Question 1

According to the Heckscher-Ohlin theory,comparative advantage is based on:

Accepted Answer

A) labor productivity differences. 
B) product life cycles. 
C) the availability of skilled resources. 
D) consumer tastes and preferences. 
E) the relative abundance of the factors of production. 
A) labor productivity differences. 
B) product life cycles. 
C) the availability of skilled resources. 
D) consumer tastes and preferences. 
E) the relative abundance of the factors of production.

Question 2

The most heavily traded category of goods in the world is:

Accepted Answer

A) office and telecom equipment. 
B) chemicals. 
C) iron and steel. 
D) textiles. 
E) crude petroleum. 
A) office and telecom equipment. 
B) chemicals. 
C) iron and steel. 
D) textiles. 
E) crude petroleum.

Question 3

If the world price of steel is greater than the U.S."no-trade" domestic equilibrium price of steel,the United States:

Accepted Answer

A) will not produce steel. 
B) will demand steel from the rest of the world. 
C) will supply steel to the rest of the world. 
D) will not trade steel. 
E) will have a shortage of steel in the domestic market. 
A) will not produce steel. 
B) will demand steel from the rest of the world. 
C) will supply steel to the rest of the world. 
D) will not trade steel. 
E) will have a shortage of steel in the domestic market.

Question 4

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.Which of the following statements is true?

Accepted Answer

A) India has an absolute advantage in the production of cloth. 
B) India has an absolute advantage in the production of both wheat and cloth. 
C) The U.S.has an absolute advantage in the production of wheat but not cloth. 
D) The U.S.has an absolute advantage the production of cloth but not wheat. 
E) The U.S.has an absolute advantage in the production of both wheat and cloth. 
A) India has an absolute advantage in the production of cloth. 
B) India has an absolute advantage in the production of both wheat and cloth. 
C) The U.S.has an absolute advantage in the production of wheat but not cloth. 
D) The U.S.has an absolute advantage the production of cloth but not wheat. 
E) The U.S.has an absolute advantage in the production of both wheat and cloth.

Question 5

The comparative advantage in a specific good can shift over time from one country to another,as the other countries can produce it at a cheaper cost after imitating the technology.

Accepted Answer

A) True 
 B)False

Question 6

The international equilibrium price is the point at which:

Accepted Answer

A) the domestic supply curve of one country intersects the domestic demand curve of another. 
B) the domestic demand and supply curves of a country intersects each other. 
C) the export supply curve of one country intersects the import demand curve of another. 
D) the domestic demand of the trading partners become identical. 
E) the domestic supply of the trading partners become identical. 
A) the domestic supply curve of one country intersects the domestic demand curve of another. 
B) the domestic demand and supply curves of a country intersects each other. 
C) the export supply curve of one country intersects the import demand curve of another. 
D) the domestic demand of the trading partners become identical. 
E) the domestic supply of the trading partners become identical.

Question 7

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.Which of the following assumptions holds true for the example?

Accepted Answer

A) The goods are produced by using different factors of production 
B) Labor productivity alone determines the comparative advantage 
C) Each of the countries will produce and export wheat and cloth 
D) Both the countries have identical factor endowments 
E) The taste and preference of the consumers are dissimilar in the two countries 
A) The goods are produced by using different factors of production 
B) Labor productivity alone determines the comparative advantage 
C) Each of the countries will produce and export wheat and cloth 
D) Both the countries have identical factor endowments 
E) The taste and preference of the consumers are dissimilar in the two countries

Question 8

The export supply and import demand curves measure the domestic shortage and surplus,respectively,at different world prices.

Accepted Answer

A) True 
 B)False

Question 9

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 in the international market is $10,Columbia will export _____ pound(s) of coffee.

Accepted Answer

A) two 
B) zero 
C) six 
D) eight 
E) ten 
A) two 
B) zero 
C) six 
D) eight 
E) ten

Question 10

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.
-Based on Scenario 20.2,which of the following terms of trade would benefit both countries?

Accepted Answer

A) 1 pound of cocoa is equal to 0.10 bushels of corn 
B) 1 pound of cocoa is equal to 2 bushels of corn 
C) 1 pound of cocoa is equal to 1 bushels of corn 
D) 1 pound of cocoa is equal to 0.5 bushels of corn 
E) 1 pound of cocoa is equal to 1.5 bushels of corn 
A) 1 pound of cocoa is equal to 0.10 bushels of corn 
B) 1 pound of cocoa is equal to 2 bushels of corn 
C) 1 pound of cocoa is equal to 1 bushels of corn 
D) 1 pound of cocoa is equal to 0.5 bushels of corn 
E) 1 pound of cocoa is equal to 1.5 bushels of corn

Question 11

A country can benefit by indulging in international trade when:

Accepted Answer

A) it produces a good in which it has absolute disadvantage. 
B) it produces a good in which its trading partner has an absolute advantage. 
C) it produces a good in which it has comparative advantage. 
D) it produces all the goods which are supported by its resources. 
E) it produces nothing and merely depends on foreign imports. 
A) it produces a good in which it has absolute disadvantage. 
B) it produces a good in which its trading partner has an absolute advantage. 
C) it produces a good in which it has comparative advantage. 
D) it produces all the goods which are supported by its resources. 
E) it produces nothing and merely depends on foreign imports.

Question 12

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3  
- Refer to Table 20.3.Determine the limits on the terms of trade for 1 pound of rice.

Accepted Answer

A) Between 5 calculators and 10 calculators 
B) Between 1 calculator and 5 calculators 
C) Between 1 calculator and 10 calculators 
D) Between 1 calculator and 2 calculators 
E) Between two-fifths of a calculator and 1 calculator 
A) Between 5 calculators and 10 calculators 
B) Between 1 calculator and 5 calculators 
C) Between 1 calculator and 10 calculators 
D) Between 1 calculator and 2 calculators 
E) Between two-fifths of a calculator and 1 calculator

According to the Heckscher-Ohlin theory,comparative advantage is based on:

The most heavily traded category of goods in the world is:

If the world price of steel is greater than the U.S."no-trade" domestic equilibrium price of steel,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 -Refer to Table 20.1.Which of the following statements is true?

The comparative advantage in a specific good can shift over time from one country to another,as the other countries can produce it at a cheaper cost after imitating the technology.

The international equilibrium price is the point at which:

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.Which of the following assumptions holds true for the example?

The export supply and import demand curves measure the domestic shortage and surplus,respectively,at different world prices.

A country can benefit by indulging in international trade when:

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3 - Refer to Table 20.3.Determine the limits on the terms of trade for 1 pound of rice.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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Exam 20: World Trade Equilibrium

According to the Heckscher-Ohlin theory,comparative advantage is based on:

The most heavily traded category of goods in the world is:

If the world price of steel is greater than the U.S."no-trade" domestic equilibrium price of steel,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 -Refer to Table 20.1.Which of the following statements is true?

The comparative advantage in a specific good can shift over time from one country to another,as the other countries can produce it at a cheaper cost after imitating the technology.

The international equilibrium price is the point at which:

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.Which of the following assumptions holds true for the example?

The export supply and import demand curves measure the domestic shortage and surplus,respectively,at different world prices.

A country can benefit by indulging in international trade when:

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3 - Refer to Table 20.3.Determine the limits on the terms of trade for 1 pound of rice.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters