FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Trade: Factor Availability and Factor Proportions Are Key

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

China has 20% of the world's population but only 10% of the world's farmable land. Which of the following will be predicted by the Heckscher-Ohlin theory, if China begins to trade with other countries?

A) China will export land-intensive goods like wheat and import labor-intensive goods like clothing.
B) China will shift resources into the production of agricultural goods and away from manufactured goods.
C) China will shift resources from the production of agricultural goods to the production of labor-intensive goods.
D) China will export capital-intensive goods like automobiles and import labor-intensive goods like clothing.

E) None of the above
F) A) and D)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Assume that country X produces two goods-sugar and shoes-and that the country's production possibility curve is "bowed-out." As the country produces more sugar the opportunity cost of sugar in terms of shoes foregone will:

A) increase.
B) decrease.
C) initially increase and then decrease.
D) remain unchanged.

E) A) and B)
F) C) and D)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

In the figure given below AB is the production-possibility curve of Canada. In the absence of trade, the price ratio is 1 bushel of wheat/bale of cotton as shown by the line PQ. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I₁ and I₂ are the pre-trade and the post trade community indifference curves of Canada respectively. In the absence of trade Canada will:

In international trade jargon, constant cost production-possibility curves are associated with _____ specialization while increasing cost production-possibility curves are associated with _____ specialization.

Increasing-cost production-possibility curves are bowed out from the origin.

The figure given below shows the post-trade production and consumption points in country Y. AB is the production-possibility curve of country Y. I₁ is the community indifference curve of country Y. Here country Y's production-possibility curve indicates that it faces _____ marginal costs of production.

The figure given below shows the production-possibility curves of Canada (AB) and the Rest of the World (CD) . The pre-trade price ratio in Canada and the Rest of the World are given by the lines P₁ and P₃ respectively. The international price ratio faced by the countries is represented by the line P₂. I?₁ and I₂ are the pre-trade and post-trade social indifference curves for both Canada and the Rest of the World respectively. Before Canada entered into a trade with the rest of the world, the total amount of cotton produced in the world was _____ bales and the total amount of wheat produced in the world was _____ bushels.

Which of the following statements is true about production-possibility curves?