Econ 319 Test 1 review
In the article "Real Money from Virtual Worlds", gold farmers certainly have _________ in the production of World of Warcraft Gold.
a comparative adavntage
A major impact of the transatlantic telegraph was
a reduction in time required to complete a financial transaction between New York and London
(Figure: PPF Nickel & Textiles) Refer to the figure. How many tons of textiles does Australia give up to produce one ton of nickel?
1/3
(Figure: Countries A and B) Refer to the figure regarding countries A and B. If both countries fully allocate all of their labor toward the good in which they have a comparative advantage, the combined production for the two countries would be _______ units of Good X, and _______ units of Good Y.
100;80
Which of the following is true?
A common market is more deeply integrated than a customs union.
Which of the following is FALSE?
A common market is more deeply integrated than an economic union.
According to what we learned in chapter 3, "Real Money from Virtual Worlds" the trade in Virtual gold makes the
Both the gold farmers and their wealthy clients are better off
The process of the Planet Money cotton into fabric is a relatively ____________.
Capital Intensive industry
When the United States gives MFN status to China, it means that
China is treated the same as other U.S. trading partners.
Suppose country A is labor-abundant and capital-scarce and country B is labor-scarce and capital-abundant. Good X is produced using a labor-intensive technology and good Y is produced using a capital-intensive technology. Which of the following can most reasonably be inferred from the given information?
Country A would export good X
If countries have similar factor endowments and productivities, their trade is likely to be interindustry.
False
Which of the following statements is true?
Free trade causes contraction in the import-competing sector.
Which of the following is true?
International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.
Which statement is TRUE?
It is virtually impossible for a country to be the low-cost producer of all goods and services.
The sewing of the Planet Money t-shirts is a relatively ____________.
Labor intensive industry
The table given below shows the units of land and labor required to produce a unit of bread and cheese respectively in country X. Identify the correct statement.
Production of bread is relatively land-intensive in the country.
Which of the following is NOT an example of an international public good?
Regional trade agreements
Considering the United States to be a capital-abundant country, which of the following facts would contradict the predictions of the Heckscher-Ohlin theory?
The United States is a net importer of capital-intensive products.
For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?
The opportunity cost of producing watches is lower in Denmark.
Assume the standard trade model with two countries (Alpha and Beta), two goods (food and drink), and two factors of production (land and labor). Further assume that Alpha is relatively labor-abundant and drink is relatively labor-intensive. Which of the following is most likely to happen in the long run following the opening of free trade between the countries?
The workers in Alpha will be better off but the land owners will be worse off.
Intraindustry trade can lead to lower prices and job creation in both the exporting and the importing nation.
True
Which of the following factors is the most significant in determining the pattern of international trade?
comparative advantage
Economists
describe reducing tariffs and quotas as shallow integration.
Assume a two-country, two-good, and two inputs model. Let the two countries in this model be the United States and the Rest of the World and the two goods being produced by each of the countries be steel and wheat. The two factors of production used in producing the goods in each country are capital and land. If the United States is capital-abundant and steel production is capital-intensive, the Heckscher-Ohlin model would predict that the Rest of the World would:
export wheat and import steel.
Political stability _____ economic growth.
fuels
Labor mobility was
greater in 1900 than in 2010.
Which of the following defines the "rules of the game" that structure economic incentives?
institutions
Market failures are less likely to occur whenever
new firms can easily attract start-up capital.
The original mission of the World Bank was to
provide financial assistance for the reconstruction of war-damaged nations.
The table given below shows the units of land and labor required to produce a unit of bread and cheese respectively in country X. If country X is a relatively land-abundant country, the opening up of free trade would cause the price of bread relative to cheese to:
rise
Property rights encourage:
saving and investment in both physical and human capital.
Comparative advantage is determined by
the opportunity cost of producing any good
In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade will benefit the owners of
the relatively abundant factor of production.
(Table: Production Possibilities for Kenya and Sri Lanka) According to the table on production possibilities for Kenya and Sri Lanka, which of the following answers identifies a trade price that both countries would find acceptable? (Units are in tons.)
two teas for one bean < Trade price < three teas for one bean