ECON231-quiz1-001 -...

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1) In general, which of the following do not tend to increase trade between two countries? a) linguistic and/or cultural affinity b) historical ties c) larger economies d) mutual membership in preferential trade agreements e) the existence of well controlled borders between countries 2) According to the  gravity model , a characteristic that tends to affect the probability of trade  existing between any two countries is a) their cultural affinity. b) the average weight/value of their traded goods. c) their colonial-historical ties. d) the distance between them. e) the number of different product varieties produced by their industries. 3) We see that the Netherlands, Belgium, and Ireland trade considerably more with the United  States than many other countries. a. This is explained by the gravity model, since these are all large countries. b. This is explained by the gravity model, since these are all small countries. c. This fails to be consistent with the gravity model since these are small countries. d. This fails to be consistent with the gravity model since these are large countries. Good Home Unit Labor Requirement (a Li ) Foreign Unit Labor Requirement (a Li *) Relative Home Productivity ( a Li */a Li ) Avocado 12 9 0.75 Tomato 7 21 3 Peach 3 15 5 Mango 5 40 8 Wheat 1 10 10 4) If the relative wage (w/w*) is 4.5, Home will produce – a) b)
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This note was uploaded on 10/26/2011 for the course ECON 231 taught by Professor Rus during the Fall '08 term at Waterloo.

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ECON231-quiz1-001 -...

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