Econ 321 Midterm 2 UNL
Comprehensive Questions with
Verified Answers Graded A+
A long run model of trade basic to the determination of how mobile factors of production affect
national welfare and the returns to the factors is known as - Answer: the Heckscher-Ohlin model
the heckscher-ohlin theorem explains patterns of trade between countries using - Answer:
abundance or scarcity of resources
the heckscher-ohlin model simplifies the analysis by assuming - Answer: there are only 2
nations, with 2 goods ad 2 factors of production
in a capital-intensice industry, the labor/capital ratio will - Answer: rise as the wage/rental ratio
falls
which of the following statements is NOT an assumption of the heckscher-ohlin model - Answer:
labor and capital can move freely between the 2 countries
assumptions of the heckscher-ohlin model - Answer: -there are 2 countries, each produces 2
goods using labor and capital
-labor and capital can move freely between the production of 2 goods
-there is free trade between the countries
, It may be unrealistic to assume that consumer tastes are the same across nations and invariant
with respect to income: - Answer: but is is an HO assumption because it enables the analysis to
focus on other issues that drive trade and prices
wages generally - Answer: are lower in labor abundant countries than in capital abundant
countries
Malaysia is relatively abundant in labor, whereas Canada is relatively abundant in capital. In
both countries, shirt production is relatively more labor intensive than computer production.
According to the Heckscher-Ohlin model, Malaysia will have a(n) ________ advantage in the
production of __________. - Answer: comparative, shirts
The heckscher-ohlin model assumes that factors of production can move freely ______ but can't
move ________ - Answer: domestically; internationally
what was "paradoxical" about Leontiefs test of the HO model on US trade - Answer: Leontief
concluded that US imports were more capital intensive than US exports
In a labor-abundant country, free trade will cause a(n) __________ in the rental of capital and
a(n) _________ in the marginal product of capital. - Answer: decrease; decrease
France and Italy only trade with each other. Each produces wine and bread. The production of
bread is relatively capital intensive, and the production of wine is relatively labor intensive.
France is relatively abundant in capital, while Italy is relatively abundant in labor. According to
the HO model, what products will italy export - Answer: wine
which of the following features is a characteristic of monopolistic competition - Answer:
differentiated products
intra-industry trade refers - Answer: imports and exports within the same industry
Comprehensive Questions with
Verified Answers Graded A+
A long run model of trade basic to the determination of how mobile factors of production affect
national welfare and the returns to the factors is known as - Answer: the Heckscher-Ohlin model
the heckscher-ohlin theorem explains patterns of trade between countries using - Answer:
abundance or scarcity of resources
the heckscher-ohlin model simplifies the analysis by assuming - Answer: there are only 2
nations, with 2 goods ad 2 factors of production
in a capital-intensice industry, the labor/capital ratio will - Answer: rise as the wage/rental ratio
falls
which of the following statements is NOT an assumption of the heckscher-ohlin model - Answer:
labor and capital can move freely between the 2 countries
assumptions of the heckscher-ohlin model - Answer: -there are 2 countries, each produces 2
goods using labor and capital
-labor and capital can move freely between the production of 2 goods
-there is free trade between the countries
, It may be unrealistic to assume that consumer tastes are the same across nations and invariant
with respect to income: - Answer: but is is an HO assumption because it enables the analysis to
focus on other issues that drive trade and prices
wages generally - Answer: are lower in labor abundant countries than in capital abundant
countries
Malaysia is relatively abundant in labor, whereas Canada is relatively abundant in capital. In
both countries, shirt production is relatively more labor intensive than computer production.
According to the Heckscher-Ohlin model, Malaysia will have a(n) ________ advantage in the
production of __________. - Answer: comparative, shirts
The heckscher-ohlin model assumes that factors of production can move freely ______ but can't
move ________ - Answer: domestically; internationally
what was "paradoxical" about Leontiefs test of the HO model on US trade - Answer: Leontief
concluded that US imports were more capital intensive than US exports
In a labor-abundant country, free trade will cause a(n) __________ in the rental of capital and
a(n) _________ in the marginal product of capital. - Answer: decrease; decrease
France and Italy only trade with each other. Each produces wine and bread. The production of
bread is relatively capital intensive, and the production of wine is relatively labor intensive.
France is relatively abundant in capital, while Italy is relatively abundant in labor. According to
the HO model, what products will italy export - Answer: wine
which of the following features is a characteristic of monopolistic competition - Answer:
differentiated products
intra-industry trade refers - Answer: imports and exports within the same industry
