International Trade III/IIID
国际贸易代修 Ina two country world, show that if the real return to labour in free trade is relatively higher in country H, then the real return to
Mid-semester Test
Part 1: Answer all of the following multiple choice questions on the answer sheet provided. (5pts each)
1.Supposethat the wage is $20 per hour in a two sector (manufacturing and agriculture) specific- factors model. Currently, the prices of manufactured and agricultural outputs are $5 and $1, respectively; the marginal product of labour in the manufactured sector is 6 units per hour; and the marginal product of labour in the agricultural sector is 10 units per hour. What will happen to the distribution of labour between the two sectors? 国际贸易代修
a)Theagricultural sector will demand more labour, and the manufacturing sector will demand less labour at the current wage.
b)Nothingwill happen. The current allocation of labour between the two sectors is ideal.
c)Boththe agricultural and the manufacturing sector will demand more labour at the current wage.
d)Themanufacturing sector will demand more labour, and the agricultural sector will demand less labour at the current wage.
A nation will gain from trade if it:
a)consumesoutside its PPF and produces along its PPF.
b)producesand consumes outside its PPF.
c)producesoutside its PPF and consumes along its PPF.
d)producesand consumes along its PPF.
3.Supposethat the home country in the two-sector (manufacturing and agriculture) specific factors model has a comparative advantage in manufactured output. Will workers be better or worse off following the opening of trade with other countries?
a)Workersmay be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls.
b)Workersmay be better off or worse off because the real wage in terms of the agricultural good falls and the real wage in terms of the manufactured good rises.
c)Workers will be worse off because the nominal wage decreases.
d)Workerswill be better off because the nominal wage increases.
4.Supposethat the home country in the two-sector (manufacturing and agriculture) specific factors model has a comparative advantage in manufacturing output. What will happen to the return (rental) on land when trade occurs? 国际贸易代修
a)It will first fall, then rise.
b)Itwill not change.
c)Itwill fall.
d)Itwill rise.
5.Supposethat, with trade, the price of shoes (which are labor intensive) increases by 10%. Then which of the following can you say for sure about returns to labor and capital in the country?
a)Wageswill rise by no more than 10%.
b)Wageswill rise by more than 10%.
c)Rentalrates will fall by at least 10%.
d)Rentalrates will rise by more than 10%.
Suppose that the new international relative price of computers increases from the pre-trade price. If we then subtract the number of computers purchased domestically at the new international price from the number of computers produced, we will get one point on ____________ for computers.
a)theexport supply schedule
b)theindifference curve
c)theimport demand schedule
d)theproduction possibilities frontier
7.Assumethat Germany and China can produce beer and cloth. If the MPLc/MPLb for Germany is 2/5 and MPLc/MPLb for China is 1, then Germany and China have a comparative advantage in: 国际贸易代修
a)beerand cloth, respectively.
b)beer.
c)cloth.
d)clothand beer, respectively.
8.Ifa country finds its comparative advantage in computer production, which is capital intensive, what will happen to the rental rate on capital when trade occurs?
a)Itwill increase.
b)Notenough information is given to answer this question.
c)Itwill stay the same.
d)Itwill decrease.
9.Consider a 2x3 Specific Factors Model.
A.Showthat the rise in the relative price of good X has an ambiguous impact on the real return to labour in the short run for a small open economy.
B.Is a typical labourer is better or worse off from the change in price described in part a? Explain.
C.Ina two country world, show that if the real return to labour in free trade is relatively higher in country H, then the real return to both specific factors must be relative higher in country F.
10.Considerthe following in the context of the Heckscher-Ohlin model of trade. 国际贸易代修
A.Showthat an increase in the labour supply of a small country could either increase or decrease the volume of trade.
B.Show that neutral growth in a large country will change commodity prices, factor prices, outputs, and the volume of trade in both countries, but will not change the pattern of trade.
C.Showthat a relative increase in the price of a commodity will increase the real return to the factor used intensively in that industry and reduce the real return to the other factor.
1Considera 2 good, 1 factor Ricardian model of two countries, H and F with the following data.
XH = .6 LXH XF = .6 LXF
YH = .3 * LYH LH= LXH + LYH
YF = .6 * LYF LF = LXF + LYF
A.Whichcountry has comparative advantage in which good and why?
B.If H is endowed with 8000 hours of labor, how much X will it produce after trade begins? How much Y? Explain.
C.Howwill productivity growth in YF affect the welfare of countries H and F? 国际贸易代修
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