Exam 35: World Trade Equilibrium

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.

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 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.What is the least amount Japan is willing to accept for 1 calculator?

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

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 20.4 According to Table 20.4, the limits to the terms of trade in potatoes are 1 ton of potatoes in exchange for:

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers.Australia can make 1, 000 computers or 2, 000 units of food in a day, and the Philippines can make 200 computers or 1, 200 units of food in a day. Table 20.2 According to Table 20.2, what is the opportunity cost of 1 computer in Australia?

If the international price of oranges is less than the domestic price of oranges in Spain, then Spain will export oranges to other countries.

The international equilibrium price is the point at which:

The Dutch Disease had occurred in Netherlands because:

The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good.

We know that industrial countries tend to trade with other industrial countries.This pattern counters the:

Countries tend to export different goods and services because 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 table below shows the quantity demanded (in thousands)and quantity supplied (in thousands)of computers in the U.S.and Canada at different prices. Table 20.5 According to Table 20.5, the equilibrium quantity of computers traded in the world market is:

The product life cycle theory predicts that comparative advantage shifts away from the country of origin if:

The figure given below shows the import demand and export supply curves of corn of the U.S.and Mexico. Figure 20.2 According to Figure 20.2, the international equilibrium price of corn is:

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.

International trade permits greater consumption than would be possible from the domestic production alone.

If the world price of a good is equal to its no-trade equilibrium price, the country will import more of the good from other nations.

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.