Exam 55: World Trade Equilibrium

Scenario 34.2 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 34.2, which of the following terms of trade would benefit both countries?

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.

Which of the following factors are least likely to affect what countries end up trading in the international market?

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 34.1 Refer to Figure 34.1.If the price of coffee in the international market is $14:

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

If Japan has a comparative advantage over Canada in the production of computers, which of the following must be true?

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 34.1 Refer to Table 34.1.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?

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 34.4 Refer to Table 34.4.Producing 1 more crate of eggs would require Arkansas to:

Nations trade what they produce in excess of their own consumption to:

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

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.

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

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

Whether exchange is between individuals, firms, or countries, voluntary trade occurs because:

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Countries with a relatively high stock of skilled labor will have a comparative advantage in producing goods that require relatively larger quantities of skilled labor.

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

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

If Brazil can produce 5 shirts or 4 pounds of beef in a day, and Uruguay can produce 10 shirts or 2 pounds of beef in a day, then Brazil has a comparative advantage in the production of beef.