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    Quiz Chapter 3

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    The document discusses the Ricardian model of comparative advantage. It provides examples to illustrate the model. 1. The Ricardian model shows that countries can benefit from trade if each country specializes in and exports the goods for which they have a comparative advantage in production. This is determined by differences in labor productivity between countries. 2. David Ricardo is credited with the earliest statement of the principle of comparative advantage in the 19th century. The model attributes gains from trade to differences in labor productivity between countries. 3. The examples demonstrate that a country has a comparative advantage and should specialize in the good for which they have a lower opportunity cost of production, measured in units of labor. Gains

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    Quiz Chapter 3

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    The document discusses the Ricardian model of comparative advantage. It provides examples to illustrate the model. 1. The Ricardian model shows that countries can benefit from trade if each country specializes in and exports the goods for which they have a comparative advantage in production. This is determined by differences in labor productivity between countries. 2. David Ricardo is credited with the earliest statement of the principle of comparative advantage in the 19th century. The model attributes gains from trade to differences in labor productivity between countries. 3. The examples demonstrate that a country has a comparative advantage and should specialize in the good for which they have a lower opportunity cost of production, measured in units of labor. Gains

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    The document discusses the Ricardian model of comparative advantage. It provides examples to illustrate the model. 1. The Ricardian model shows that countries can benefit from trade if each country specializes in and exports the goods for which they have a comparative advantage in production. This is determined by differences in labor productivity between countries. 2. David Ricardo is credited with the earliest statement of the principle of comparative advantage in the 19th century. The model attributes gains from trade to differences in labor productivity between countries. 3. The examples demonstrate that a country has a comparative advantage and should specialize in the good for which they have a lower opportunity cost of production, measured in units of labor. Gains

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    291 views3 pages

    Quiz Chapter 3

    Uploaded by

    Sơn Tùng
    The document discusses the Ricardian model of comparative advantage. It provides examples to illustrate the model. 1. The Ricardian model shows that countries can benefit from trade if each country specializes in and exports the goods for which they have a comparative advantage in production. This is determined by differences in labor productivity between countries. 2. David Ricardo is credited with the earliest statement of the principle of comparative advantage in the 19th century. The model attributes gains from trade to differences in labor productivity between countries. 3. The examples demonstrate that a country has a comparative advantage and should specialize in the good for which they have a lower opportunity cost of production, measured in units of labor. Gains

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    International Economics

    Labor Productivity and Comparative Advantage: The Ricardian Model

    3.1 The Concept of Comparative Advantage

    1. Trade between two countries can benefit both countries if


    A) each country enjoys superior terms of trade.
    B) each country has a more elastic demand for the imported goods.
    C) each country has a more elastic supply for the exported goods.
    D) each country produces a wide range of goods for export.
    E) each country exports that good in which it has a comparative advantage.
    Answer:

    2. In order to know whether a country has a comparative advantage in the production of one particular
    product we need information on at least ________ unit labor requirements
    A) four
    B) five
    C) two
    D) three
    E) one
    Answer:

    3. A country engaging in trade according to the principles of comparative advantage gains from trade because
    it
    A) is producing exports while outsourcing services.
    B) is producing imports indirectly more efficiently than it could domestically.
    C) is producing imports indirectly using fewer labor units.
    D) is producing exports using fewer labor units.
    E) is producing exports indirectly more efficiently than it could alternatively.
    Answer:

    4. Given the information in the table above, if it is ascertained that Foreign uses prison-slave labor to produce
    its exports, then home should
    A) export widgets.
    B) export widgets and import cloth.
    C) export cloth.
    D) export and import nothing.
    E) export both and import nothing.
    Answer:

    5. Given the information in the table above, if the Home economy suffered a meltdown, and the Unit Labor
    Requirements doubled to 20 for cloth and 40 for widgets then home should
    A) export widgets and import cloth.
    B) export cloth.
    C) export widgets.
    D) export both and import nothing.
    E) export and import nothing.
    Answer:

    6. The earliest statement of the principle of comparative advantage is associated with


    A) David Ricardo.
    B) Adam Smith.
    C) David Hume.
    D) Bertil Ohlin.
    E) Eli Heckscher.
    Answer:

    7. The Ricardian model attributes the gains from trade associated with the principle of comparative advantage
    result to
    A) differences in resources.
    B) differences in technology.
    C) gravity relationships among countries.
    D) differences in preferences.
    E) differences in labor productivity.
    Answer:

    8. The Ricardian model demonstrates that


    A) trade between two countries may benefit both regardless of which good each exports.
    B) trade between two countries may benefit both if each exports the product in which it has a comparative
    advantage.
    C) trade between two countries will benefit both countries.
    D) trade between two countries may benefit one but harm the other.
    E) trade between two countries always benefits the country with a larger labor force.
    Answer:

    9. Given the information in the table above


    A) neither country has a comparative advantage in widgets.
    B) Home has a comparative advantage in cloth.
    C) neither country has a comparative advantage in cloth.
    D) Home has a comparative advantage in both cloth and widgets.
    E) Foreign has a comparative advantage in cloth.
    Answer:

    10. Given the information in the table above, if wages were to double in Home, then Home should
    A) export widgets and import cloth.
    B) export widgets.
    C) export cloth.
    D) export both and import nothing.
    E) export and import nothing.
    Answer:

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