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International econ - Chapter 3 MC quiz - Labor Productivity and Comparative Advantage - The Ricardian Model

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cmarquardt94's version from 2016-09-26 20:29

Section 1

Question Answer
Trade between two countries can benefit both countries if..?each country exports that good in which it has a comparative advantage
3) A country engaging in trade according to the principles of comparative advantage gains from trade because it..?is producing imports indirectly more efficiently than it could domestically
6) The earliest statement of the principle of [comparative advantage] is associated with?David Ricardo
7) The Ricardian Model attributes the gains from trade associated with the principle of comparative advantage result to?differences in labor productivity
8) The Ricardian Model demonstrates that..?trade between two countries may benefit both if each exports the product in which it has a comparative advantage
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Section 2

Question Answer
10) In a [two product], [two country] world, international trade can lead to increases in..?output of both products and consumer welfare in both countries
If the production possibilities frontier is bowed out (concave to the origin), then production occurs under conditions of...?increasing opportunity costs
If the production possibilities frontier of one trade partner ("Country A") is bowed out (concave to the origin), then increased specialization in production by that country will...?increase the economic welfare of both countries
If two countries have identical production possibility frontiers, then trade between them is likely to be beneficial if..?their demand functions differ
If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios), then if they both use the same currency...?it is possible that both will enjoy the conventional gains from trade
If one country's wage level is very high relative to the other's (the relative wage exceeding the relative productivity ratios) then it is probable that...?free trade will result in each country exporting the good in which it enjoys comparative advantage
In a two-country, two-product world, the statement "Germany enjoys a comparative advantage over France in autos relative to ships" is equivalent to...?France having comparative advantage over Germany in ships
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...?Germany has comparative advantage in butter
Suppose the United States' production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that German mark sharply depreciates against the U.S. dollar. We now know that...? Germany has a comparative advantage in butter
Suppose the United States production possibility frontier was flatter to the widget axis, whereas Germany's was flatter to the butter axis. We now learn that the German wage doubles, but U.S. wages to not change at all. We now know that...?Germany has a comparative advantage in butter
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Section 3

Question Answer
Which of the following statements is TRUE? [A) Free trade is beneficial only if your country is strong enough to stand up to foreign competition.] [B) Free trade is beneficial only if your competitor does not pay unreasonably low wages] [C) Free trade is beneficial only if both countries have access to the same technology] [D) Free trade is never beneficial for developing countries] [E) Free trade can be beneficial to economic welfare of all countries involved] ?(E) - Free trade can be beneficial to economic welfare of all countries involved
Mahatma Gandhi exhorted his followers in India to promote economic welfare by decreasing imports. This approach..?is not consistent with the Ricardian Model of comparative advantage
The country of Rhozundia is blessed with rich copper deposits. The cost of copper produced (relative to the cost of widgets produced) is therefore very low. From this information we know that..?Rhozundia may or may not have a comparative advantage in copper
We know that in antiquity, China exported Silk because no one in any other country knew how to produce this product. From this information we know that..?China has a comparative advantage in silk
The pauper labor theory, and the exploitation argument...?are theoretically irrelevant to the Ricardian Model, and do not limit its logical relevance
If labor productivities were exactly proportional to wage levels internationally, this would..?NOT negate the logical basis for trade in the Ricardian Model
What does the Ricardian model of camparative advantage argue?it argues that EVERY country must have a comparative advantage in some product (assuming there are more products than countries)
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Section 4

Question Answer
The two-country, multi-product model differs from the two-country, two-product model in that, in the former(first one)..?the relative wage ratio will determine the pattern of trade (ie. which good is exported by which country)
Assume that transportation costs are especially high for Widgets in the two-country, two-product Ricardian Model, and Country A enjoys a comparative advantage in Widgets, then..?Trade may be impossible between the two countries
Which of the following is most likely to be an untraded good in a Ricardian two-country, multi-good model? [a) steel, b) textiles, c)haircuts, d) petroleum, e) telemarketer services](c) - haircuts is most likely to be untraded good
Which of the following has been confirmed by empirical tests of the Ricardian Model?Companies tend to export goods in which they have relatively high level of productivity
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