3610 PS1 - Cornell University Fall 2009 Economics 3610:...

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Cornell University Fall 2009 Economics 3610: Problem Set 1 Due 9/14/2009 1. True/False/Explain. For each of the following statements, say whether the statement is true or false and explain your answer. Please limit your answer to two sentences. a. In a world with two countries and two goods, it is possible for a country to have an absolute advantage in the production of both goods and for there to be no gains from trade possible. b. In a world with two countries and two goods, if the (constant) marginal product of labor is the same for one of the goods in both countries, then there can be no gains from trade. c. If a country has a comparative advantage in producing a good, it must also have an absolute advantage in producing that good. d. In the Ricardian model, there are no losers from trade. e. If in a trade equilibrium the real wage in one country is higher than that of the other country in terms of one of the goods, then it is higher in terms of the other good as well. 2.
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This note was uploaded on 12/10/2011 for the course BTRY 3010 at Cornell University (Engineering School).

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3610 PS1 - Cornell University Fall 2009 Economics 3610:...

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