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Econ 321 Exam 6 2022/2023#58 questions and correct answers.
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Econ 321 Exam 6 2022/2023#58 questionsand correct answers.
production per person - -marginal product of labor
-Ricardian Model - -complete and full specialization wages are equal because they are
trying to get both products made
-Autarky - -a situation in which a country does not trade with other countries
-in the ricardian model, how do you know trade was beneficial? - -higher indifference
curve
-international trade can have important effects on the distribution of income because -
-some resources are immobile in the short run by immobile, it means you cannot move
from sector to sector
-Assume the Ricardian Model holds. Country A has 10 workers and each worker can
produce 8 units of wheat or 2 units of cloth in one hour. Country B also has 20 workers
but each worker can produce only 4 units of wheat or 2 units of cloth in an hour. Which
country has a higher marginal product of labor for producing wheat? - -country A
-Assume the Ricardian model holds. Suppose Country A is able to produce 70 chocolate
bars or 112 lollipops with the number of workers it has now. If they hire an additional
worker, they can now produce 75 chocolate bars or 120 lollipops. Country B has 20
workers and each worker can produce either 6 lollipops or 8 chocolate bars. The MPL
for chocolate and lollipops respectively for country A are - -5 & 8
-Assume the Ricardian model holds. Suppose Country A is able to produce 70 chocolate
bars or 112 lollipops with the number of workers it has now. If they hire an additional
worker, they can now produce 75 chocolate bars or 120 lollipops. Country B has 20
workers and each worker can produce either 6 lollipops or 8 chocolate bars. The MPL
for chocolate and lollipops respectively for country A are - -Country A should export
Lollipops and Country B should export chocolate
-Labor is - -mobile
-The Ricardian model of international trade demonstrates that trade can be mutually
beneficial. Why, then, do governments restrict imports of some goods? - -Trade can
have substantial effects on a country's distribution of income
-International trade can have important effects on the distribution of income because -
-some resources are immobile in the short run
-The relative price of a unit of cloth in the small isolated country of Moribundia is 5
units of food. When the central city, Mudhole, puts in an airstrip, the country is able to
, engage in trade. If the relative price of cloth in the outside world is 3 units of food, then
Moribundia will export ________ and ________ factors used in the production of
________ will benefit. - -food; immobile; food
-The relative price of a unit of cloth in the small isolated country of Moribundia is 5
units of food. When the central city, Mudhole, puts in an airstrip, the country is able to
engage in trade. If the relative price of cloth in the outside world is 8 units of food, then
Moribundia will export ________ and ________ factors used in the production of
________ will benefit. - -cloth, specific, cloth
-In the specific factors model, the effects of trade on welfare are ________ for mobile
factors, ________ for fixed factors used to produce the exported good, and ________
for fixed factors used to produce the imported good. - -ambiguous, positive, negative
-In the specific factors model, the effects of trade on welfare overall are ________ - -
Positive
-Suppose the specific factors model holds and two goods are being produced: Sugar and
Salt. If the MPL of Sugar and Salt respectively are 3 and 4 pounds, what must the price
of each good be in equilibrium if the equilibrium wage rate is 12 dollars? (That is price of
Sugar and price of salt) - -$3 and $4
-The main reason for trade according to the Ricardian model is - -countries have
different production technologies and as such, have an advantage in productivity in
different goods and can then trade
-When a country requires fewer resources to produce a product than other countries, it
is said to have a(n): - -absolute advantage
-According to the Ricardian model, a country that has comparative advantage in the
good on the x-axis of the PPF, will have - -flatter slope with its trading partner
-Ricardo's theory made an implicit number of assumptions, including which of the
following? - -Nations had balanced trade with their partners, and there were no barriers
to trade (free trade).
-According to the Ricardian principle of comparative advantage, international trade
increases a nation's total output because - -there would be gains due to specialization
only with subsequent trade
-In the Ricardian model, the extra production gained from the employment of an
additional unit of labor - -does not change, as more labor is employed to produce a good
-Assume the 𝑀𝑃𝐿𝑡=10MPLt=10 tennis rackets and 𝑀𝑃𝐿𝑏=5MPLb=5 baseball bats. If
the economy has 500 workers, then the economy can produce - -2500 rackets and 1250
baseball bats
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