Exam 4: Specific Factors and Income Distribution

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.

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.

In the specific factors model, which of the following is treated as a specific factor?

International trade can have important effects on the distribution of income because

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.

In the specific factors model, a country's production function is ________ because of ________.

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.

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

U.S. imports of sugar are limited by an import quota that, in 2006, imposed an average cost of ________ per consumer, which is an average of ________ per American job saved in the sugar industry.

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

In the specific factor model, the effect of an increase in the productivity of labor in the production of cloth 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.

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

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

-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

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 ________.

The Ricardian two-country two-good model predicts that there are potential benefits from trade, but not

In the specific factors model, a country's production possibility frontier is ________ because of ________.

The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________. Assume that output of good Y is measured on the vertical axis, output of good X is measured on the horizontal axis, MPL is the marginal product of labor with a subscript indicating which good, P is the price of a good, and w is the wage rate.

The overall welfare effects of trade are ________ if ________.

A country will realize no gains from trade if