ECON 335 - Midterm 1 || with 100% Error-free Solutions.
Subsidize and encourage exports correct answers According to the Mercantilists, governments
should:
Absolute advantage correct answers If country X has higher labor productivity in the production
of umbrellas than the rest of the world, we would say that country X has a(n) ___________ in
the production of umbrellas.
Neither corn nor umbrellas correct answers Table 1 shows the number of labor hours required to
produce 1 umbrella and 1 bushel of corn in the U.K. And the rest of the world. (UK: 1 umbrella
= 3 hours, 1 bushel of corn = 1 hours; rest of the world: 1 umbrella = 2 hours, 1 bushel of corn =
0.25 hours) The UK has an absolute advantage in the production of ___________.
Only umbrellas correct answers (UK: 1 umbrella = 3 hours, 1 bushel of corn = 1 hours; rest of
the world: 1 umbrella = 2 hours, 1 bushel of corn = 0.25 hours) The UK has a comparative
advantage in the production of _____________.
Only cheese correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese = 1 hour;
France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) The US has an absolute
advantage in the production of ________________.
2 gallons of wine per pound correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese
= 1 hour; France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) What is the relative
price of cheese (the price of cheese in terms of wine) in France under no trade situation?
0.25 gallons of wine correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese = 1
hour; France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) The opportunity cost of
producing cheese in the United States is ______________.
Only cheese correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese = 1 hour;
France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) The US has a comparative
advantage in the production of ______________.
Along a constant cost production possibilities curve, the opportunity cost of producing more of a
good is constant correct answers Which of the following is true of a constant cost production-
possibility curve?
Can produce this good at a lower opportunity cost than the other country correct answers In a
two-country two-good model, if a country has a comparative advantage in the production of a
certain good, it implies that this country:
7/9; 2 correct answers Figure 1 below shows the production possibility curves for Canada (AB)
and the Rest of the World (CD). The opportunity cost of producing one liter of maple syrup in
Canada and in the Rest of the World are ________ bushels and ________ bushels of corn
respectively.
, 9/7; 1/2 correct answers Please again consult Figure 1. The opportunity cost of producing one
bushel of corn in Canada and in the Rest of the World are ________ liters and ________ liters of
syrup respectively.
The negative slope of the production-possibility curve indicates declining productivity. correct
answers Which of the following is NOT true of a nation's production-possibility curve?
This country has higher labor productivity in the production of this good correct answers In a
two-country two-good model, if a country has an absolute advantage in the production of a
certain good, it implies that:
Constant cost production-possibility curves are straight lines and usually lead to complete
specialization under free trade. correct answers Which of the following statements is true about
production-possibility curves?
Produce and consume at point C0 correct answers In Figure 2 given below AB is the production-
possibility curve of Canada. In the absence of trade, the price ration 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:
Produce at point S1 and consume at point C1 correct answers Please again consult Figure 2.
After Canada engages in free trade, it will:
Canada has a comparative advantage in production of wheat. correct answers Please again
consult Figure 2. Which of the following can be inferred from this figure?
20 bushels of wheat correct answers Please again consult Figure 2. After Canada engages in free
trade, it will export:
60 bales of cotton correct answers Please again consult Figure 2. After Canada engages in free
trade, it will import:
Increasing opportunity costs correct answers Most trading nations do not completely specialize.
Incomplete specialization is due mainly to:
Abundance or scarcity resources correct answers The Heckscher-Ohlin (HO) theorem explains
patterns of trade between countries using:
Export steel and import wheat correct answers Assume a two-country, two-good, and two-input
model. Let the two countries in this model be in the US 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 US is capital-abundant
and steel production is capital-intensive, the Heckscher-Ohlin model would predict that the
United States would:
Subsidize and encourage exports correct answers According to the Mercantilists, governments
should:
Absolute advantage correct answers If country X has higher labor productivity in the production
of umbrellas than the rest of the world, we would say that country X has a(n) ___________ in
the production of umbrellas.
Neither corn nor umbrellas correct answers Table 1 shows the number of labor hours required to
produce 1 umbrella and 1 bushel of corn in the U.K. And the rest of the world. (UK: 1 umbrella
= 3 hours, 1 bushel of corn = 1 hours; rest of the world: 1 umbrella = 2 hours, 1 bushel of corn =
0.25 hours) The UK has an absolute advantage in the production of ___________.
Only umbrellas correct answers (UK: 1 umbrella = 3 hours, 1 bushel of corn = 1 hours; rest of
the world: 1 umbrella = 2 hours, 1 bushel of corn = 0.25 hours) The UK has a comparative
advantage in the production of _____________.
Only cheese correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese = 1 hour;
France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) The US has an absolute
advantage in the production of ________________.
2 gallons of wine per pound correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese
= 1 hour; France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) What is the relative
price of cheese (the price of cheese in terms of wine) in France under no trade situation?
0.25 gallons of wine correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese = 1
hour; France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) The opportunity cost of
producing cheese in the United States is ______________.
Only cheese correct answers (US: 1 gallon of wine = 4 hours, 1 pound of cheese = 1 hour;
France: 1 gallon of wine = 1 hour, 1 pound of cheese = 2 hours) The US has a comparative
advantage in the production of ______________.
Along a constant cost production possibilities curve, the opportunity cost of producing more of a
good is constant correct answers Which of the following is true of a constant cost production-
possibility curve?
Can produce this good at a lower opportunity cost than the other country correct answers In a
two-country two-good model, if a country has a comparative advantage in the production of a
certain good, it implies that this country:
7/9; 2 correct answers Figure 1 below shows the production possibility curves for Canada (AB)
and the Rest of the World (CD). The opportunity cost of producing one liter of maple syrup in
Canada and in the Rest of the World are ________ bushels and ________ bushels of corn
respectively.
, 9/7; 1/2 correct answers Please again consult Figure 1. The opportunity cost of producing one
bushel of corn in Canada and in the Rest of the World are ________ liters and ________ liters of
syrup respectively.
The negative slope of the production-possibility curve indicates declining productivity. correct
answers Which of the following is NOT true of a nation's production-possibility curve?
This country has higher labor productivity in the production of this good correct answers In a
two-country two-good model, if a country has an absolute advantage in the production of a
certain good, it implies that:
Constant cost production-possibility curves are straight lines and usually lead to complete
specialization under free trade. correct answers Which of the following statements is true about
production-possibility curves?
Produce and consume at point C0 correct answers In Figure 2 given below AB is the production-
possibility curve of Canada. In the absence of trade, the price ration 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:
Produce at point S1 and consume at point C1 correct answers Please again consult Figure 2.
After Canada engages in free trade, it will:
Canada has a comparative advantage in production of wheat. correct answers Please again
consult Figure 2. Which of the following can be inferred from this figure?
20 bushels of wheat correct answers Please again consult Figure 2. After Canada engages in free
trade, it will export:
60 bales of cotton correct answers Please again consult Figure 2. After Canada engages in free
trade, it will import:
Increasing opportunity costs correct answers Most trading nations do not completely specialize.
Incomplete specialization is due mainly to:
Abundance or scarcity resources correct answers The Heckscher-Ohlin (HO) theorem explains
patterns of trade between countries using:
Export steel and import wheat correct answers Assume a two-country, two-good, and two-input
model. Let the two countries in this model be in the US 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 US is capital-abundant
and steel production is capital-intensive, the Heckscher-Ohlin model would predict that the
United States would:
