chapter4 - probliems

chapter4 - probliems - QUICKQUIZ...

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QUICK QUIZ 1. The magnification effect holds for a factor if (a) that factor is mobile cross industries. (b) that factor is immobile across industries. (c) the other factor is immobile across industries. (d) the other factor is mobile across industries. (e) the price of the good that uses that factor intensively rises. (f) the price of the good that does not use the factor intensively rises. 2. Trends in the United States over the past twenty years have included (a) an increase in imports of goods and services. (b) a shift in demand toward more educated and skilled workers. (c) a growing differential between the wages of skilled and unskilled workers. (d) a slowing in the growth rate of average wages. (e) all of the above. (f) (a) and (d), but not (b) or (c). 3. The Stolper Samuelson theorem states that (a) a change in output prices will lead to more than proportional changes in the same direction in the prices of inputs used intensively in the goods’ production. (b) opening trade will equalize factor prices across countries. (c) opening trade will equalize output prices across countries. (d) under unrestricted trade and identical tastes, a country will tend to specialize in and export the good that used the country’s abundant factor intensively. (e) a change in output prices will lead to less than proportional changes in the same direction in the prices of inputs used intensively in the goods’ production. (f) a change in output prices will lead to more than proportional changes in the opposite direction in the prices of inputs used intensively in the goods’ production.
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4. The factor price equalization theorem states that (a) factor mobility will equalize wage rates across countries. (b) factor mobility will equalize the rental rate on capital across countries. (c) unrestricted trade in goods will equalize relative factor prices across countries. (d) trade will equalize only the price of the abundant factor across countries. (e) trade will equalize only the price of the scarce factor across countries. (f) factor prices will equalize across countries even in the absence of trade or factor mobility. 5. In the specific factors model, if a country with a comparative advantage in good X opens trade, in the short run (a) the real return to capital specific to the X industry will fall. (b) the real wages of all labor will fall. (c) the real wages of all labor will rise. (d) the real return to capital specific to the Y industry will fall. (e) the real wages of all workers in the X industry will rise. (f) the real wages of all workers in the X industry will fall. 6. Opening international trade (a) satisfies the Pareto criterion for a welfare improvement. (b)
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chapter4 - probliems - QUICKQUIZ...

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