Exam 20: World Trade Equilibrium

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.

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

The theory that explains the shift of color TV sets production from the United States to Japan and Taiwan is called the _____ theory.

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

We know that industrial countries tend to trade with other industrial countries.This pattern counters the:

Which of the following lists gives world exports in the order of their value,from highest to lowest?

Which of the following countries receives the largest share of U.S.exports?

Countries with a relatively high stock of skilled labor will have a comparative advantage in producing goods that require relatively larger quantities of skilled labor.

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S.and Canada at different prices. Table 20.5 - According to Table 20.5,the equilibrium quantity of computers traded in the world market is:

Dutch Disease is associated with a dramatic decline in the demand for a primary commodity produced by a country.

Scenario 20.1 Suppose labor productivity differences are the only determinants of comparative advantage,and Brazil and Chile both produce only coffee and sugar.In Chile,either 5 units of coffee or 2 units of sugar can be produced in one day.In Brazil,a day of labor produces either 2 units of coffee or 1 unit of sugar. -Refer to Scenario 20.1.What is the opportunity cost of producing coffee in Chile?

Though the countries can benefit by completely specializing in the production of the good in which they have comparative advantage,in real world however,they do not completely specialize.

Nations trade what they produce in excess of their own consumption to:

The human skills theory is similar to the factor abundance theory of explaining the source of comparative advantage,except that the former concentrates only on different aspects of labor.

The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good.

If Brazil can produce 5 shirts or 4 pounds of beef in a day,and Uruguay can produce 10 shirts or 2 pounds of beef in a day,then Brazil has a comparative advantage in the production of beef.

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,Australia has an:

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 India equals:

Which of the following factors are least likely to affect what countries end up trading in the international market?

Scenario 20.1 Suppose labor productivity differences are the only determinants of comparative advantage,and Brazil and Chile both produce only coffee and sugar.In Chile,either 5 units of coffee or 2 units of sugar can be produced in one day.In Brazil,a day of labor produces either 2 units of coffee or 1 unit of sugar. -Refer to Scenario 20.1.Calculate the opportunity cost of producing sugar in Brazil.