In a two product two country world, international trade can lead to increases in A) consumer welfare only if output of both products is increased. B) output of both products and consumer welfare in both countries. C) total production of both products but not consumer welfare in both countries. D) consumer welfare in both countries […]
The U.S. Balance of Payments is constructed by A) the U.S. Department of Labor. B) the U.S. Department of Agriculture. C) the U.S. Department of Commerce. D) the Council of Economic Advisers to the President. ANSWER C
Both the classical and the HO model predict that the pattern of trade is determined largely by international differences in factor endowments. Indicate whether the statement is true or false ANSWER FALSE
The Heckscher-Ohlin, factor-proportions model lends support to the argument that A) trade tends to worsen the conditions of unskilled labor in rich countries. B) trade tends to worsen the conditions of owners of capital in rich countries. C) trade tends to worsen the conditions of workers in poor countries. D) trade tends to worsen the […]
Refer to above figure. If OmL1 workers are employed in manufacturing then what is the marginal productivity of labor in manufacturing? What will be an ideal response? ANSWER OmWm.
According to the Rybczynski theorem, if a country increases its endowment of capital and prices remain constant, then its output of both the capital and labor intensive goods will rise. Indicate whether the statement is true or false ANSWER FALSE
The Brander-Spencer model identified market failure in certain industries due to A) unfair competition. B) wildcat destructive competition. C) environmental negative externalities associated with pollution. D) limited competition. E) lack of excess returns. ANSWER D
Given the information in the table above, Foreign’s opportunity cost of cloth is A) 0.5. B) 2.0. C) 6.0. D) 1.5. E) 3.0. ANSWER B
The infant industry argument calls for active government involvement A) only if the government forecasts are accurate. B) only if some market failure can be identified. C) only if the industry is not one already dominated by industrial countries. D) only if the industry has a high value added. E) only if the industry is […]
The Maastricht Treaty eliminated passport controls at borders with the European Union. Indicate whether the statement is true or false ANSWER FALSE
