INTERNATIONAL ECONOMICS THEORY AND
POLICY COMPREHENSIVE SOLVED
QUESTIONS AND COMPLETE ANSWERS
◉ specific factors.
Answer: Factors of production that are unable to move into or out of
an industry or sector.
◉ production function.
Answer: the relationship between quantity of inputs used to make a
good and the quantity of output of that good
◉ Marginal product of labor.
Answer: the increase in the amount of output from an additional
unit of labor
◉ diminishing returns.
Answer: stage where output increases at a decreasing rate as more
units of variable input are added
◉ budget constraint.
,Answer: all possible consumption combinations of goods that
someone can afford, given the prices of goods, when all income is
spent; the boundary of the opportunity set
◉ labor mobility.
Answer: the ability and willingness of workers to relocate in markets
where wages are higher
◉ U.S. Trade Adjustment Assistance program.
Answer: Provides extended unemployment coverage for an
additional year and tuition reimbursement to workers who are
displaced by Plant closure due to import competition or an overseas
relocation to a country receiving preferential access to the United
States
◉ wage convergence.
Answer: As the wages of migrant and local workers converge, and
the labor market barriers are gradually eliminated, more adequate
and integrated labor mobility across regions is expected to bring
about a reduction of regional wage differentials.
◉ marginal product.
Answer: extra output due to the addition of one more unit of input
,◉ total product.
Answer: All the goods and services produced by a business during a
given period of time with a given amount of input
◉ Abundance of Factors.
Answer: Resource richness for production
◉ Heckscher-Ohlin Theory.
Answer: comparative advantage arises from differences in national
factor endowments
◉ Factor Proportions Theory.
Answer: Countries produce and export goods that require resources
(factors) in abundance, and import goods that require resources in
short supply
◉ factors of production.
Answer: Land, labor, and capital; the three groups of resources that
are used to make all goods and services
◉ factor prices.
Answer: The prices of the services of the factors of production.
, ◉ Expansion of production possibilities.
Answer: Occurs when the production possibility frontier shifts out
much more in one direction than in another
◉ Heckscher-Ohlin Theorem.
Answer: "The country that is abundant in a factor exports the good
who's production is intensive in that factor"
◉ Abundant Factor.
Answer: The resource of which a country has a relatively large
supply
◉ Scarce factor.
Answer: The resource of which a country has a relatively small
supply
◉ NAFTA (North American Free Trade Agreement).
Answer: An agreement for free trade between the United States and
Canada and Mexico
◉ Equalization of factor prices.
Answer: When factor prices in different countries become equalized
(the same) due to international trade (convergence)
POLICY COMPREHENSIVE SOLVED
QUESTIONS AND COMPLETE ANSWERS
◉ specific factors.
Answer: Factors of production that are unable to move into or out of
an industry or sector.
◉ production function.
Answer: the relationship between quantity of inputs used to make a
good and the quantity of output of that good
◉ Marginal product of labor.
Answer: the increase in the amount of output from an additional
unit of labor
◉ diminishing returns.
Answer: stage where output increases at a decreasing rate as more
units of variable input are added
◉ budget constraint.
,Answer: all possible consumption combinations of goods that
someone can afford, given the prices of goods, when all income is
spent; the boundary of the opportunity set
◉ labor mobility.
Answer: the ability and willingness of workers to relocate in markets
where wages are higher
◉ U.S. Trade Adjustment Assistance program.
Answer: Provides extended unemployment coverage for an
additional year and tuition reimbursement to workers who are
displaced by Plant closure due to import competition or an overseas
relocation to a country receiving preferential access to the United
States
◉ wage convergence.
Answer: As the wages of migrant and local workers converge, and
the labor market barriers are gradually eliminated, more adequate
and integrated labor mobility across regions is expected to bring
about a reduction of regional wage differentials.
◉ marginal product.
Answer: extra output due to the addition of one more unit of input
,◉ total product.
Answer: All the goods and services produced by a business during a
given period of time with a given amount of input
◉ Abundance of Factors.
Answer: Resource richness for production
◉ Heckscher-Ohlin Theory.
Answer: comparative advantage arises from differences in national
factor endowments
◉ Factor Proportions Theory.
Answer: Countries produce and export goods that require resources
(factors) in abundance, and import goods that require resources in
short supply
◉ factors of production.
Answer: Land, labor, and capital; the three groups of resources that
are used to make all goods and services
◉ factor prices.
Answer: The prices of the services of the factors of production.
, ◉ Expansion of production possibilities.
Answer: Occurs when the production possibility frontier shifts out
much more in one direction than in another
◉ Heckscher-Ohlin Theorem.
Answer: "The country that is abundant in a factor exports the good
who's production is intensive in that factor"
◉ Abundant Factor.
Answer: The resource of which a country has a relatively large
supply
◉ Scarce factor.
Answer: The resource of which a country has a relatively small
supply
◉ NAFTA (North American Free Trade Agreement).
Answer: An agreement for free trade between the United States and
Canada and Mexico
◉ Equalization of factor prices.
Answer: When factor prices in different countries become equalized
(the same) due to international trade (convergence)
