Question 1

The first empirical test of the comparative advantage trade model was conducted by

Accepted Answer

A)   MacDougall
B)   Marshall
C)   Jevons
D)   Friedman

Question 2

The Mercantilists did not advocate:

Accepted Answer

A)   free trade
B)   stimulating the nation's exports
C)   restricting the nations' imports
D)   the accumulation of gold by the nation

Question 3

Which of the following statements is true?

Accepted Answer

A)   The combined demand for each commodity by the two nations is negatively sloped
B)   the combined supply for each commodity by the two nations is rising stepwise
C)   the equilibrium relative commodity price for each commodity with trade is given by the intersection of the demand and supply of each commodity by the two nations
D)   All of the above statements are true. D

Question 4

With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) .The range of mutually beneficial trade between nation A and B is:

Accepted Answer

A)   3Y 
B)   5Y 
C)   3Y 
D)   1Y < 3X < 3Y

Question 5

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) :

Accepted Answer

A)   nation A has a comparative disadvantage in commodity X
B)   nation B has a comparative disadvantage in commodity Y
C)   nation A has a comparative advantage in commodity X
D)   nation A has a comparative advantage in neither commodity

Question 6

How can the production possibilities frontier be used to determine opportunity cost?

Accepted Answer

An production possibility frontier (PPF)...

Question 7

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) :

Accepted Answer

A)   Px/Py=1 in nation A
B)   Px/Py=3 in nation B
C)   Py/Px=1/3 in nation B
D)   Px/Py=3 in nation A

Question 8

If in a two-nation (A and B) ,two-commodity (X and Y) world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

Accepted Answer

A)   an absolute advantage in commodity Y
B)   an absolute disadvantage in commodity Y
C)   a comparative disadvantage in commodity Y
D)   a comparative advantage in commodity Y

Question 9

Assume that both the United States and Germany produce beef and computer chips with the following costs:
  
a)What is the opportunity cost of beef (B)and computer chips (C)in each country?
b)In which commodity does the United States have a comparative cost advantage? What about Germany?
c)What is the range for mutually beneficial trade between the United States and Germany for each computer chip traded?
d)How much would the United States and Germany gain if 1 unit of beef is exchanged for 3 chips?

Accepted Answer

a)In the United States: the opportunity ...

Question 10

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold _____ units of good _____ for one unit of good _____

Accepted Answer

A)   0.4; Y; X
B)   2.5; Y; X
C)   2.5; X; Y
D)   0.4; X; Y

Question 11

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Accepted Answer

A)   absolute disadvantage
B)   absolute advantage
C)   comparative disadvantage
D)   comparative advantage

Question 12

The Ricardian trade model has been empirically

Accepted Answer

A)   verified
B)   rejected
C)   not tested
D)   tested but the results were inconclusive

Question 13

Who was the first to test the theory of comparative advantage and what were to results?

Accepted Answer

MacDougall tested comparative advantage ...

Question 14

Assume a Ricardian,constant-cost world.There are two countries,the United States and Canada.Each country can produce cameras and milk.The table below shows production per man-hour for each country.
  
The United States has a labor force of 1,000 workers,and Canada has a labor force of 500 workers.
a)Graph the world supply curve for cameras.
b)Show a possible world demand curve and price (assuming that both countries completely specialize).

Accepted Answer

a)The world supply of cameras begins at ...

Question 15

The Mercantilists believed in

Accepted Answer

A)   running trade surpluses
B)   balanced trade
C)   the logic of Adam Smith
D)   no government intervention in markets.

Question 16

Assume a Ricardian,constant-cost world.There are two countries,the United States and Canada.Each country can produce cameras and milk.The table below shows production per man-hour for each country.
  
The United States has a labor force of 1,000 workers,and Canada has a labor force of 500 workers.
a)Use this information to graph production possibilities frontiers for both countries.Put cameras on the horizontal axis.
b)Assuming that a world price is established at which both countries can gain from trade,show possible consumption frontiers for each country.

Accepted Answer

a)The United States PPF should have horizontal intercept (6000,0)and vertical intercept (0,1000).The Canadian PPF should have horizontal intercept (1000,0)and vertical intercept (0,1000).
b)The slope of the U.S.PPF is -1/6,and the slope of the Canadian PPF is -1.The U.S.has a comparative advantage in cameras,and Canada has a comparative advantage in milk.For mutually beneficial trade,a unit of milk must trade for between 1 camera and 1/6 camera.The consumption frontier for the U.S.must begin at the horizontal intercept and have a slope greater than -1/6,and Canada's consumption frontier must begin at the vertical intercept and have a slope less than -1.The slopes of the two consumption frontiers must be identical.

Question 17

In trade between a small and a large nation:

Accepted Answer

A)   the large nation is likely to receive all of the gains from trade
B)   the small nation is likely to receive all of the gains from trade
C)   the gains from trade are likely to be equally shared
D)   we cannot say

Question 18

A difference in relative commodity prices between two nations can be based upon a difference in:

Accepted Answer

A)   factor endowments
B)   technology
C)   tastes
D)   all of the above

Question 19

What proportion of international trade is based on absolute advantage?

Accepted Answer

A)   All
B)   most
C)   some
D)   none

Question 20

"The importance of being unimportant" refers to which of the following?

Accepted Answer

A)   Small countries are likely to gain a great deal from trade since they have little impact on world prices.
B)   Small countries are likely to gain a great deal from trade because they will be able to sell large amounts on world markets.
C)   Large countries are likely to gain a great deal from trade since they have a large impact on world prices.
D)   All countries are will gain from trade because every country will have a comparative advantage in at least one good. A

Exam 2: The Law of Comparative Advantage

The first empirical test of the comparative advantage trade model was conducted by

Correct Answer
verified

The Mercantilists did not advocate:

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified
D

With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) .The range of mutually beneficial trade between nation A and B is:

Correct Answer
verified

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) :

Correct Answer
verified

How can the production possibilities frontier be used to determine opportunity cost?

Correct Answer
verified
An production possibility frontier (PPF)...
View Answer

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) :

Correct Answer
verified

If in a two-nation (A and B) ,two-commodity (X and Y) world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

Correct Answer
verified

Correct Answer
verified
a)In the United States: the opportunity ...
View Answer

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold ___ units of good _ for one unit of good ___

Correct Answer
verified

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Correct Answer
verified

The Ricardian trade model has been empirically

Correct Answer
verified

Who was the first to test the theory of comparative advantage and what were to results?

Correct Answer
verified
MacDougall tested comparative advantage ...
View Answer

Correct Answer
verified
a)The world supply of cameras begins at ...
View Answer

The Mercantilists believed in

Correct Answer
verified

In trade between a small and a large nation:

Correct Answer
verified

A difference in relative commodity prices between two nations can be based upon a difference in:

Correct Answer
verified

What proportion of international trade is based on absolute advantage?

Correct Answer
verified

"The importance of being unimportant" refers to which of the following?

Correct Answer
verified
A

Exam 2: The Law of Comparative Advantage

The first empirical test of the comparative advantage trade model was conducted by

Correct AnswerverifiedShow Answer

The Mercantilists did not advocate:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedD

With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) .The range of mutually beneficial trade between nation A and B is:

Correct AnswerverifiedShow Answer

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) :

Correct AnswerverifiedShow Answer

How can the production possibilities frontier be used to determine opportunity cost?

Correct AnswerverifiedAn production possibility frontier (PPF)...View AnswerShow Answer

If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) :

Correct AnswerverifiedShow Answer

If in a two-nation (A and B) ,two-commodity (X and Y) world,it is established that nation A has a comparative advantage in commodity X,then nation B must have:

Correct AnswerverifiedShow Answer

Correct Answerverifieda)In the United States: the opportunity ...View AnswerShow Answer

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold _____ units of good _____ for one unit of good _____

Correct AnswerverifiedShow Answer

The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

Correct AnswerverifiedShow Answer

The Ricardian trade model has been empirically

Correct AnswerverifiedShow Answer

Who was the first to test the theory of comparative advantage and what were to results?

Correct AnswerverifiedMacDougall tested comparative advantage ...View AnswerShow Answer

Correct Answerverifieda)The world supply of cameras begins at ...View AnswerShow Answer

The Mercantilists believed in

Correct AnswerverifiedShow Answer

In trade between a small and a large nation:

Correct AnswerverifiedShow Answer

A difference in relative commodity prices between two nations can be based upon a difference in:

Correct AnswerverifiedShow Answer

What proportion of international trade is based on absolute advantage?

Correct AnswerverifiedShow Answer

"The importance of being unimportant" refers to which of the following?

Correct AnswerverifiedA

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An production possibility frontier (PPF)...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a)In the United States: the opportunity ...
View Answer

If nation A can produce 5 units of good X or 10 units of good Y and nation B can produce 4 units of good X or 12 units of good Y we can conclude that both nations would gain from trade if nation A sold ___ units of good _ for one unit of good ___

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
MacDougall tested comparative advantage ...
View Answer

Correct Answer
verified
a)The world supply of cameras begins at ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A