answ2006 - 1. Given the following information: Number of...

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1. Given the following information: Number of Units Produced by one Unit of Labor Home Foreign Cloth 10 60 Widgets 20 30 Neither country has a comparative advantage. Home has a comparative advantage in cloth. Foreign has a comparative advantage in cloth. Foreign has a comparative advantage in widgets. 2. Consider the previous question. If the two countries open up to trade Home will export widgets Foreign will export both goods Home will export cloth Home will specialize in cloth 3. Consider the previous question. If the world equilibrium price of widgets were 1 cloths, then both countries could benefit from trade with each other. neither country could benefit from trade with each other. neither country will want to export the good in which it enjoys comparative advantage. both countries will want to specialize in cloth. 4. Consider the previous question. If Canada’s labour endowment doubles, then 1. Canada’s autarky price ratio will stay the same. 2. Canada’s real wages will stay the same. 3. Canada’s nominal wages will stay the same. 4. All of the above. 5. A nation engaging in trade according to the Ricardian model will find its consumption bundle inside its production possibilities frontier. on its production possibilities frontier. outside its production possibilities frontier. on its trade-partner' s production possibilities frontier.
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6. The Ricardian model is based on all of the following except only two nations and two products. production exhibits constant returns to scale.
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This note was uploaded on 06/09/2010 for the course AP 3150 taught by Professor Allalileeva during the Winter '09 term at York University.

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answ2006 - 1. Given the following information: Number of...

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