Assume that labor is the only factor of production and that wages in the United States 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 […]
Date: September 10th, 2020
France is capital abundant and Italy is labor abundant. Shoes are labor intensive and wheat is capital intensive. Draw diagrams to illustrate the pre- and post-trade equilibria for each of the two countries including the production points, the consumption points, the international price, and the volumes of exports and imports for each. Be sure to […]
Date: September 10th, 2020
________ is the largest international debtor in the world. A) Brazil B) Mexico C) Italy D) The United States ANSWER D
Date: September 10th, 2020
Intraindustry trade refers to A) international trade of products made within the same industry. B) international trade of products made across different industries. C) trade that occurs as a result of comparative advantage. D) the exchange of non-similar items. E) trade that occurs mostly within developing countries. ANSWER A
Date: September 10th, 2020
A firm in long-run equilibrium under monopolistic competition will earn A) zero economic profits because of free entry. B) positive monopoly profits because each sells a differentiated product. C) positive oligopoly profits because each firm sells a differentiated product. D) negative economic profits because it has economies of scale. E) positive economic profit if it […]
Date: September 10th, 2020
It is argued that import substitution is a misguided trade policy if the intent is to promote long-term economic growth. Explain the reasons underlying this argument. What will be an ideal response? ANSWER Import substitution promotes that economic activity in which the country is relatively inefficient. This lowers the real income at any given […]
Date: September 10th, 2020
What does a current account deficit do that is positive for a nation? What will be an ideal response? ANSWER The deficit enables more investment in the economy and investment increases living standards. Capital inflows, in general, indicate foreign confidence in the domestic economy.
Date: September 10th, 2020
International trade based solely on internal scale economies in both countries is likely to be carried out by A) monopolists in each country. B) a relatively large number of price competing firms. C) a relatively small number of price competing firms. D) a relatively small number of imperfect competitors. E) a large number of oligopolists […]
Date: September 10th, 2020
According to Ricardo, a country will have a comparative advantage in the product in which its A) labor productivity is relatively low. B) labor productivity is relatively high. C) labor mobility is relatively low. D) labor mobility is relatively high. E) labor is outsourced to neighboring countries. ANSWER B
Date: September 10th, 2020
Import substitution policies make use of A) tariffs that discourage goods from entering a country. B) quotas applied to goods that are shipped abroad. C) production subsidies granted to industries with comparative advantage. D) tax breaks granted to industries with comparative advantage. E) production facilities provided by industrialized countries. ANSWER A
Date: September 10th, 2020
