Exam 19: World Trade Equilibrium

Scenario 20.2 Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and produce only corn and cocoa. In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day. In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa. -Refer to Scenario 20.2. Egypt will be willing to trade corn for cocoa if in the international market 1 bushel of corn can be exchanged for:

Whether exchange is between individuals, firms, or countries, voluntary trade occurs because:

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market. Figure 20.1 -Refer to Figure 20.1. If the price of Columbian coffee in the international market is $10, Columbia will export _____ pound(s) of coffee.

If Bolivia can produce 6 calculators or 3 televisions in a day, and Argentina can produce 4 calculators or 12 televisions in a day, then Bolivia would be willing to trade 1 calculator for 1 television with Argentina.

The export supply curve shows a country's:

The original comparative advantage model that used the relative abundance of factors of production to explain comparative advantage assumed that countries:

The following table shows that in one day poultry farmers in Arkansas can produce 3 cartons of eggs, while poultry farmers in Idaho can produce 2 cartons of eggs. It takes Arkansas potato farmers one day to produce 30 tons of potatoes, while Idaho potato farmers produce 10 tons of potatoes in that same time. Table 20.4 -According to Table 20.4, the limits to the terms of trade in potatoes are 1 ton of potatoes in exchange for:

The Dutch Disease had occurred in Netherlands because:

A country can benefit by indulging in international trade when:

If the world price of steel is greater than the U.S. "no-trade" domestic equilibrium price of steel, the United States:

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day. Table 20.2 -According to Table 20.2, what is the opportunity cost of 1 unit of food in Australia?

The figure given below shows the import demand and export supply curves of corn of the U.S. and Mexico. Figure 20.2 -According to Figure 20.2, the international equilibrium price of corn is:

The international equilibrium price is the point at which:

The standard interpretation of the Ricardian model is that differences in factor endowments between countries account for differences in labor productivity.

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 -According to Table 20.1, the opportunity cost of producing wheat in the U.S. equals:

Countries should specialize and import goods in which they have a comparative disadvantage.

The comparative advantage in a specific good can shift over time from one country to another, as the other countries can produce it at a cheaper cost after imitating the technology.

Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible.

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market. Figure 20.1 -Refer to Figure 20.1. The autarky equilibrium price of coffee in Columbia is:

No country can have an absolute advantage in the production of more than one good.