Question 1

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

Accepted Answer

A)  the marginal product of labor in the production of cloth times the price of cloth. 
B)  the ratio of the marginal product of labor in the production of cloth to the marginal product of labor in the production of food times the ratio of the price of cloth to the price of food. 
C)  the slope of the production possibility frontier. 
D)  the average product of labor in the production of cloth times the price of cloth. 
E)  the price of cloth divided by the marginal product of labor in the production of cloth. 
A)  the marginal product of labor in the production of cloth times the price of cloth. 
B)  the ratio of the marginal product of labor in the production of cloth to the marginal product of labor in the production of food times the ratio of the price of cloth to the price of food. 
C)  the slope of the production possibility frontier. 
D)  the average product of labor in the production of cloth times the price of cloth. 
E)  the price of cloth divided by the marginal product of labor in the production of cloth. A

Question 2

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

Accepted Answer

A)  the more powerful country dictates the terms of trade. 
B)  some resources are immobile in the short run. 
C)  different countries use different currencies. 
D)  of government corruption. 
E)  rich countries take advantage of poor countries. 
A)  the more powerful country dictates the terms of trade. 
B)  some resources are immobile in the short run. 
C)  different countries use different currencies. 
D)  of government corruption. 
E)  rich countries take advantage of poor countries. B

Question 3

In the specific factors model, a 5% increase in the price of food accompanied by a 5% 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.

Accepted Answer

A)  a decrease; an increase; an increase 
B)  a decrease; a decrease; a decrease 
C)  no change; no change; no change 
D)  an increase; a decrease; a decrease 
E)  an increase; an increase; an increase 
A)  a decrease; an increase; an increase 
B)  a decrease; a decrease; a decrease 
C)  no change; no change; no change 
D)  an increase; a decrease; a decrease 
E)  an increase; an increase; an increase C

Question 4

In modern economies,

Accepted Answer

A)  restrictions on international labor mobility are common. 
B)  labor is far more mobile internationally than it is intra-nationally. 
C)  outsourcing increases international labor mobility. 
D)  restrictions on international labor mobility are rare. 
E)  labor is far more mobile internationally than capital. 
A)  restrictions on international labor mobility are common. 
B)  labor is far more mobile internationally than it is intra-nationally. 
C)  outsourcing increases international labor mobility. 
D)  restrictions on international labor mobility are rare. 
E)  labor is far more mobile internationally than capital.

Question 5

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

Accepted Answer

A)  the amount of time required to redeploy the factor to a different industry. 
B)  factor quality, with lower quality factors having a lower level of specificity. 
C)  the cost of the factor as a proportion of the long-run total cost of production. 
D)  the mobility of the factor, with more mobile factors having less specificity. 
E)  technology differences between two countries, with a less advanced technology resulting in less factor specificity. 
A)  the amount of time required to redeploy the factor to a different industry. 
B)  factor quality, with lower quality factors having a lower level of specificity. 
C)  the cost of the factor as a proportion of the long-run total cost of production. 
D)  the mobility of the factor, with more mobile factors having less specificity. 
E)  technology differences between two countries, with a less advanced technology resulting in less factor specificity.

Question 6

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to ________ and it ________ as more cloth is produced.

Accepted Answer

A)  -MPLF/MPLC; becomes steeper 
B)  -MPLF/MPLC; becomes flatter 
C)  -MPLC/MPLF; is constant 
D)  -MPLF/MPLC; is constant 
E)  -MPLC/MPLF; becomes steeper 
A)  -MPLF/MPLC; becomes steeper 
B)  -MPLF/MPLC; becomes flatter 
C)  -MPLC/MPLF; is constant 
D)  -MPLF/MPLC; is constant 
E)  -MPLC/MPLF; becomes steeper

Question 7

A factor of production that cannot be used outside of a particular sector of an economy is a(an)

Accepted Answer

A)  variable factor. 
B)  export-competing factor. 
C)  mobile factor. 
D)  import-competing factor. 
E)  specific factor. 
A)  variable factor. 
B)  export-competing factor. 
C)  mobile factor. 
D)  import-competing factor. 
E)  specific factor.

Question 8

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

Accepted Answer

A)  production function for food. 
B)  production possibility frontier. 
C)  labor supply curve. 
D)  labor allocation constraint. 
E)  production function for cloth. 
A)  production function for food. 
B)  production possibility frontier. 
C)  labor supply curve. 
D)  labor allocation constraint. 
E)  production function for cloth.

Question 9

The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food. When the 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 3 units of food, then Moribundia will export ________ and ________ factors used in the production of ________ will benefit.

Accepted Answer

A)  cloth; mobile; cloth 
B)  food; mobile; food 
C)  food; immobile; cloth 
D)  food; immobile; food 
E)  cloth; immobile; cloth 
A)  cloth; mobile; cloth 
B)  food; mobile; food 
C)  food; immobile; cloth 
D)  food; immobile; food 
E)  cloth; immobile; cloth

Question 10

Immigration into the U.S. over the past century has caused the percentage of immigrants in the U.S. population to

Accepted Answer

A)  fall steadily over the entire century. 
B)  rise steadily until the 1970s and fall thereafter. 
C)  rise steadily over the entire century. 
D)  fall steadily until the 1970s and increase thereafter. 
E)  remain relatively constant over the time period. 
A)  fall steadily over the entire century. 
B)  rise steadily until the 1970s and fall thereafter. 
C)  rise steadily over the entire century. 
D)  fall steadily until the 1970s and increase thereafter. 
E)  remain relatively constant over the time period.

Question 11

The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________. Assume that output of good Y is measured on the vertical axis, output of good X is measured on the horizontal axis, MPL is the marginal product of labor with a subscript indicating which good, P is the price of a good, and w is the wage rate.

Accepted Answer

A)  -PX/PY; -MPLY/MPLX; 
B)  -MPLY/MPLX; -PX/PY 
C)  -MPLX/MPLY; -PX/PY 
D)  -MPLY/w; -MPLF/w 
E)  -PX/w; -PY/w 
A)  -PX/PY; -MPLY/MPLX; 
B)  -MPLY/MPLX; -PX/PY 
C)  -MPLX/MPLY; -PX/PY 
D)  -MPLY/w; -MPLF/w 
E)  -PX/w; -PY/w

Question 12

In the specific factors model, which of the following will increase the quantity of labor used in food production?

Accepted Answer

A)  an increase in the price of cloth relative to that of food 
B)  an increase in the price of food relative to that of cloth 
C)  a decrease in the price of labor 
D)  an equal percentage increase in the price of food and cloth 
E)  an equal percentage decrease in the price of food and cloth 
A)  an increase in the price of cloth relative to that of food 
B)  an increase in the price of food relative to that of cloth 
C)  a decrease in the price of labor 
D)  an equal percentage increase in the price of food and cloth 
E)  an equal percentage decrease in the price of food and cloth

Question 13

In the specific factors model, a country's production possibility frontier is ________ because of ________.

Accepted Answer

A)  a straight line; diminishing marginal returns 
B)  a curved line; diminishing marginal returns 
C)  a straight line; constant marginal returns 
D)  a curved line; constant marginal returns 
E)  a curved line; a limited supply of labor 
A)  a straight line; diminishing marginal returns 
B)  a curved line; diminishing marginal returns 
C)  a straight line; constant marginal returns 
D)  a curved line; constant marginal returns 
E)  a curved line; a limited supply of labor

Question 14

-Refer to the graph above. Points A, B, and C represent ________, ________, and ________, respectively.

Accepted Answer

A)  the global wage rate before migration; the wage rate in foreign after migration; the wage rate in home after migration 
B)  the global wage rate before migration; the wage rate in home after migration; the wage rate in foreign after migration 
C)  equilibrium wage rate after migration from foreign to home has occurred; the wage rate in home before migration; the wage rate in foreign before migration 
D)  equilibrium wage rate after migration from home to foreign has occurred; the wage rate in foreign before migration; the wage rate in home before migration 
E)  the wage rate in home before migration; the wage rate in home after migration; the wage rate in foreign after migration 
A)  the global wage rate before migration; the wage rate in foreign after migration; the wage rate in home after migration 
B)  the global wage rate before migration; the wage rate in home after migration; the wage rate in foreign after migration 
C)  equilibrium wage rate after migration from foreign to home has occurred; the wage rate in home before migration; the wage rate in foreign before migration 
D)  equilibrium wage rate after migration from home to foreign has occurred; the wage rate in foreign before migration; the wage rate in home before migration 
E)  the wage rate in home before migration; the wage rate in home after migration; the wage rate in foreign after migration

Question 15

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

Accepted Answer

A)  positive; positive 
B)  positive; ambiguous 
C)  negative; positive 
D)  positive; negative 
E)  ambiguous; positive 
A)  positive; positive 
B)  positive; ambiguous 
C)  negative; positive 
D)  positive; negative 
E)  ambiguous; positive

Question 16

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

Accepted Answer

A)  the cost of the factor as a proportion of the long-run total cost of production. 
B)  technology differences between two countries, with a more advanced technology resulting in more factor specificity. 
C)  the amount of time required to redeploy the factor to a different industry. 
D)  factor quality, with higher quality factors having a higher level of specificity. 
E)  the mobility of the factor, with more mobile factors having more specificity. 
A)  the cost of the factor as a proportion of the long-run total cost of production. 
B)  technology differences between two countries, with a more advanced technology resulting in more factor specificity. 
C)  the amount of time required to redeploy the factor to a different industry. 
D)  factor quality, with higher quality factors having a higher level of specificity. 
E)  the mobility of the factor, with more mobile factors having more specificity.

Question 17

The overall welfare effects of trade are ________ if ________.

Accepted Answer

A)  positive; the domestic economy grows faster than do foreign economies 
B)  positive; more people gain from trade than lose from it 
C)  negative; some people are made worse off by trade 
D)  negative; those who lose can compel those who gain to compensate them for their losses 
E)  positive; those who gain can compensate those who lose and still be better off 
A)  positive; the domestic economy grows faster than do foreign economies 
B)  positive; more people gain from trade than lose from it 
C)  negative; some people are made worse off by trade 
D)  negative; those who lose can compel those who gain to compensate them for their losses 
E)  positive; those who gain can compensate those who lose and still be better off

Question 18

In the two-country model of international labor mobility

Accepted Answer

A)  migration has no effect on global output, although some groups are made better off. 
B)  migration has no effect on global output, although some groups are made worse off. 
C)  migration results in increased global output, and all groups are made better off. 
D)  migration may reduce global output, although some groups are made better off. 
E)  migration results in increased global output, although some groups are made worse off. 
A)  migration has no effect on global output, although some groups are made better off. 
B)  migration has no effect on global output, although some groups are made worse off. 
C)  migration results in increased global output, and all groups are made better off. 
D)  migration may reduce global output, although some groups are made better off. 
E)  migration results in increased global output, although some groups are made worse off.

Question 19

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.

Accepted Answer

A)  an ambiguous change; an increase; a decrease 
B)  a decrease; an ambiguous change; an ambiguous change 
C)  an ambiguous change; an ambiguous change; an ambiguous change 
D)  an ambiguous change; a decrease; an increase 
E)  an increase; a decrease; an increase 
A)  an ambiguous change; an increase; a decrease 
B)  a decrease; an ambiguous change; an ambiguous change 
C)  an ambiguous change; an ambiguous change; an ambiguous change 
D)  an ambiguous change; a decrease; an increase 
E)  an increase; a decrease; an increase

Question 20

A factor of production that can be used in any sector of an economy is a(an)

Accepted Answer

A)  import-competing factor. 
B)  export-competing factor. 
C)  mobile factor. 
D)  variable factor. 
E)  specific factor. 
A)  import-competing factor. 
B)  export-competing factor. 
C)  mobile factor. 
D)  variable factor. 
E)  specific factor.

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

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

In the specific factors model, a 5% increase in the price of food accompanied by a 5% 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 modern economies,

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

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to and it as more cloth is produced.

A factor of production that cannot be used outside of a particular sector of an economy is a(an)

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

Immigration into the U.S. over the past century has caused the percentage of immigrants in the U.S. population to

In the specific factors model, which of the following will increase the quantity of labor used in food production?

In the specific factors model, a country's production possibility frontier is because of .

-Refer to the graph above. Points A, B, and C represent , , and , respectively.

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

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

The overall welfare effects of trade are if .

In the two-country model of international labor mobility

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.

A factor of production that can be used in any sector of an economy is a(an)

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

Exam 4: Specific Factors and Income Distribution

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

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

In modern economies,

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

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to ________ and it ________ as more cloth is produced.

A factor of production that cannot be used outside of a particular sector of an economy is a(an)

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

Immigration into the U.S. over the past century has caused the percentage of immigrants in the U.S. population to

In the specific factors model, which of the following will increase the quantity of labor used in food production?

In the specific factors model, a country's production possibility frontier is ________ because of ________.

-Refer to the graph above. Points A, B, and C represent ________, ________, and ________, respectively.

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

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

The overall welfare effects of trade are ________ if ________.

In the two-country model of international labor mobility

A factor of production that can be used in any sector of an economy is a(an)

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to and it as more cloth is produced.

In the specific factors model, a country's production possibility frontier is because of .

-Refer to the graph above. Points A, B, and C represent , , and , respectively.

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

The overall welfare effects of trade are if .