Midterm_Practice_Ch4

Midterm_Practice_Ch4 - Chapter 4 Resources and Trade: The...

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Chapter 4 Resources and Trade: The Heckscher-Ohlin Model Multiple Choice Questions 1. In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border would (a) move the point of production along the production possibility curve. (b) shift the production possibility curve outward, and increase the production of both goods. (c) shift the production possibility curve outward and decrease the production of the labor-intensive product. (d) shift the production possibility curve outward and decrease the production of the capital- intensive product. (e) None of the above. Answer: D 2. In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in (a) tastes. (b) military capabilities. (c) size. (d) relative availabilities of factors of production. (e) labor productivities. Answer: D 3. In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade will benefit the owners of (a) capital. (b) the relatively abundant factor of production. (c) the relatively scarce factor of production. (d) the relatively inelastic factor of production. (e) the factor of production with the largest elasticity of substitution. Answer: B 4. In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade (a) will tend to make the wages in both countries more similar. (b) will equalize the wages in both countries. (c) will tend to make the wages in both countries less similar. (d) will tend to make wages equal to returns to capital. (e) will tend to make rents equal to interest rates. Answer: A
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5. According to the Heckscher-Ohlin model, the source of comparative advantage is a country’s (a) technology. (b) advertising. (c) human capital. (d) factor endowments. (e) Both (a) and (b). Answer: D 6. The Hechscher-Ohlin model states that a country will have a comparative advantage in the good or service whose production is relatively intensive in the ______ with which the country is relatively abundant. (a) tastes (b) technology (c) factor of production (d) opportunity cost (e) scale economy Answer: C 7. One way in which the Heckscher-Ohlin model differs from the Ricardo model of comparative advantage is by assuming that __________ is (are) identical in all countries. (a) factor of production endowments (b) scale economies (c) factor of production intensities (d) technology (e) opportunity costs Answer: D 8. According to the Hecksher-Ohlin model, (a) everyone automatically gains from trade (b) the scarce factor necessarily gains from trade (c) the gainers could compensate the losers and still retain gains. (d) a country gains if its exports have a high value added. (e) None of the above. Answer: C
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9. The Heckscher-Ohlin model assumes that _____ are identical in all trading countries (a) tastes (b) technologies (c) factor endowments (d) Both (a) and (b). (e) None of the above.
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Midterm_Practice_Ch4 - Chapter 4 Resources and Trade: The...

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