12 May THE HECKSCHER-OHLIN TRADE MODEL FOCUSES ON WHICH EXPLANATION?
Listed below are five reasons why autarky prices could be different between nations. The Heckscher-Ohlin Trade Model focuses on which explanation?Differences in demand due to differences in tastes or preferences.Differences in supply due to differences in production technologies.Differences in supply due to differences in the relative supplies of the factors of production.Differences in prices due to government policies such as import taxes and export subsidies.Differences in prices due to shipping costs between markets..1 pointsQuestion 2Listed below are five reasons why autarky prices could be different between nations. The Ricardo Trade Model focuses on which explanation?Differences in demand due to differences in tastes or preferences.Differences in supply due to differences in production technologies.Differences in supply due to differences in the relative supplies of the factors of production.Differences in prices due to government policies such as import taxes and export subsidies.Differences in prices due to shipping costs between markets..1 pointsQuestion 3Which below is true regarding the data used by GDA MacDougall?For each of the industries listed, U.S. absolute labor productivity was twice the U.K. absolute labor productivity.For each of the industries listed, U.K. absolute labor productivity was twice the U.S. absolute labor productivity.Wages for U.K. workers were more than twice those for U.S. workers.Wages for U.S. workers were twice those for U.K. workers.Wages for both nations were equal..1 pointsQuestion 4GDA MacDougall’s results can be interpreted asStrong evidence against the Ricardo Trade Model.Strong evidence for the Ricardo Trade Model.Strong evidence against the Heckscher-Ohlin or Factor Endowments trade model.Strong evidence for the Heckscher-Ohlin or Factor Endowments trade model.Strong evidence that absolute productivity is a major determinant of trade patterns..1 pointsQuestion 5According to the data listed below, the United States is considered to beHW4problem5table.pngCapital abundantCapital scarceLabor intensiveCapital intensiveNot enough information to answer properly..1 pointsQuestion 6Answer questions 6-7 using the following information: The U.S., a land abundant nation, has decided to open up to trade. Wheat production in the U.S. is land-intensive and cloth production is labor intensive. In the SHORT RUN, opening up to trade is expected to have what impact on the earnings of U.S. land owners (Tc, Tw) and laborers (Lc, Lw)?The earnings of Tc, Lc, Tw, and Lw will decline.The earnings of Tc, Lc, Tw, and Lw will rise.The earnings of Tc and Lc will decline, and those of Tw and Lw will rise.The earnings of Tc and Lc will rise, and those of Tw and Lw will decline.The earnings of Tc and Tw will rise, and the earnings of Lc and Lw will fall..1 pointsQuestion 7Assume that we are now in the LONG RUN. The opening up to trade is expected to have what impact on the earnings of the U.S. factors of production?Answer The earnings of land owners (Tc and Tw) will fall and the earnings of workers (Lw and Lc) will rise.The impact on the earnings of landowners is uncertain, but the earnings of Lw and Lc will rise.The earnings of Tc and Lc will decline, and those of Tw and Lw will rise.The earnings of Tc and Lc will rise, and those of Tw and Lw will decline.The earnings of landowners will rise, and the earnings of Lc and Lw will fall..1 pointsQuestion 8Use the graph below to answer questions 8-10. Suppose the nation depicted in the graph is initially in autarky at point X. What is the autarky relative price of shoes (Ps/Pc)?HW4question8graph.pdfPs/Pc = 1/3 C/SPs/Pc = 1 C/SPs/Pc = 3 C/SPs/Pc = 50 C/SPs/Pc = 1/50 C/S.1 pointsQuestion 9Suppose that 3 weeks earlier the nation depicted in the graph below had opened up to free trade. Where is the new production point likely to be after three weeks of having a free trade policy?Point APoint BPoint XPoint CPoint D.1 pointsQuestion 10After three weeks of implementing a free trade policy, what is the Marginal Cost of producing an extra unit of shoes?1 C/S3 C/S1/3 C/S3 S/C2/3 S/C.1 pointsQuestion 11A nation with a Ricardo-type economy has arrived at its free trade equilibrium. Which of the graphs drawn below illustrates the new consumption possibilities as a result of moving to free trade? In each graph, the line labeled Ppc is the production possibility curve and the one labeled CpcW is the consumption possibility curve with trade.HW4problem11graph.pngGraph AGraph BGraph CGraph DAll are possibilities..1 pointsQuestion 12I AM DROPPING THIS QUESTION: SIMPLY SELECT ANSWER d. Consider the diagram below. Suppose the nation is at point A. Which of the following are correct?i. MUc/MUw < MCc/MCwii. MUc/MUw > MCc/MCwiii. The country is not maximizing its economic well-being.iv. The country is maximizing its economic well-being.v. Consumers and producers have an incentive to move to point B.vi. Consumers and producers have an incentive to stay at point A.HW4question12graph.pdfi, ii, vii,iiiii, ivii, iii, vii, iv, vi.1 pointsQuestion 13Because they pay high wages, industries in rich nations are unable to compete with products manufactured in low-wage nations.TrueFalse .1 pointsQuestion 14Because they have outdated and poor technology, industries in poor nations are unable to compete with products manufactured by industries in rich nations.TrueFalse .1 pointsQuestion 15Which of the following are consistent with mercantilism?i. Governments should subsidize exports.ii. National well-being is directly related to the accumulation of precious metals.iii. Contemporary mercantilism focuses on job gains and losses due to international trade.iv. Trade deficits are good since they bring gold into the nation running the trade deficit.v. Trade deficits are bad since they lead to a loss of gold for the nation running the trade deficit.i, iii, iii, ivii, iii, ivi, iii, vi, ii, iii, vQuestion 13Consider the table below, which lists the share of the world’s factor endowments held by various nations between 2007-2010. (It is missing data on GDP but work with the data.)FactorEndowments2007_2010.docxIf you have trouble viewing the table, it is Figure 5.3 on page 77 of your text. Now consider the following data:JapanExportsImports_2009.docxIf you have trouble viewing this second table, it is the table that accompanies problem 10 on page 90 of your text. According to the data in this last table, Japan is a net importer of a number of products. Which are consistent with the predictions of the Heckscher-Ohlin theory?I. food (land-intensive).II. metal ores and petroleum and petroleum products (natural-resource intensive).III. clothing and accessories and shoes and other footwear (unskilled labor-intensive)IV. pharmaceuticals, aircraft, and medical equipment (skilled labor-intensive).Answer I only.I and II only.I, II, and III only.I, II, III, and IV.Not enough information provided to answer the question..1 pointsQuestion 14Consider the table below, which lists the share of the world’s factor endowments held by various nations between 2007-2010. (It is missing data on GDP but work with the data.)FactorEndowments2007_2010.docxIf you have trouble viewing the table, it is Figure 5.3 on page 77 of your text. Now consider the following data:ChinaExportsImports2009.docxIf you have trouble viewing this second table, it is on page 83 of your text. According to the data in this last table, what part of China’s trade is consistent with the predictions of the Heckscher-Ohlin theory?Answer China’s net imports of land-intensive agricultural products.China’s net imports of natural resources like metal ores and crude petroleum.China’s net imports of skilled-labor-intensive manufactured products like industrial machinery, electronic microcircuits, and scientific equipment.China’s net exports of less-skilled-labor-intensive products like clothing, footwear and toys.All of the above.
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