Exam 20: 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.Ghana will be willing to trade cocoa for Egyptian corn if in the international market,1 pound of cocoa can be exchanged for:

The principle of comparative advantage states that a country should specialize in the production of those goods that have the highest opportunity costs.

Trade between industrial countries account for the majority of international trade.

If the world price of a good is equal to its no-trade equilibrium price,the country will import more of the good from other nations.

The Dutch Disease had occurred in Netherlands because:

The export supply curve shows a country's:

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 eggs are 1 carton of eggs in exchange for:

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 the Philippines?

Workers in industrial countries earn much higher wages than workers in developing countries 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.The autarky equilibrium price of coffee in Columbia is:

The product life cycle theory predicts that comparative advantage shifts away from the country of origin if:

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 falls to $6 in the international market:

Which of the following looks at the demand side of the market to explain some of the observed international trade patterns?

Countries import goods in which they have:

International equilibrium occurs if the quantity of imports demanded by one country is equal to the quantity of exports supplied by the other country.

For purposes of determining comparative advantage,the cost of producing a good in each of two countries is measured in terms of:

The oldest theory of comparative advantage is based on:

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

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3 -According to Table 20.3,what is the greatest amount Korea is willing to pay for 1 calculator?

According to the Heckscher-Ohlin model: