International econ - {myChapter3} - Ricardian Model

cmarquardt94's version from 2016-09-27 01:01

Section 1

Question Answer
we say a country has comparative advantage in producing a good if..?the opportunity cost of producing the good in that country is lower than it is in other countries
the relative wage of a country's workers is...?the amount they are paid per hour, compared with the amount workers in another country are paid per hour.
pauper labor argument?People who adhere to this belief argue that industries should not have to cope with foreign industries that are less efficient, but pay lower wages
* partial equilibrium analysis?to study a single market
what is general equilibrium analysis?takes into account linkages between 2 markets
what are nontraded goods?goods each country produces for themselves
When countries specialize in the production of the good for which they have a comparative advantage,.......what happens?world output increases.....Therefore, there are potential gains from trade.

Section 2

Question Answer
We can show that trade benefits a country in either of two ways:first, we can think of trade as an indirect method of production Second, we can show that trade enlarges a country's consumption possibilities, which implies gains from trade
The distribution of the gains from trade depends on the..?relative prices of the goods countries produce
To determine the relative prices of the goods countries will produce, it is necessary to look at...?the world relative supply and demand for goods
The relative price implies a..?relative wage rate as well
What do we mean by ... The proposition that trade is beneficial is unqualified?That is, there is no requirement that a country be "competitive" or that the trade be "fair".
Also, a many-commodity model can be used to illustrate the important point that...?transportation costs can give rise to a situation in which some goods are nontraded.

Section 3

Question Answer
countries can gain from trade because they can...?exploit their comparative advantages
export the good that is..?relatively expensive
import the good that is..?relatively cheap
The pattern of trade is determined by...?comparative advantages
The Ricardian Model predicts that countries will export the goods for which the autarky price is....?lower than the trade price
What plays an important role in international trade?productivity differences
_____ matters for trade!comparative advantage!
Wages are determined by...?absolute advantages
More productive workers have...?higher wages independent of trade
Trade increases the real wage in terms of...?the imported good

Section 4

Question Answer
In the Ricardian model, what does it say trade leads to?international specialization (ie. with each country shifting its labor force from industries in which that labor is relatively inneficient to ones industries which it is relatively more efficient)
In the Ricardian Model, Because labor is the only factor of production in that model, and it is assumed that...?labor can move freely from one industry to another......there is no possibility that individuals will be hurt by trade