Exam 20: World Trade Equilibrium

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 - Refer to Table 20.1.Assume that the U.S.has only two workers and the terms of trade are 2 bushels of wheat per rack of clothing.What would be the gains from trade for the U.S.if it is producing according to its comparative advantage?

Absolute advantage is irrelevant,because knowing the absolute number of labor hours required to produce a good does not tell us if we can benefit from trade.

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 - Refer to Table 20.4.Producing 1 more crate of eggs would require Arkansas to:

The simultaneous import and export of goods in the same industry by a particular country is known as interindustry trade.

The figure given below shows the import demand and export supply curves of corn of the U.S.and Mexico. Figure 20.2 - Refer to Figure 20.2.The no-trade equilibrium price of a bushel of corn in Mexico is:

Differences in the productivity of labor account for comparative advantage if:

Which of the following statements in the context of U.S.exports is true?

The difference between absolute and comparative advantage is that:

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:

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.Which of the following statements is true?

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 cloth in the U.S.equals:

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:

If a laborer in Mexico can produce 2 bushels of wheat or 4 bushels of corn in a day,the opportunity cost of producing wheat is 4 bushels of corn.

Which of the following counties are largely dependent on trade with the United States?

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 -Which of the following can be inferred from the information provided in Table 20.1?

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:

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:

The theory of comparative advantage is based on:

According to the Ricardian model,the source of comparative advantage is:

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 computer in Australia?