-
——
B)
differences in preferences.
C)differences in labor productivity.
D)
differences in
resources.
E)
gravity relationships among countries.
12. A nation
engaging in trade according to the Ricardian model
will find its
consump tion
bundle
A)
inside its production possibilities
frontier.
B)on its production
possibilities frontier.
C)outside its
production possibilities frontier.
D)
inside its
trade-partner's production possibilities frontier.
E)on its trade-partner's production
possibilities frontier.
13.
Assume that
labor is the only factor of production and that
wages in the United Sta
tes
equal
$$20
per
hour
while
wages
in
Japan
are
$$10
per
hour.
Production
costs
would be lower in the United States as
compared to Japan if
A)
U.S. labor productivity equaled 40
units per hour and Japan's 15 units per ho
ur.
B)
U.S. labor productivity equaled 30
units per hour and Japan's 20 units per hour.
C)
U.S. labor
productivity equaled 20 units per hour and Japan's
30 units per hour.
D)
U.S. labor productivity equaled 15
units per hour and Japan's 25 units per hour.
E)
U.S. labor
productivity equaled 15 units per hour and Japan's
40 units per hour.
14.
In a two-country, two-product world,
the statement
“
Germanyenjoys
a
comparativ e advantage over France in
autos relative toships
”
is
equivalent to
A) France having a
comparative advantage over Germany in ships.
B) France having a comparative
disadvantage compared to Germany in autos and
ship s.
C) Germany having a
comparative advantage over France in autos and
ships.
D) France having no comparative
advantage over Germany.
E) France
should produce autos.
15.
If the United States' production
possibility frontier was flatter to the widget
axis,
whereas Germany's was flatter to
the butter axis, we know that
A)
the United
States has no comparative advantage
B)
Germany has a
comparative advantage in butter.
C)
the U.S. has a
comparative advantage in butter.
D)
Germany has
comparative advantages in both products.
E)
the U.S. has a
comparative disadvantage in widgets.
Ch4-Ch5
Ricardian model of international trade
demonstrates that trade can be
mutually
beneficial. Why, then, do governments restrict
imports of some goods?
A)Trade can have substantial effects on
a country's distribution of income.
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——
B)
The Ricardian model is often incorrect
in its prediction that trade can be
mutually beneficial.
C)
Import
restrictions are the result of trade wars between
hostile countries.
D)
Imports are only restricted when
foreign-made goods do not meet domestic standar
ds of qualityE) Restrictions on imports
are intended to benefit domestic consumers.
2.
Japan's trade
policies with regard to rice reflect the fact that
A) japanese rice farmers have
significant political power.
B) Japan
has a comparative advantage in rice production and
therefore exports most
o f its rice
crop.
C) there would be no gains from
trade available to Japan if it engaged in free
trade in
r ice.
D) there are
gains from trade that Japan captures by engaging
in free trade in rice.
E) Japan imports
most of the rice consumed in the country.
3.
In the
specific factors model, which of the following is
treated as a specific factor?
A)Labor
B)
Land
C)
Cloth
D)
Food
E)
Technology
4.
The specific
factors model assumes that there are ________
goods and ________
fa ctor(s) of
production.
A) two; three
B)
two; two C)
two; one D)
three; two E)
four;
three
5.
The slope of a country's production
possibility frontier with cloth measured on the
horizontal and food measured on the
vertical axis in the specific factors model is
equa l to ________ and it ________ as
more cloth is produced.
A)
-MPLF/MPLC; becomes steeper
B)
-MPLF/MPLC;
becomes flatter
C)
-MPLF/MPLC; is constant
D)
-MPLC/MPLF;
becomes steeper
E)
-MPLC/MPLF; is constant
6.
Under perfect
competition, the equilibrium price of labor used
to produce cloth
will be equal to
A)the slope of the production
possibility frontier.
B)
the average
product of labor in the production of cloth times
the price of cloth.
C)
the ratio of the marginal product of
labor in the production of cloth to the marginal
product of labor in the production of
food times the ratio of the price of cloth. to the
p
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rice of food.
D)
the marginal
product of labor in the production of cloth times
the price of clot
h.
E)
the price of
cloth divided by the marginal product of labor in
the production of clot
h.
7.
In the
specific factors model, which of the following
will increase the quantity of
la bor
used in cloth production?
A)an increase
in the price of cloth relative to that of food
B)
an
increase
in
the
price
of
food
relative
to
that
of
cloth C) a decrease in the price of
labor
D) an equal percentage decrease
in the price of food and cloth
E) an
equal percentage increase in the price of food and
cloth
8.
A country that
does not engage in trade can benefit from trade
only if
A)it has an absolute advantage
in at least one good.
B)
it employs a
unique technology.
C)
pre-trade and free-trade relative
prices are not identical.
D)
its wage rate is below the world
average.
E)
pre-
trade and free-trade relative prices are
identical.
9.
In
the specific factors model, the effects of trade
on welfare are ________ for mobil e
factors, ________ for fixed factors
used to produce the exported good, and _______
_ for fixed factors used to produce the
imported good.
A)ambiguous; positive;
negative
B) ambiguous;
negative; positive C)
positive; ambiguous; ambiguous D)
negative; ambiguous; ambiguous E)
positive; positive; positive
effect of trade on specialized
employees of import-competing industries will
b e ________ jobs and ________ pay
because they are relatively ________.
A)fewer; lower; mobile
B)
fewer; lower;
immobile
C)
more;
lower; immobile
D)
more; higher; mobile
E)
more; higher;
immobile
11. There is a bias in the
political process against free trade
because
A)there is a high
correlation between the volume of imports and the
unemployment
ra te.
B)
the gains from
free trade cannot be measured.
C)
those who gain
from free trade can't compensate those who lose.
D)
foreign
governments make large donations to U.S. political
campaigns.
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E) those who lose from free
trade are better organized than those who
gain.
the 2-factor, 2 good
Heckscher-Ohlin model, the two countries differ
in A)tastes and preferences.
B)
military
capabilities.
C)
the size of their economies.
D)
relative
abundance of factors of production.
E)
labor
productivities.
13.
If a country produces good Y (measured
on the vertical axis) and good X
(measure d on the horizontal axis),
then the absolute value of the slope of its
production possibil ity frontier is
equal to
A)the opportunity cost of good
X.
B) the price of good X divided by
the price of good Y.
C) the price of
good X divided by the price of good
Y.
D) the opportunity cost of good Y.
E)
the cost of
capital (assuming that good Y is capital
intensive) divided by the cost
of
labor.
14.
In the
2-factor, 2 good Heckscher-Ohlin model, trade will
________ the owners of
a country's
________ factor and will ________ the good that
uses that factor intensiv
ely.
A)benefit;
abundant; export
B)harm;
abundant; import
C)
benefit;
scarce; export
D)
benefit; scarce; import
E)
harm; scarce;
export
15.
The
assumption of diminishing returns in the
Heckscher-Ohlin model means that,
unlike in the Ricardian model, it is
likely that
A) countries will consume
outside their production possibility frontier.
B) countries will benefit from free
international trade.
C) countries will
not be fully specialized in one product.
D)
comparative
advantage will not determine the direction of
trade.
E)
global
production will decrease under trade.
Japan is relatively capital rich and the United
States is relatively land rich, and if
food is relatively land intensive then
trade between these two, formerly autarkic coun
tries will result in
A)an increase in the relative price of
food in the U.S.
B)
an increase in
the relative price of food in Japan.
C)
a global
increase in the relative price of food.
D)
a decrease in
the relative price of food in both countries.
E)
an increase in
the relative price of food in both countries.
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