Question 1

If Japan is relatively capital rich and the United States is relatively land rich,and if food is relatively land intensive then trade between these two,formerly autarkic countries will result in
A)an increase in the relative price of food in the U.S.
B)an increase in the relative price of food in both countries.
C)a decrease in the relative price of food in both countries.
D)an increase in the relative price of food in Japan.
E)a global increase in the relative price of food.

Accepted Answer

A

Question 2

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.
A)harm; abundant; import
B)benefit; scarce; import
C)benefit; scarce; export
D)harm; scarce; export
E)harm; scarce; import

Accepted Answer

E

Question 3

In the 2- factor,2- good Heckscher- Ohlin model,the production possibility frontier is kinked when
A)there is no factor substitution in production.
B)transportation costs are very high.
C)the opportunity cost of production is constant.
D)there are unemployed factor resources.
E)a country does not engage in trade.

Accepted Answer

In the Heckscher-Ohlin model, the production possibility frontier (PPF) is kinked when there is no factor substitution in production, meaning that the factors of production cannot be substituted for one another, leading to a linear PPF with a kink.

Question 4

In the Heckscher- Ohlin model,when two countries begin to trade with each other
A)all factors in both countries will gain from trade.
B)benefits from trade are evenly distributed between the two countries.
C)relative factor prices in the two countries diverge.
D)all factors in one country will gain,but there may be no gains in the other country.
E)the relative prices of traded goods in the two countries converge.

Accepted Answer

In the Heckscher-Ohlin model, trade leads to the equalization of relative prices of traded goods between countries, as each country specializes in producing goods that use their abundant factors more intensively.

Question 5

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.
A)land; capital intensive
B)labor; capital intensive
C)capital; land intensive
D)labor; labor intensive
E)land; labor intensive

Accepted Answer

In the Heckscher-Ohlin model, a country will have a production possibility frontier biased towards the production of the good that uses its abundant factor intensively. If a country has an abundance of labor, it will be biased towards producing labor-intensive goods.

Question 6

The assumption of diminishing returns in the Heckscher- Ohlin model means that,unlike in the Ricardian model,it is likely that
A)countries will not be fully specialized in one product.
B)global production will decrease under trade.
C)countries will benefit from free international trade.
D)countries will consume outside their production possibility frontier.
E)comparative advantage will not determine the direction of trade.

Accepted Answer

In the Heckscher-Ohlin model, diminishing returns imply that countries will not fully specialize in one product because as production of a good increases, the opportunity cost of producing additional units rises, leading to partial specialization.

Question 7

In the 2- factor,2- good Heckscher- Ohlin model,the two countries differ in
A)labor productivities.
B)relative abundance of factors of production.
C)tastes and preferences.
D)military capabilities.
E)the size of their economies.

Accepted Answer

The Heckscher-Ohlin model assumes that countries differ in their relative abundance of factors of production, which leads to differences in comparative advantage and trade patterns.

Question 8

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.
A)labor; land intensive
B)land; labor intensive
C)labor; capital intensive
D)capital; capital intensive
E)land; capital intensive

Accepted Answer

In the Heckscher-Ohlin model, a country will have a production possibility frontier biased towards the production of goods that intensively use the country's abundant factor. Therefore, a country with a relative abundance of capital will have a PPF biased towards the production of capital-intensive goods.

Question 9

In the Heckscher- Ohlin model,countries are assumed to differ only in terms of their
A)factor productivities.
B)factor endowments.
C)tastes and preferences.
D)physical size.
E)available technologies.

Accepted Answer

In the Heckscher-Ohlin model, countries are assumed to differ only in terms of their factor endowments, which means the amounts of capital and labor they have available.

Question 10

In the 2- factor,2- good Heckscher- Ohlin model,an influx of workers from across the border would
A)shift the production possibility curve outward and decrease the production of the capital- intensive product.
B)shift the production possibility curve outward and decrease the production of the labor- intensive product.
C)shift the production possibility curve outward,and increase the production of both goods.
D)move the point of production along the production possibility curve.
E)shift the possibility curve outward and displace preexisting labor.

Accepted Answer

An influx of workers increases the labor supply, shifting the production possibility curve outward. In the Heckscher-Ohlin model, this would lead to an increase in the production of the labor-intensive product and a decrease in the production of the capital-intensive product.

Question 11

Trade benefits a country by
A)increasing the real income of all resource owners.
B)reducing the relative price of the exported good.
C)increasing the wage rate.
D)reducing the need for specialization in production.
E)increasing available consumption choices.

Accepted Answer

Trade benefits a country by increasing available consumption choices, allowing consumers access to a wider variety of goods and services than would be possible without trade.

Question 12

If a country produces good Y (measured on the vertical axis)and good X (measured on the horizontal axis),then the absolute value of the slope of its production possibility frontier is equal to
A)the price of good X divided by the price of good Y.
B)the price of good Y divided by the price of good X.
C)the cost of capital (assuming that good Y is capital intensive)divided by the cost of labor.
D)the opportunity cost of good Y.
E)the opportunity cost of good X.

Accepted Answer

The absolute value of the slope of the production possibility frontier (PPF) represents the opportunity cost of producing one more unit of good X in terms of good Y.

Question 13

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.
A)harm; abundant; import
B)benefit; abundant; export
C)benefit; scarce; import
D)benefit; scarce; export
E)harm; scarce; export

Accepted Answer

In the Heckscher-Ohlin model, trade benefits the owners of a country's abundant factor because it allows the country to export goods that use that factor intensively.

Question 14

If Gambinia has many workers but very little land and even less productive capital,then,following the Heckscher- Ohlin model,we predict that Gambinia will export
A)both capital- and land- intensive goods.
B)both labor- and land- intensive goods.
C)labor- intensive goods.
D)land- intensive goods.
E)capital- intensive goods.

Accepted Answer

According to the Heckscher-Ohlin model, a country will export goods that use its abundant factors intensively. Since Gambinia has many workers but little land and capital, it will export labor-intensive goods.

Question 15

If Australia has more land per worker,and Belgium has more capital per worker,then if trade began between these two countries
A)the real income of capital owners in Australia would increase.
B)the real income of labor in both countries would decline.
C)the real income of labor in Belgium would decline.
D)the real income of labor in Australia would decline.
E)the real income of landowners in Belgium would decline.

Accepted Answer

The answer of If Australia has more land per worker,and...

Question 16

The Heckscher- Ohlin model predicts all of the following EXCEPT
A)which country will export which product.
B)that trade increases a country's overall welfare.
C)that relative wages will tend to become equal in both trading countries.
D)which factor of production within each country will gain from trade.
E)the volume of trade.

Accepted Answer

The Heckscher-Ohlin model does not predict the volume of trade; it focuses on the patterns of trade based on factor endowments and the effects on income distribution within countries.

Question 17

According to the Heckscher- Ohlin model
A)the scarce factor gains from trade and the abundant factor loses.
B)only the country with the more advanced technology gains from trade.
C)the gainers from trade could compensate the losers and still retain gains.
D)a country gains from trade if its exports have a high value added.
E)everyone gains from trade.

Accepted Answer

The Heckscher-Ohlin model suggests that trade benefits the abundant factor of production in a country, and while there may be losers, the overall gains from trade can be redistributed to compensate them, leading to a net gain.

Question 18

One way in which the Heckscher- Ohlin model differs from the Ricardo model of comparative advantage is by assuming that is (are)identical in all countries.
A)opportunity costs
B)scale of production
C)factor intensities
D)technology
E)factor endowments

Accepted Answer

The Heckscher-Ohlin model assumes that technology is identical across countries, unlike the Ricardo model, which attributes comparative advantage to differences in technology.

Question 19

If Australia has relatively more land per worker,and Belgium has relatively more capital per worker,then if trade began between these two countries
A)the relative price of the capital- intensive product would decrease in Belgium.
B)the relative price of the land- intensive product would increase in Belgium.
C)the relative price of the capital- intensive product would increase in Australia.
D)the relative price of the land- intensive product would increase in Australia.
E)relative product prices would diverge between Australia and Belgium.

Accepted Answer

The answer of If Australia has relatively more land per...

Question 20

According to the Heckscher- Ohlin model,the source of comparative advantage is a country's
A)technology.
B)advertising.
C)human capital.
D)political system.
E)factor endowments.

Accepted Answer

The Heckscher-Ohlin model posits that a country's comparative advantage is determined by its factor endowments, such as land, labor, and capital.

Quiz 5: Resources and Trade: the Heckscher-Ohlin Model

If Japan is relatively capital rich and the United States is relatively land rich,and if food is relatively land intensive then trade between these two,formerly autarkic countries will result in

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

In the 2- factor,2- good Heckscher- Ohlin model,the production possibility frontier is kinked when

In the Heckscher- Ohlin model,when two countries begin to trade with each other

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

The assumption of diminishing returns in the Heckscher- Ohlin model means that,unlike in the Ricardian model,it is likely that

In the 2- factor,2- good Heckscher- Ohlin model,the two countries differ in

In the 2- factor,2- good Heckscher- Ohlin model,the country with a relative abundance of will have a production possibility frontier that is biased toward production of the good.

In the Heckscher- Ohlin model,countries are assumed to differ only in terms of their

In the 2- factor,2- good Heckscher- Ohlin model,an influx of workers from across the border would

Trade benefits a country by

If a country produces good Y (measured on the vertical axis) and good X (measured on the horizontal axis) ,then the absolute value of the slope of its production possibility frontier is equal to

In the 2- factor,2- good Heckscher- Ohlin model,trade will _ the owners of a country's factor and will the good that uses that factor intensively.

If Gambinia has many workers but very little land and even less productive capital,then,following the Heckscher- Ohlin model,we predict that Gambinia will export

If Australia has more land per worker,and Belgium has more capital per worker,then if trade began between these two countries

The Heckscher- Ohlin model predicts all of the following EXCEPT

According to the Heckscher- Ohlin model

One way in which the Heckscher- Ohlin model differs from the Ricardo model of comparative advantage is by assuming that is (are) identical in all countries.

If Australia has relatively more land per worker,and Belgium has relatively more capital per worker,then if trade began between these two countries

According to the Heckscher- Ohlin model,the source of comparative advantage is a country's