it A) is prod produc ucin in expo export rt indi indire rect ctly ly more more effi effici cien entl tl than than it coul alternat alternativel ively. y. produc ucin in impo import rt indi indire rect ctly ly more more effi effici cien entl tl than than it coul domest domestical ically. ly. B) is prod uc ng or ew ab ts ci impo impo in re tl usin usin ab un t. D) bo E) Answer: til
us
nit Labor Labor Requir Requirem ement ent
Ooth
Widgets
lU
oreign
6U it is
it expo export rts, s, then then ho shou should ld A) expo export rt clot cloth. h. et C) po th an im or ot in irn port po port nothi nothing ng ll ab e. stio stio
ta us Prev Prev ou
diti dition on
asce ascert rtai aine ne
that that Fore Foreig ig uses uses pris prison on-s -sla lave ve labo labo to prod produc uc
cI
A) export cloth. id ts C) ex th
lies
at
no in
en
ci le
om ar ti
dv ta
B) Davi Ricardo. C) Adam Smith. Heckscncr. iI estio
tatus:
7)
C)
D)
All
of th above. ab e.
Question Status Previous Editio
Rica ia el ad et ee tw C)
advantage. ab e. Answer: Question Status
ew
tr te un ie ntr
th ll en it bo
co tr es
iate
th
1)
iven
the followin
nit Labor- ou
information:
of Production
u.s,
Croatia
Soy Toy
(c
unproductive
country. 3u
(b)
.s., .ha
au ar ic
ce ra io
co itio
eces ar
ot
ou ri
in nit Labor Requirements Widgets
Goth
me Foreign en th
rmat on
60
ta le ab ornparative
as ha
ra iv ra iv
anta anta
ns er Question Status Previous Editio
A) export cloth. S) export widgets. ex th ll
th
ve
Question Status Previous Editio
hi
advantage.
in
dg ts th
ct
to
ai
om tr e)
ay
3)
or atio
iven
ab
ab
B)
ig ei
C)
0) E)
om ar ti om ar ti
ad ta as ad ta omparative advantag
lo h. in et in both products
r: sE
'1
ascertaine that Foreig uses pri A) export cloth. B) expor widgets or bo nd im rt th g. C) 0) export an import nothing. e. E) ll of th Answer: ti
tatu
re io
diti
e. rt cI th B) export widgets. C)
AIIof th above. r: Qu stio Status Previous Editio
in whic
ot co
ri
il
an to
ci lize in
it enjoys comparativ advantage. it enjoys comparativ advantage.
h.
Qu stio Status Previous Editio
7)
it
ot co Questio
ri
il
an to
Status: Previou Edition
ci lize in
h.
enjoys comparativ
advantage.
8)
tp ta
fo ct an co of ro ct
th uc io
d.
ar ot co
th co tr es el ar
co tr es
D) ov
E)
Answer: estio
9) As
vious Edition
latus:
resu Itof trade, pecializatio
in
ts,
om lete th nsta inco lete it co pl te it co an osts an co plet it nc et it co an osts an in lete th ov er Questio Status: Pr vious Edition lt
ad
be ee
tw co tr es
co tr es both countries co tr C) om lete in om lete ar co tr th ov E) on er Qu stio Status Pr viou Editio
hich ar
in ea ng in ea ng cr as
co
osts osts co
letely
er nt econ
ic
ze
eciali atio
lete in bo
ut
co pl te co et
ti en gi ad co in to th icar an A) inside it production possibilitie frontier
th la
un un
al
de
ll
nd
on
ti
le
C) outsid
it production possibilitie frontier D) inside it trade-partner' production po sibilities frontier E) on it trade-partner' production possibilitie frontier Answer: Qu stio Status Pr viou Editio 12) in th Ri ar ia l, co tr tr de is icte imit peci lizati an th iv io la or C)
pr
uc in
ov Answer: Question Status: Previou Edition
th ir
uc io
is
ll ca
ib li ie
ll
cu es
pr
ic
fa
ry
f?
ll ountry
very large
ountry
A) B) th
ar
ou
C) th smal countr D) th
larg countr
il
er
de ea co gain from trade. will en oy gain from trade.
lf e.
only will enjo
er nls: Pr 14) Ifthe worl
F,
then un an co tr it er co tr or C) ly th co tr D) ne th ve E) Answer: B)
he
il bo ai ra e. il gain from trade. ov en izes ex
ts
ai
ts
li ai
ts
ll ai
ld
A)
un an co tr it er co tr or co tr D) only ne th ve E) Answer: B)
C)
Qu stio Status
reviou
il bo
ai
ra e.
will gain from trade.
ov
nt
izes
Editio
16) if
then bu no countr will gain from trade. untr Hand ai ra e. untry will bo B) co tr il gain from trade. C) eith D) ly co tr ho ov nt izes it ex th ve E) Answer: A) country
Questio
Status: Previous Editio
17) A) Jabo produ tivity is relatively
low. B) rp tivity is relatively high. C) la or ilit lati el lo D) labo mobility is relatively high on th ve An swer: Questio
Status: Previous Editio
18) Assume
an if B) U.S. productivit
equale 30 U.S. labo productivity equale U.
20. 20 an
Japan's 30.
E)
Answer: viou
dition
tw co tr es en ag
ee
ad
ol owin
th
in
le
ar ti
IS (margina
un
ll qu th B) lati ce an relative pri D) M R s b u
th
ther co ry be om eq al
co
rate
va ta e, th
transformarion-MfcTs)
in on
ri
E)
er Question 20)
rarus:
Previou
Edlti
purchasing labor.Jn th Ricardian 2X2 model, if two co tr es er ta ng in tr de th th ea ge il ot ecte in is an ia ar ab e. B) th real wage il increase only ifa countr attain full specialization it decreases in th other D) th ea ge ll ri in th nt es E)
Answer: Editi
A) th larg countr B) the
al
tr
D)
on of th Answer:
ater itical ower an he ce wiIl no yiel is ad ic al ts au ar fully sp cialize. is less likely fully specialize.
will
ield li el
ve
E)
ew
A) scale economies od ta ia B) C) greate capita availability pe worker D) ll of th above. E)
Answer: ew
to
arke ic
ignals elativ
ce
23) An (potentially
beneficial fo each of th
ad ng pa ne
ce
al ow
ex an
co
io
pansion
decrease in comp ed an in ti gain from trad fOT Answer: re
it at on
tr
ne th
specializatio with tr perspective. In ot er owev r, nc
ef cien pr
od ti
po ib lity
he
ct on in ac co ti
ti nn each ou is
th
th
bl tt
ry nt ie
nv ve
pr
nt
fa
impr
en
fact
eate
ng
rl
od ti
th
off SO
in ee
th
he
ld
er
that th ne
olutio
ct ve
However,
th de ce tain ir An wer: (a If in er countr ay en economy (e.g. an uf
to
en
5)
an es ev on in each ne at on l, ec no ic gr up pecializin "e lave ector) ad af cted
clai
at
at
ad g,
trade. Illustrate counter-exampl er ne l, begin itio al isto ti example, If er er
ce en
el po
cr as
tr
he
ce tr Il
is id atio
ar et
tter
ic
ll at ch ta en to acco
po ab
nt lled tr di
as en
oo
Itend
ac
lo
ec no ic
to this proposition. co tr
th
ec
th in er ti al ke ). oo ic th co tr
th
ir ctio
fa
im ov
t.
uc
ca it ea to em tr te th if om ar ti ad nt ge impo country's economi welfare will improve.
he
Question Status Previous Editio
he
icar an
everthel
ositio
sa
internationa
trade.
at in er ti na
tr de
ef
an co tr
ains fr
ad
lo
th
nit Labor Requirements Widgets 200 30
loth
Forei
'11
Foreign? ne al io
id t. io
itio
If
widgets? Answer 1/ Cloths Editi
co ex er
th Rica ia ne ha
de
co
ar ti
ad an ag
is
lo
imit or th
ce of cl th
et Editi
to Foreign? Answer
widgets.
uestio
3.4
tus:
reviou
Editi
isconcepti ns
ra
1) If conditions of A) constant opportunit costs. B) increasing opportunit costs. decrea in opportunit co ts ne
th ab e. Edlti
2) If fon origin), then increase specialization in production by that countr A) increa th economic welfar of both countries. cr as th ec no ic el ar nl un
ne
th ab e.
er Questio
Status: Previous Edition
will
in
er
et in
3) If tw co tr es pp A) th ir
av
en ical pr ct on ve ar en ical
ilit
ti rs
en tr de
tw
he
ot li el if
ilit
tier
en tr de
tw
he
ot li el if
B)
C) thei demand conditions ar i~tical. D) thei income
ar identical.
Answer: Qu stionStatus Previou Edition if tw co A) thei B) their C) thei D) thei
tr es av en ical ctio uppl curves ar identical. es functi ns ar identical. demand function differ income ar identical. of th ve
Answer: Questio Status: Previou Edition 5)
if la iv th th r' (t very ig productivity ratios), then if th th he am cu en A) neithe countr ha comparativ advantage. ly th ag countr ha comparativ advantage. B)
lati
ceed
he
lati
ex ee in
he
lati
C)
consumer will till find trad wort of th ve Answer: Questio Status: Previou Edition D)
very
if
productivity ratios), then is bl that B)
ig
whil from thei perspective.
la iv
od er
each onsumers in both
th il
th r' (t
lati
in
xp ar ts itab e. untrie will enhanc thei respective welfares
through
imports. C) it D)
it is
os ib that bl th th of th ve
co tr es ll in ai ll en he on nt on
tr de ai
ade.
Answer: Questio Status: Previou Edition 7)
ucti it atio re ad ll
en
is
th ot er very ig el tive ob le at ot co ri el ar
(t
elativ
ag ex ee in
he elativ
B) which it enjoys comparativ
C) D) fre trade will
esul in each
disad vantage. ve E) on of th Answer: sti viou dition
un
ex
ti
ic
it suffer
advantage. th greatest comparativ
8)
In
tw un au os elativ B) C)
0) E)
pr
ct ld th qu alen
to hi
te
nt
an
an av co pa at ve di va ta er an av ativ va ta ce av ar ti va ta ne he ab e.
Questio
ar ti
ed an an in auto an rmany.
va ta
au an ships.
er
ce
hi
Status; Previous Edition
9) If
B)
er an
C)
D)
as co ativ as ra iv ug in ti
ad an ag in bu te an ag in te iv
Answer: vious 0)
pp
ni ed
it
ta es
uc io
ilit
tier
latter to
et
xi
er as
er an US dollar.
te tate om ar ti anta B)Ger an ha co parative advantag in butter. ni ed tate co pa at ve ad ntag in ut er ne
he ab e.
fr US
.We te
tate
om ar ti
anta e.
C)
ne Questio
2)
ug nf io he ab e.
is iv n.
Status: Previous Edition
ch ee tr ee tr th
Question
lo at is en icia
en is ue nl if ou
is
nl
ne ic al ve he ab e.
th ou
is ie
en av
ratus: Previous Editio
II
cces
ta
to
ig
he same technology.
et ti n.
13 Mahatm Ghandi exhorted hi follower in approach B) C)
akes no economic ense co te th th he icar an no on is en th th ic rd an on of th ov
ia to
od
co
of co ativ om ar ti
lf
decr asin
impo
an age. dv ta e.
Questio Status; Previous 'clition
dg ts
ro
ed
zu ia
ul
is
er fo
xp
pp
er
lo
an
io
kn
th
id et
Ba ov
on er
in ed om ar ti va ta in ed an lu ad an ag no co parative advantag exists becaus
C)
is nf
lk co ar ti va ta technology wa no diffused
in il
ov er re
fco advantage. re theo tica ly
re ev nt to
ca di
el
nd
ot imit ts
gi al co en
C)
re
le an
au
th Ri ar ia
lo
or if er
ec ol ie
if
er
ab
ro
C)
er he Rica ia at th og ca of tradin on er no
ta
tivi ie
partner' ov CW
ctly od
ti na
he etic ll tr de in th
ag le el or ct bu pr ti ally ca ia od l.
atio ll es
th
ul
en
un ie
18 Many countrie in sub-Sahara an agricu lture. They O~l ctiv advantage.
nd
ie
fric have very lo
br
is
ca ia anta in
labo productivities in many sectors in manufacturing
hi
el
on ex
ra iv
an ag er ar
ct
icar an es th
or
de
ativ
er country ct th co tr es).
rnparative
ev
th
Question Status; Previou ·clition 19) in 1975 wage levels in Sout
Kore were roughl
of thos in
5°10
have caus
It is
nited State, becaus
ucer in this country
Di cuss thi
comparativ
obviou that if the
ft
advantage. be associated
1I
sri
with ro tatus: Previou
ition th
Sl.Igge ts that rei tive
as
in er ti
al productiviries
es (r la iv to lo th lo ic to thei resp tive
in th ited icar an
on
ge
at od
of of r,
esti
in er ti na
ag
ve
Why do yo
suppos
na in th co ec de lain yo ea in ativ an ag as an co tr es ay ic
tum
ic
od
If China
their industrialized country markets ru usEdit
Many Good lati an
ag te
at ne
ll eter in ic ou
patt ll xp
D) AJ of th above. on ov Answer: 1I
I~
en
sex ly la
du ti it
ta
oo th co ri th ical ambiguous Changes in lati ag at "chain of ornparativ advantage. Questio
init on co pa at ve ad ntag th nt rn ti al titi en lo
Status Previous Edition
1) if co parative advantage, then Co ry Bmu ls en ex C)
