Chap003

Chap003 - Chapter 03 - The Classical World of David Ricardo...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 03 - The Classical World of David Ricardo and Chapter 03 The Classical World of David Ricardo and Multiple Choice Questions 1. Given the information in Table 1, which one of the following statements is correct? A . France's pretrade price ratio is 1 brandy = 2 shirts b. The U.S. pretrade price ratio is 1 shirt = 3 brandy c. The United States has an absolute advantage in both goods d. France will export shirts after trade begins 2. In the situation in Table 1, if the countries engage in trade at posttrade prices (terms of trade) of 1 shirt = 0.5 brandy, then a. France gets all the gains from trade B . The United States gets all the gains from trade c. Neither country gains from trade d. The two countries share equally in the gains from trade 3-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 03 - The Classical World of David Ricardo and 3. Given the information in Table 2, which one of the following statements is true? a. The United Kingdom has an absolute advantage in both goods and a comparative advantage in cloth b. The pretrade price ratio in the United Kingdom is 1 steel:2 cloth c. The United Kingdom has an absolute advantage in neither good but a comparative advantage in steel D . The pretrade price ratio in Germany is 1 cloth:1.5 steel 4. Given the information in Table 2, suppose that Germany is a much larger country in terms of production and income than is the United Kingdom. In this situation, other things equal, when the countries engage in trade, the posttrade price ratio (terms of trade) would tend to settle __________, and __________ would therefore tend to have relatively large gains from trade. a. Toward a value of 1 cloth:2 steel; the United Kingdom
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 6

Chap003 - Chapter 03 - The Classical World of David Ricardo...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online