Exam 4: Specific Factors and Income Distribution

International trade can have important effects on the distribution of income because

-Refer to the production possibility graph above.Assume that the economy is in equilibrium at point e.If a war reduces the country's capital stock by 40%,the new equilibrium is most likely to be

The degree of a factor's specificity is inversely related to

When a country's labor market is in equilibrium in the specific factors model,the wage rate

A country will realize no gains from trade if

Under perfect competition,the equilibrium price of labor used to produce cloth will be equal to

In the four-quadrant diagram of the specific factors model,the graph in the upper left quadrant is a country's

The specific factors model was developed by

Japan's trade policies with regard to rice reflect the fact that

In the specific factors model,a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause ________ in the welfare of labor,________ in the welfare of the fixed factor in the production of food,and ________ in the welfare of the fixed factor in the production of cloth.

In the specific factor model,the effect of an increase in the productivity of labor in the production of food will cause a(an)________ in the quantity of labor used to produce cloth,a(an)________ in the quantity of labor used to produce food and a(an)________ in the wage rate.

A worker who has invested in ________ skills will be ________ mobile than would otherwise be the case.

In the specific factors model,the effects of trade on welfare overall are ________ and for fixed factors used to produce the imported good they are ________.

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

There is a bias in the political process against free trade because

In modern economies,

The Ricardian two-country two-good model predicts that there are potential benefits from trade,but NOT

In the specific factors model,labor is defined as a(an)

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food.When then central city,Mudhole,puts in an airstrip,the country is able to engage in trade.If the relative price of cloth in the outside world is 8 units of food,then Moribundia will export ________ and ________ factors used in the production of ________ will benefit.