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Microeconomics Study Set 29

Business

Quiz 33 :

The Gains From International Trade

Quiz 33 :

The Gains From International Trade

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Which of the following statements about comparative advantage are true? 1) A country's pattern of comparative advantage depends partly upon the relative abundance of different types of resources in its endowment of factors. 2) Trade allows small countries to reap economies of scale through specialization. 3) Climate affects a country's pattern of comparative advantage.
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Multiple Choice
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Answer:

A

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The following production possibilities schedule shows the quantities of soybeans and oil that can be produced in Canada and Mexico with one unit of equivalent resources. img -Refer to Table 33- 3. Canada has an absolute advantage in the production of
Free
Multiple Choice
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Answer:

B

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The following production possibilities schedule shows the quantities of soybeans and oil that can be produced in Canada and Mexico with one unit of equivalent resources. img -Refer to Table 33- 3. If Canada were to transfer half a unit of resources from oil to soybeans and Mexico were to transfer one unit of resources from soybeans to oil, the effect on the total output of the two countries would be as follows:
Free
Multiple Choice
Answer:

Answer:

A

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Trade, whether between individuals or nations, generally promotes
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Two nations want to engage in trade but discover that one of them is more efficient in producing all goods. In this case,
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This table shows how much cotton and cocoa can be produced in Peru and Brazil with one unit of equivalent resources. img -Refer to Table 33- 4. The opportunity cost of a bale of cotton in Brazil is
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In moving from a no- trade to a free- trade situation, a country will
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In addition to reaping the benefits of specialization according to comparative advantage, a nation that engages in international trade and specialization may realize benefits from
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According to the Heckscher- Ohlin theory, national comparative advantages exist because of
Multiple Choice
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The figure below shows Arcticland's annual production possibilities boundary for the production of fish and ice. img FIGURE 33- 4 -Refer to Figure 33- 4. Suppose that a trading partner offers to give Arcticland ice in exchange for its fish. If Arcticland is to improve its consumption possibilities, the terms of trade must be 1 tonne of ice for:
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If Country A has a comparative advantage in the production of good X relative to Country B,
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If a country has a comparative advantage in the production of soybeans, and it trades freely with other countries, it will most probably
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If Canada has an absolute advantage in the production of oil relative to the United States, then
Multiple Choice
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Canada is a net exporter of oil. An increase in the world price of oil, ceteris paribus, means that Canada's terms of trade will
Multiple Choice
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Ireland and Japan are assumed to produce only wool and steel, to have full employment and complete mobility of resources. Their production possibilities boundaries before trade are drawn in solid lines. It is assumed that the two countries have the same amount of resources. Their consumption possibilities after trade are shown by the dotted line. The outputs of wool and steel are given in physical units. img FIGURE 33- 1 -Refer to Figure 33- 1. When trade between Ireland and Japan begins, the probable trade pattern is to
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Since joining NAFTA in the early 1990s, Canada has experienced increases in productivity and output in many export- oriented industries because of economies of scale and learning by doing. In these industries, these gains from trade will lead to
Multiple Choice
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This table shows how much cotton and cocoa can be produced in Peru and Brazil with one unit of equivalent resources. img -Refer to Table 33- 4. Compared with Peru, Brazil has
Multiple Choice
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The following production possibilities schedule shows the quantities of soybeans and oil that can be produced in Canada and Mexico with one unit of equivalent resources. img -Refer to Table 33- 3. The opportunity cost of a barrel of oil in Canada is
Multiple Choice
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The diagram below shows Robinson Crusoe's annual production possibilities boundary for the production of bananas and coconuts. img FIGURE 33- 3 -Refer to Figure 33- 3. Suppose that a trading partner offers to give coconuts to Robinson Crusoe in exchange for his bananas. If Robinson Crusoe is to improve his consumption possibilities, the terms of trade must be 1 kg coconuts for
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The index for a country's terms of trade is computed as
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