International-Economics--8e-(Krugman)-Chapter-3

1Chapter3LaborProductivityandComparativeAdvantage:TheRicardianModel3.1TheConceptofComparativeAdvantage1)TradebetweentwocountriescanbenefitbothcountriesifA)eachcountryexportsthatgoodinwhichithasacomparativeadvantage.B)eachcountryenjoyssuperiortermsoftrade.C)eachcountryhasamoreelasticdemandfortheimportedgoods.D)eachcountryhasamoreelasticsupplyfortheexportedgoods.E)BothCandD.Answer:AQuestionStatus:PreviousEdition2)Inordertoknowwhetheracountryhasacomparativeadvantageintheproductionofoneparticularproductweneedinformationonatleast________unitlaborrequirementsA)oneB)twoC)threeD)fourE)fiveAnswer:DQuestionStatus:PreviousEdition3)AcountryengagingintradeaccordingtotheprinciplesofcomparativeadvantagegainsfromtradebecauseitA)isproducingexportsindirectlymoreefficientlythanitcouldalternatively.B)isproducingimportsindirectlymoreefficientlythanitcoulddomestically.C)isproducingexportsusingfewerlaborunits.D)isproducingimportsindirectlyusingfewerlaborunits.E)Noneoftheabove.Answer:BQuestionStatus:PreviousEdition4)Giventheinformationinthetableabove,ifitisascertainedthatForeignusesprison-slavelabortoproduceitsexports,thenhomeshouldA)exportcloth.B)exportwidgets.C)exportbothandimportnothing.D)exportandimportnothing.E)Alloftheabove.Answer:AQuestionStatus:PreviousEdition25)Giventheinformationinthetableabove,iftheHomeeconomysufferedameltdown,andtheUnitLaborRequirementsdoubledto30forclothand60forwidgetsthenhomeshouldA)exportcloth.B)exportwidgets.C)exportbothandimportnothing.D)exportandimportnothing.E)Alloftheabove.Answer:AQuestionStatus:PreviousEdition6)TheearlieststatementoftheprincipleofcomparativeadvantageisassociatedwithA)DavidHume.B)DavidRicardo.C)AdamSmith.D)EliHeckscher.E)BertilOhlin.Answer:BQuestionStatus:PreviousEdition7)TheGainsfromTradeassociatedwiththeprincipleofComparativeAdvantagedependsonA)thetradepartnersmustdifferintechnologyortastes.B)therecanbenomoregoodstradedthanthenumberoftradepartners.C)theremaybenomoretradepartnersthangoodstraded.D)Alloftheabove.E)Noneoftheabove.Answer:AQuestionStatus:PreviousEdition8)TheRicardianmodeldemonstratesthatA)tradebetweentwocountrieswillbenefitbothcountries.B)tradebetweentwocountriesmaybenefitbothregardlessofwhichgoodeachexports.C)tradebetweentwocountriesmaybenefitbothifeachexportstheproductinwhichithasacomparativeadvantage.D)tradebetweentwocountriesmaybenefitonebutharmtheother.E)Noneoftheabove.Answer:CQuestionStatus:New33.2AOne-FactorEconomy1)Giventhefollowinginformation:(a)Whatisthemarginalcostofatoyineachcountry?(b)Howmightyoudemonstrate(quantitatively)thatacountrywithabsoluteproductivityadvantageinaproductmayfindthatitsproductionismorecostlythanintheother(unproductive)country?(c)Demonstratethefactthattradeproducesimports(indirectly)cheaper,evenintherelativelyunproductivecountry.Answer:(a)3unitsofSoyintheU.S.,and1SoyunitinCroatia.(b)TheU.S.haveabsoluteproductivityadvantageintoys.Nevertheless,toysarethreetimesmorecostlythantheyareinCroatia.(c)InCroatia,oneunitofsoywillcostonetoy.However,ifthetermsoftradefallbetweenthetwoautarkicpriceratios(aconditionnecessaryforbothcountriestoenjoygainsfromtrade),sayat2Soyunitspertoy,thenCroatiawillgaineachSoyunitwithlessofasacrificeoftoyproduction.QuestionStatus:PreviousEdition3.3TradeinaOne-FactorWorld1)GiventheinformationinthetableaboveA)neithercountryhasacomparativeadvantage.B)Homehasacomparativeadvantageincloth.C)Foreignhasacomparativeadvantageincloth.D)Homehasacomparativeadvantageinwidgets.E)Homehasacomparativeadvantageinbothproducts.Answer:BQuestionStatus:PreviousEdition2)Giventheinformationinthetableabove,ifwagesweretodoubleinHome,thenHomeshouldA)exportcloth.B)exportwidgets.C)exportbothandimportnothing.D)exportandimportnothing.E)Alloftheabove.Answer:AQuestionStatus:PreviousEdition43)GiventheinformationinthetableaboveA)neithercountryhasacomparativeadvantage.B)Homehasacomparativeadvantageincloth.C)Foreignhasacomparativeadvantageincloth.D)Foreignhasacomparativeadvantageinwidgets.E)Homehasacomparativeadvantageinbothproducts.Answer:CQuestionStatus:PreviousEdition4)Giventheinformationinthetableabove,theopportunitycostofclothintermsofwidgetsinForeignisifitisascertainedthatForeignusesprison-slavelabortoproduceitsexports,thenhomeshouldA)exportcloth.B)exportwidgets.C)exportbothandimportnothing.D)exportandimportnothing.E)Alloftheabove.Answer:BQuestionStatus:PreviousEdition5)Giventheinformationinthetableabove,ifwagesweretodoubleinHome,thenHomeshouldA)exportcloth.B)exportwidgets.C)exportbothandimportnothing.D)exportandimportnothing.E)Alloftheabove.Answer:BQuestionStatus:PreviousEdition6)Giventheinformationinthetableabove,iftheworldequilibriumpriceofwidgetswere4Cloths,thenA)bothcountriescouldbenefitfromtradewitheachother.B)neithercountrycouldbenefitfromtradewitheachother.C)eachcountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.D)neithercountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.E)bothcountrieswillwanttospecializeincloth.Answer:AQuestionStatus:PreviousEdition7)Giventheinformationinthetableabove,iftheworldequilibriumpric