Question 1

Suppose Portugal has 700 workers and 26,000 units of
Capital, and France has 18,000 workers and 700 units of
Capital.Technology is identical in both countries.Assume
That wine is the capital­intensive good and cloth is the
Labor­intensive good.Which of the following statements is
CORRECT if the nations start trading with each other?
A)Wages will increase in Portugal.
B)Rental rates in France will increase.
C)Wages in France will decrease.
D)Rental rates in Portugal will increase.

Accepted Answer

Portugal has a comparative advantage in producing wine, which is capital-intensive. This means that Portugal's rental rates for capital will increase as it increases wine production to export it to France. As a result, the wages in Portugal will not increase, but rental rates will increase. Conversely, France has a comparative advantage in producing cloth, which is labor-intensive, and will see a decrease in wages as it increases production to export it to Portugal.

Question 2

(Figure: A Country's Before and After Trade Equilibria) What
Is the equilibrium post­trade point of production of this
Nation?
A)A
B)B
C)C
D)D

Accepted Answer

The answer of  (Figure: A Country's Before and After...

Question 3

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria) At
What point will this nation be in a no­trade equilibrium?
A)A
B)B
C)C
D)D

Accepted Answer

At point B, the domestic price is equal to the world price, indicating that there is no incentive to trade. Therefore, this nation will be in a no-trade equilibrium at point B.

Question 4

(Figure: A Country's Before and After Trade Equilibria) How
Many shoes will this nation import?
A)0
B)125
C)350
D)500

Accepted Answer

The nation will import 350 shoes. This can be determined by finding the difference between the domestic supply curve and domestic demand curve at the world price, which is 70. At a price of 70, domestic quantity supplied is 200, while domestic quantity demanded is 550. The difference between these two quantities is 350, which is the quantity of shoes that will be imported.

Question 5

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria) How
Many shoes will this nation export?
A)0
B)125
C)350
D)500

Accepted Answer

The answer of Figure: A Country's Before and After Trade...

Question 6

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria) What
Happened to the relative price of shoes in this nation after
Trade?
A)Shoes became relatively more expensive in terms of computers.
B)Shoes became relatively cheaper in terms of computers.
C)Shoes were not as desirable after trade.
D)The price of shoes did not change-only the quantity.

Accepted Answer

The relative price of shoes decreased after trade, meaning that shoes became relatively cheaper in terms of computers. This is indicated by the downward shift in the price ratio line (Pshoes/Pcomputers) in the after-trade equilibrium.

Question 7

(Figure: A Country's Before and After Trade Equilibria) The
Trade triangle shows the exports that were exchanged for
Imports.What are the three points of the trade triangle?
A)A, B, C
B)A, B, D
C)A, D, C
D)B, C, D

Accepted Answer

The three points of the trade triangle are A, D, and C. A represents the country's domestic production before trade, D represents the domestic production after trade, and C represents the imports. Therefore, option C is the correct choice as it contains all three points of the trade triangle.

Question 8

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria) What
Are the post­trade quantities of shoes and computers
Produced by this nation?
A)300 shoes; 300 computers
B)225 shoes; 175 computers
C)225 shoes; 200 computers
D)150 shoes; 300 computers

Accepted Answer

The answer of Figure: A Country's Before and After Trade...

Question 9

For which of the following does the Heckscher­Ohlin model
Offer an explanation?
I.gains from trade
II.the pattern of trade.
III.the effects of international trade on the returns to
Mobile resources.
A)I
B)I and II
C)I and III
D)I, II, and III

Accepted Answer

The Heckscher-Ohlin model explains gains from trade by showing how countries benefit from specializing in the production of goods for which they have a comparative advantage. It also explains the pattern of trade based on differences in factor endowments between countries. Additionally, it addresses the effects of international trade on the returns to mobile resources, as trade can alter the demand for factors of production, affecting their returns.

Question 10

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria) How
Many computers will this nation import?
A)0
B)125
C)350
D)500

Accepted Answer

The answer of Figure: A Country's Before and After Trade...

Question 11

Suppose Portugal has 700 workers and 26,000 units of
Capital, and France has 18,000 workers and 700 units of
Capital.Technology is identical in both countries.Assume
That wine is the capital­intensive good and cloth is the
Labor­intensive good.Which of the following statements is
CORRECT?
A)Portugal will export wine and import cloth.
B)France will export wine and import cloth.
C)There is no basis for trade between France and Portugal.
D)Portugal will export cloth and import wine.

Accepted Answer

Portugal has a comparative advantage in wine production (capital-intensive) due to its abundance of capital, while France has a comparative advantage in cloth production (labor-intensive) due to its abundance of labor.

Question 12

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria) What
Are the pretrade quantities of shoes and computers
Produced by this nation?
A)300 shoes; 300 computers
B)225 shoes; 175 computers
C)225 shoes; 200 computers
D)150 shoes; 300 computers

Accepted Answer

Before trade, the country produces and consumes 225 shoes and 200 computers. The production possibility frontier (PPF) shows that it can produce at most 225 shoes or 200 computers without trade. After trade, the country can consume at point D, which is outside its PPF. This point is reached by exporting 25 shoes and importing 100 computers. By specializing in computer production and trading with another nation that specializes in shoe production, the country can increase its consumption of both goods beyond what is possible without trade. Therefore, the best choice is to specialize in producing computers and trade.

Question 13

Consider two products, automobiles and shoes.If shoes are
Labor intensive and automobiles are capital intensive, what
Will happen under the HO model?
A)The labor­abundant country will export automobiles.
B)The capital­abundant country will export shoes.
C)The labor­abundant country will import shoes.
D)The capital­abundant country will import shoes.

Accepted Answer

According to the Heckscher-Ohlin (HO) model, a country will export goods that use its abundant resources intensively. Therefore, the capital-abundant country will export capital-intensive goods (automobiles) and import labor-intensive goods (shoes).

Question 14

(Table: Data on Suburbia) What is the ratio of total capital
To total labor in Suburbia?
A)1 unit/day
B)1.5 units/day
C)1.67 units/day
D)3 units/day

Accepted Answer

To find the ratio of total capital to total labor, we need to divide the total capital by the total labor. Total capital is 150 units and total labor is 90 days, so the ratio is 150/90 = 1.67 units/day. Therefore, the answer is C.

Question 15

(Figure: A Country's Before and After Trade Equilibria)
Suppose that the new international relative price of
Computers increases from the pretrade price.If we then
Subtract the number of computers purchased domestically
At the new international price from the number of
Computers produced, we will get one point on
____________ for computers.
A)the import demand schedule
B)the export supply schedule
C)the production possibilities frontier
D)the indifference curve

Accepted Answer

The answer of  (Figure: A Country's Before and After...

Question 16

(Figure: A Country's Before and After Trade Equilibria) How
Many computers will this nation export?
A)0
B)125
C)350
D)500

Accepted Answer

The answer of  (Figure: A Country's Before and After...

Question 17

Figure: A Country's Before and After Trade Equilibria  (Figure: A Country's Before and After Trade Equilibria)
Suppose that the new international relative price of
Computers increases from the pretrade price.If we then
Subtract the number of shoes produced domestically at the
New international price from the number of shoes consumed
At this price, we will get one point on ____________ for
Shoes.
A)the import demand schedule
B)the export supply schedule
C)the production possibilities frontier
D)the indifference curve

Accepted Answer

The question is asking for the import demand schedule for shoes, which shows the quantity of shoes that a country would demand at different prices after trade. Option A is the only choice that describes the import demand schedule. Option B describes the export supply schedule, which shows the quantity of shoes that a country would export at different prices after trade. Option C describes the production possibilities frontier, which shows the combinations of shoes and computers that a country can produce with its given resources and technology. Option D describes the indifference curve, which represents the different combinations of shoes and computers that yield the same level of satisfaction for a consumer.

Question 18

(Figure: A Country's Before and After Trade Equilibria) If
The new international relative price of computers increases
From its pre­trade position, how will the slope of the price
Line change in the graph?
A)The slope will increase.
B)The slope will decrease.
C)The slope will not change but the price line will shift to the right.
D)The slope will not change but the price line will shift to the left.

Accepted Answer

The answer of  (Figure: A Country's Before and After...

Question 19

The conclusion that a labor­abundant country exports the
Good using labor intensively in production and a capital­
Abundant country exports the good using capital intensively
In production is known as:
A)factor­intensity reversal.
B)the Heckscher­Ohlin theorem.
C)Riparian comparative advantage.
D)the Stolper­Samuelson theorem.

Accepted Answer

The statement describes the Heckscher-Ohlin theorem, which explains how factor abundance affects a country's exports and imports. Factor-intensity reversal refers to the phenomenon where the factor used more intensively in one country for a certain good becomes used more intensively in another country for the same good. Riparian comparative advantage and Stolper-Samuelson theorem are not relevant to the statement.

Question 20

Table: Data on Suburbia
Use this table, which represents autarkic and free trade
Production and consumption and resource usage for
Suburbia, to answer the following question(s).

(Table: Data on Suburbia) Which of the following statement
Is CORRECT?
A)Surburbia is a labor­intensive country.
B)Suburbia is a labor­abundant country.
C)Suburbia is a capital­intensive country.
D)Suburbia is a capital­abundant country.

Accepted Answer

Suburbia has a high amount of labor (200) compared to its capital (20), making it labor-abundant.

Quiz 4: Trade and Resources: the Heckscher-Ohlin Model

(Figure: A Country's Before and After Trade Equilibria) What Is the equilibrium posttrade point of production of this Nation?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) At What point will this nation be in a notrade equilibrium?

(Figure: A Country's Before and After Trade Equilibria) How Many shoes will this nation import?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) How Many shoes will this nation export?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Happened to the relative price of shoes in this nation after Trade?

(Figure: A Country's Before and After Trade Equilibria) The Trade triangle shows the exports that were exchanged for Imports.What are the three points of the trade triangle?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Are the posttrade quantities of shoes and computers Produced by this nation?

For which of the following does the HeckscherOhlin model Offer an explanation? I.gains from trade II.the pattern of trade. III.the effects of international trade on the returns to Mobile resources.

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) How Many computers will this nation import?

Suppose Portugal has 700 workers and 26,000 units of Capital, and France has 18,000 workers and 700 units of Capital.Technology is identical in both countries.Assume That wine is the capitalintensive good and cloth is the Laborintensive good.Which of the following statements is CORRECT?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Are the pretrade quantities of shoes and computers Produced by this nation?

Consider two products, automobiles and shoes.If shoes are Labor intensive and automobiles are capital intensive, what Will happen under the HO model?

(Table: Data on Suburbia) What is the ratio of total capital To total labor in Suburbia?

(Figure: A Country's Before and After Trade Equilibria) How Many computers will this nation export?

(Figure: A Country's Before and After Trade Equilibria) If The new international relative price of computers increases From its pretrade position, how will the slope of the price Line change in the graph?

The conclusion that a laborabundant country exports the Good using labor intensively in production and a capital Abundant country exports the good using capital intensively In production is known as:

Table: Data on Suburbia Use this table, which represents autarkic and free trade Production and consumption and resource usage for Suburbia, to answer the following question(s) . (Table: Data on Suburbia) Which of the following statement Is CORRECT?

Quiz 4: Trade and Resources: the Heckscher-Ohlin Model

(Figure: A Country's Before and After Trade Equilibria) What Is the equilibrium post­trade point of production of this Nation?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) At What point will this nation be in a no­trade equilibrium?

(Figure: A Country's Before and After Trade Equilibria) How Many shoes will this nation import?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) How Many shoes will this nation export?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Happened to the relative price of shoes in this nation after Trade?

(Figure: A Country's Before and After Trade Equilibria) The Trade triangle shows the exports that were exchanged for Imports.What are the three points of the trade triangle?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Are the post­trade quantities of shoes and computers Produced by this nation?

For which of the following does the Heckscher­Ohlin model Offer an explanation? I.gains from trade II.the pattern of trade. III.the effects of international trade on the returns to Mobile resources.

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) How Many computers will this nation import?

Suppose Portugal has 700 workers and 26,000 units of Capital, and France has 18,000 workers and 700 units of Capital.Technology is identical in both countries.Assume That wine is the capital­intensive good and cloth is the Labor­intensive good.Which of the following statements is CORRECT?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Are the pretrade quantities of shoes and computers Produced by this nation?

Consider two products, automobiles and shoes.If shoes are Labor intensive and automobiles are capital intensive, what Will happen under the HO model?

(Table: Data on Suburbia) What is the ratio of total capital To total labor in Suburbia?

(Figure: A Country's Before and After Trade Equilibria) How Many computers will this nation export?

(Figure: A Country's Before and After Trade Equilibria) If The new international relative price of computers increases From its pre­trade position, how will the slope of the price Line change in the graph?

The conclusion that a labor­abundant country exports the Good using labor intensively in production and a capital­ Abundant country exports the good using capital intensively In production is known as:

Table: Data on Suburbia Use this table, which represents autarkic and free trade Production and consumption and resource usage for Suburbia, to answer the following question(s) . (Table: Data on Suburbia) Which of the following statement Is CORRECT?

(Figure: A Country's Before and After Trade Equilibria) What Is the equilibrium posttrade point of production of this Nation?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) At What point will this nation be in a notrade equilibrium?

Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) What Are the posttrade quantities of shoes and computers Produced by this nation?

For which of the following does the HeckscherOhlin model Offer an explanation? I.gains from trade II.the pattern of trade. III.the effects of international trade on the returns to Mobile resources.

Suppose Portugal has 700 workers and 26,000 units of Capital, and France has 18,000 workers and 700 units of Capital.Technology is identical in both countries.Assume That wine is the capitalintensive good and cloth is the Laborintensive good.Which of the following statements is CORRECT?

(Figure: A Country's Before and After Trade Equilibria) If The new international relative price of computers increases From its pretrade position, how will the slope of the price Line change in the graph?

The conclusion that a laborabundant country exports the Good using labor intensively in production and a capital Abundant country exports the good using capital intensively In production is known as: