Exam 38: World Trade Equilibrium

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 According to Table 20.1, the opportunity cost of producing wheat in India equals:

The limits of the terms of trade are determined by the:

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:

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

The figure given below shows the import demand and export supply curves of corn of the U.S.and Mexico. Figure 20.2 Refer to Figure 20.2.The no-trade equilibrium price of a bushel of corn in Mexico is:

Developing countries can be expected to have a comparative advantage in industries requiring a relatively large amount of skilled labor.

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.

Countries tend to export different goods and services because of:

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

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

Scenario 20.1 Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar.In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day.In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Refer to Scenario 20.1.Which of the following statements is true?

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