Question 1

In the specific factors model, a 5% increase in the price of food accompanied by a 1% increase in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in the welfare of the fixed factor in the production of cloth.

Accepted Answer

A)   an increase; a decrease; an increase
B)   an ambiguous change; an increase; a decrease
C)   an ambiguous change; an ambiguous change; an ambiguous change
D)   a decrease; an ambiguous change; an ambiguous change
E)   an ambiguous change; a decrease; an increase

Question 2

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Accepted Answer

A)   The Ricardian model is often incorrect in its prediction that trade can be mutually beneficial.
B)   Import restrictions are the result of trade wars between hostile countries.
C)   Trade can have substantial effects on a country's distribution of income.
D)   Imports are only restricted when foreign-made goods do not meet domestic standards of quality.
E)   Restrictions on imports are intended to benefit domestic consumers.

Question 3

In the specific factors model, a 5% decrease in the price of food accompanied by a 5% decrease in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in the welfare of the fixed factor in the production of cloth.

Accepted Answer

A)   an increase; an increase; an increase
B)   a decrease; a decrease; a decrease
C)   no change; no change; no change
D)   a decrease; an increase; an increase
E)   an increase; a decrease; a decrease

Question 4

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

Accepted Answer

A)   more; the effects on income distribution are major and consequential
B)   less; the wealthy benefit and only the poor lose
C)   less; many factors besides trade affect income distribution
D)   more; those who are harmed are not compensated by those who gain
E)   less; the effects on income distribution are minor and inconsequential

Question 5

In the four-quadrant diagram of the specific factors model, the graph in the upper right quadrant is a country's

Accepted Answer

A)   production possibility frontier.
B)   production function for food.
C)   labor allocation constraint.
D)   labor supply curve.
E)   production function for cloth.

Question 6

In the specific factors model, a 0% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________.

Accepted Answer

A)   increase by more then 5%; increase; remain unchanged
B)   increase by less then 5%; increase; decrease
C)   remain constant; decrease; decrease
D)   increase by 5%; remain unchanged; remain unchanged
E)   remain constant; increase; increase

Question 7

In the two-country model of international labor mobility

Accepted Answer

A)   the effect of migration is to cause real wages in the two countries to diverge.
B)   the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in the two countries.
C)   labor has only limited international mobility.
D)   the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in the two countries.
E)   the effect of migration is to cause real wages in the two countries to converge.

Question 8

The specific factors model was developed by

Accepted Answer

A)   Adam Smith and David Ricardo.
B)   C.B. deMille and Gordon Willis.
C)   Paul Samuelson and Ronald Jones.
D)   Bill Clinton and Monica Lewinsky.
E)   Richard Nixon and Robert Kennedy.

Question 9

In the specific factors model, labor is defined as a(an)

Accepted Answer

A)   intensive factor.
B)   mobile factor.
C)   variable factor.
D)   fixed factor.
E)   specific factor.

Question 10

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 equal to ________ and it ________ as more cloth is produced.

Accepted Answer

A)   -MPLC/MPLF; becomes steeper
B)   -MPLF/MPLC; becomes steeper
C)   -MPLC/MPLF; is constant
D)   -MPLF/MPLC; becomes flatter
E)   -MPLF/MPLC; is constant

Question 11

The specific factors model assumes that there are ________ goods and ________ factor(s)  of production.

Accepted Answer

A)   two; two
B)   two; one
C)   three; two
D)   four; three
E)   two; three

Question 12

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

Accepted Answer

A)   more; the effects on income distribution are major and consequential
B)   less; the effects on income distribution are minor and inconsequential
C)   more; those who are harmed are not compensated by those who gain
D)   less; the wealthy benefit and only the poor lose
E)   less; those who are harmed can be compensated by those who gain

Question 13

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good A increases, the new equilibrium is most likely to be

Accepted Answer

A)   point h.
B)   point f.
C)   point e.
D)   point d.
E)   point b.

Question 14

The effect of trade on specialized employees of import-competing industries will be ________ jobs and ________ pay because they are relatively ________.

Accepted Answer

A)   more; lower; immobile
B)   more; higher; immobile
C)   fewer; lower; immobile
D)   more; higher; mobile
E)   fewer; lower; mobile

Question 15

The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food. When the central city, Mudhole, puts in an airstrip, the country is able to engage in trade. If the relative price of cloth in the outside world is 8 units of food, then Moribundia will export ________ and ________ factors used in the production of ________ will benefit.

Accepted Answer

A)   cloth; immobile; food
B)   food; mobile; food
C)   food; immobile; food
D)   cloth; immobile; cloth
E)   cloth; mobile; cloth

Question 16

A country's budget constraint states that

Accepted Answer

A)   real income in the exporting country must be equal to real income in the importing country.
B)   the value of exports must be equal to the value of imports.
C)   a country will engage in trade only if the value of imports exceed the value of exports.
D)   unless a country engages in trade, the value of exports cannot exceed the value of goods produced.
E)   a country will engage in trade only if the value of exports exceeds the value of imports.

Question 17

Japan's trade policies with regard to rice reflect the fact that

Accepted Answer

A)   japanese rice farmers have significant political power.
B)   Japan imports most of the rice consumed in the country.
C)   Japan has a comparative advantage in rice production and therefore exports most of its rice crop.
D)   there would be no gains from trade available to Japan if it engaged in free trade in rice.
E)   there are gains from trade that Japan captures by engaging in free trade in rice.

Question 18

In the specific factors model, a 5% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________.

Accepted Answer

A)   increase by more then 5%; increase; remain unchanged
B)   increase by 5%; remain unchanged; remain unchanged
C)   remain constant; decrease; decrease
D)   remain constant; increase; increase
E)   increase by less then 5%; decrease; increase

Question 19

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Accepted Answer

A)   Import restrictions are the result of trade wars between hostile countries.
B)   Trade can have significant harmful effects on some segments of a country's economy.
C)   Restrictions on imports can have significant beneficial effects on domestic consumers.
D)   The Ricardian model is often incorrect in its prediction that trade can be mutually beneficial.
E)   Imports are only restricted when foreign-made goods do not meet domestic standards of quality.

Question 20

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $________, or an average cost of ________ per year for every U.S. household.

Accepted Answer

A)   $2 billion; $110
B)   $3 billion; $2,000
C)   $3 .5 billion; $30
D)   $105 million; $3
E)   $370 million; $2,000

Exam 4: Specific Factors and Income Distribution

The effect of trade on specialized employees of import-competing industries will be jobs and pay because they are relatively .

Correct Answer
verified

Economists consider the effects of free trade on income distribution to be important than the effects on overall welfare because .

Correct Answer
verified

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $, or an average cost of per year for every U.S. household.

Correct Answer
verified

Japan's trade policies with regard to rice reflect the fact that

Correct Answer
verified

In the specific factors model, a 5% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to , the production of cloth to , and the production of food to .

Correct Answer
verified

The specific factors model was developed by

Correct Answer
verified

In the specific factors model, a 0% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to , the production of cloth to , and the production of food to .

Correct Answer
verified

Correct Answer
verified

Economists consider the effects of free trade on income distribution to be important than the effects on overall welfare because .

Correct Answer
verified

In the four-quadrant diagram of the specific factors model, the graph in the upper right quadrant is a country's

Correct Answer
verified

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good A increases, the new equilibrium is most likely to be

Correct Answer
verified

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Correct Answer
verified

The specific factors model assumes that there are goods and factor(s) of production.

Correct Answer
verified

In the two-country model of international labor mobility

Correct Answer
verified

In the specific factors model, a 5% decrease in the price of food accompanied by a 5% decrease in the price of cloth will cause in the welfare of labor, in the welfare of the fixed factor in the production of food, and in the welfare of the fixed factor in the production of cloth.

Correct Answer
verified

In the specific factors model, labor is defined as a(an)

Correct Answer
verified

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 equal to and it as more cloth is produced.

Correct Answer
verified

A country's budget constraint states that

Correct Answer
verified

In the specific factors model, a 5% increase in the price of food accompanied by a 1% increase in the price of cloth will cause in the welfare of labor, in the welfare of the fixed factor in the production of food, and in the welfare of the fixed factor in the production of cloth.

Correct Answer
verified

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Correct Answer
verified

Exam 4: Specific Factors and Income Distribution

The effect of trade on specialized employees of import-competing industries will be ________ jobs and ________ pay because they are relatively ________.

Correct AnswerverifiedShow Answer

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

Correct AnswerverifiedShow Answer

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $________, or an average cost of ________ per year for every U.S. household.

Correct AnswerverifiedShow Answer

Japan's trade policies with regard to rice reflect the fact that

Correct AnswerverifiedShow Answer

In the specific factors model, a 5% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________.

Correct AnswerverifiedShow Answer

The specific factors model was developed by

Correct AnswerverifiedShow Answer

In the specific factors model, a 0% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to ________, the production of cloth to ________, and the production of food to ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists consider the effects of free trade on income distribution to be ________ important than the effects on overall welfare because ________.

Correct AnswerverifiedShow Answer

In the four-quadrant diagram of the specific factors model, the graph in the upper right quadrant is a country's

Correct AnswerverifiedShow Answer

-Refer to the production possibility graph above. Assume that the economy is in equilibrium at point e. If the price of good A increases, the new equilibrium is most likely to be

Correct AnswerverifiedShow Answer

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Correct AnswerverifiedShow Answer

The specific factors model assumes that there are ________ goods and ________ factor(s) of production.

Correct AnswerverifiedShow Answer

In the two-country model of international labor mobility

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the specific factors model, labor is defined as a(an)

Correct AnswerverifiedShow Answer

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 equal to ________ and it ________ as more cloth is produced.

Correct AnswerverifiedShow Answer

A country's budget constraint states that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Ricardian model of international trade demonstrates that trade can be mutually beneficial. Why, then, do governments restrict imports of some goods?

Correct AnswerverifiedShow Answer

The effect of trade on specialized employees of import-competing industries will be jobs and pay because they are relatively .

Correct Answer
verified

Economists consider the effects of free trade on income distribution to be important than the effects on overall welfare because .

Correct Answer
verified

U.S. imports of sugar are limited by an import quota that, according to a study updated in 2015, imposed a total cost on American consumers close to $, or an average cost of per year for every U.S. household.

Correct Answer
verified

Correct Answer
verified

In the specific factors model, a 5% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to , the production of cloth to , and the production of food to .

Correct Answer
verified

Correct Answer
verified

In the specific factors model, a 0% increase in the price of food accompanied by a 5% increase in the price of cloth will cause wages to , the production of cloth to , and the production of food to .

Correct Answer
verified

Correct Answer
verified

Economists consider the effects of free trade on income distribution to be important than the effects on overall welfare because .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The specific factors model assumes that there are goods and factor(s) of production.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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 equal to and it as more cloth is produced.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified