Chap006

Chap006 - Chapter 06 - Gains from Trade in Neoclassical...

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Chapter 06 - Gains from Trade in Neoclassical Theory Chapter 06 Gains from Trade in Neoclassical Theory Multiple Choice Questions FIGURE 1 1. In Figure 1, where P is the autarky production point, C is the free trade consumption point, P1 represents autarky prices, and P2 represents free-trade prices, the free-trade production point is __________, and the autarky consumption point is __________. a. R; G B . R; P c. P; G d. G; P 2. In Figure 1, as the country moves from autarky to free trade, the difference between the S0 and S1 satisfaction levels is called the a. "consumption gain" (or "gains from exchange") B . "production gain" (or "gains from specialization") c. "total gains from trade (both "consumption gain" and "production gain") d. "lost tariff revenue effect" from removing protective tariffs 6-1
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Chapter 06 - Gains from Trade in Neoclassical Theory FIGURE 2 3. In Figure 2 showing a fixed-quantity production-possibilities frontier, a community indifference curve, and the associated autarky price line, if this country is opened to trade through exposure to different relative prices, the country can attain a. Both a "production gain" ("gains from specialization") and a "consumption gain" b. ("gains from exchange") c. Neither a "production gain" ("gains from specialization") nor a "consumption gain" d. ("gains from exchange") E . A "consumption gain" ("gains from exchange") but not a "production gain" ("gains from specialization") f. A "production gain" ("gains from specialization") but not a "consumption gain" g. ("gains from exchange") 6-2
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Chapter 06 - Gains from Trade in Neoclassical Theory 4. In Figure 2 showing a fixed-quantity production-possibilities frontier and a community indifference curve, suppose that this country is opened to trade from this initial situation where the dashed line indicates autarky prices [(PX/PY)autarky]. With this opening to trade,
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This note was uploaded on 11/27/2009 for the course ECON 421 taught by Professor Macphee,c during the Spring '08 term at UNL.

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Chap006 - Chapter 06 - Gains from Trade in Neoclassical...

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