Question

17) Assume that labor is the only factor of production and that wages in the U hour while wages in Japan s the only factor of production and that wages in the United States equal $20 per UUE WHITE wages in Japan are S10 per hour. Protein costs would be lower in the United St compared to Japan if A) U.S. labor productivity equaled 40 units per hour and Japan's 15 units per mon B) U.S. Tabor productivity equaled 30 units per hour and Japan's 20 units per mu U.S. Tabor productivity equaled 20 units per hour and Japan's 30 units per hour. D) U.S. labor productivity equaled 15 units per hour and Japan's 25 units per hour. E) U.S. labor productivity equaled 15 units per hour and Japan's 40 units per hour. 10) it a production possibilities frontier is a straight line, then production occurs under conditions of A) increasing opportunity costs. B) constant opportunity costs. C) decreasing opportunity costs. D) infinite opportunity costs. E) uncertain opportunity costs. 19) Which of the following statements is TRUE? rree trade is beneficial only if your country is strong enough to stand up to foreign competition. B) Free trade is beneficial only if your competitor does not pay unreasonably low wages. C) Free trade is beneficial only if both countries have access to the same technology. D) Free trade is never beneficial for developing countries. E) Free trade can be beneficial to the economic welfare of all countries involved. 20) If labor productivities were exactly proportional to wage levels internationally, this would A) not negate the logical basis for trade in the Ricardian model. B) render the Ricardian model theoretically correct but practically useless. C) negate the logical basis for trade in the Ricardian model. D) negate the applicability of the Ricardian model if the number of products were greater than the number of trading partners. E) demonstrate the validity of the Ricardian model. 21) The two-country, multi-product model differs from the two-country, two-product model in that, in the former A) the relative wage ratio will determine the pattern of trade (which good is exported by which country). B) which country will export which product is determined entirely by labor productivity data. C) full specialization is likely to hold in equilibrium. D) none of the goods are potentially nontraded. E) domestic relative prices are not relevant. 22) The Ricardian two-country, two-good model predicts that there are potential benefits from trade, but NOT A) when both countries have the same types of technology available. B) when one country has significantly lower wages than the other country. C) the mechanism that determines which country will specialize in which good. D) the effect of trade on income distribution. E) when one country has an absolute advantage in the production of both goods.

Answer 1

Question—17

U.S. labor productivity equalled 40 units per hour and Japan’s 15 units per hour.

Question—18

Increasing opportunity cost

We know that the increasing opportunity cost means that if continue increase the production of one good, the opportunity cost producing another unit increases.

Question—19

Free trade is beneficial only if your country is strong enough to stand up to foreign competition

Free trade is a situation when two countries are agreeing on trade without the restriction.

Question—20

Not negate the logical basis for trade in the Ricardian model.

The Ricardian model of trade explains the comparative advantage in the technological basis across the countries.

Question—21

The relative wage ratio will determine the pattern of trade (which good is exported by which country)

Question—22

The effect of trade on income distribution