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Unformatted text preview: ple Midterm #1 5.
When Adam Smith presented his theory of absolute advantage, he thought that all value was
measured in terms of the amount of _______ used in the production of the good.
Constant cost production possibility curves lead to _______ specialization. Increasing cost
production possibility curves lead to _______ specialization.
partial; complete 7.
Refer to Figure 4.2. Before trade opens, the Rest of the World produces _______ yards of cloth
and _______ units of wheat; while consuming _______ yards of cloth and _______ units of
10; 8; 8; 10
4; 16; 8; 10
8; 10; 8; 10
8; 10; 12; 8 8.
China has 20% of the world’s population but only 10% of the world’s farmable land. The
Heckscher-Ohlin theory of trade would predict which of the following for China following the
opening of trade?
China will export land-intensive goods like wheat and import labor-intensive
goods like clothing.
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This note was uploaded on 02/15/2011 for the course FBE 462 at USC.