TEST 5 NEW TRADE THEORIES
5.56 out of 5.56 points
Which of the following trade patterns can be best explained by labor
a.Diamond exports by South Africa.
Two-way trade in electronic equipment between the US and
4.17 out of 4.17 points
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 w
5 out of 5 points
The word capital, when used in trade theory, refers to
b. machines and buildings.
c. stocks and bonds.
d. all of these answers are correct.
5 out of 5 p
4.35 out of 4.35 points
A pri A primary reason why nations conduct international trade is because:
Some nations prefer to produce one thing while others produce other things
Resources are not equally distributed among all trading n
0 out of 5.56 points
The theory of absolute advantage implies that
a. a small country can never gain from trading with a bigger one.
b. a country has to have more labor than its trading partner for trade to be
c. the gains from tra
Production Possibilities and Consumption Possibilities
Main points to keep in mind:
Consumption possibilities are determined by income and prices;
income is earned by participation in productive activity and the sale of the goods p
The model introduces increasing opp. costs and tastes
or demand preferences with community indifference
Forces of demand and supply determine the
Comparative Advantage and the Gains
PROBLEMS on Comparative Advantage
Comparative advantage in a good is attributed to the low opportunity cost producer of
To understand the concept of comparative advantage, you must the
: questions 5,6,7,8
A Brief Summary( Importance& Difficulties)
This chapter extended our simple trade model to the more
Chapter 3 : The Ricardian Model of
Why do countries open to international trade ?
Which countries benet from international trade ?
What is the nature of the gain ? And how do gains are shared ?