Exam 4: Specific Factors and Income Distribution

U.S.imports of sugar are limited by an import quota that,according to a study updated in 2013,imposed a total cost on American consumers close to $________,or an average cost of ________ per year for every man,woman,and child in the country.

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food.When then 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.

In the specific factor model,the effect of an increase in the productivity of labor in the production of food will cause a(an)________ in the quantity of labor used to produce cloth,a(an)________ in the quantity of labor used to produce food and a(an)________ in the wage rate.

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

Those who will unambiguously gain from free trade are ________ factors in sectors that produce goods that are ________.

In the specific factors model,a 0% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to ________,the production of cloth to ________,and the production of food to ________.

In modern economies,

-Refer to the production possibility graph above.Assume that the economy is in equilibrium at point e.If a war reduces the country's capital stock by 40%,the new equilibrium is most likely to be

The specific factors model assumes that there are ________ goods and ________ factor(s)of production.

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

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

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

A country will realize no gains from trade if

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

A country that does NOT engage in trade can benefit from trade only if

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.

The effect of trade on specialized employees of import-competing industries will be ________ jobs and ________ pay because they are relatively ________.

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.

The Ricardian model of international trade demonstrates that trade can be mutually beneficial.Why,then,do governments restrict imports of some goods?