Question :
4.2 International Trade in the Specific Factors Model
1) A country : 1407603
4.2 International Trade in the Specific Factors Model
1) A country that does NOT engage in trade can benefit from trade only if
A) pre-trade and free-trade relative prices are not identical.
B) it employs a unique technology.
C) it has an absolute advantage in at least one good.
D) its wage rate is below the world average.
E) pre-trade and free-trade relative prices are identical.
2) The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food. When then 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.
A) food; immobile; food
B) food; mobile; food
C) cloth; immobile; cloth
D) cloth; mobile; cloth
E) food; immobile; cloth
3) The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of food. When then 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.
A) cloth; immobile; cloth
B) food; immobile; food
C) food; mobile; food
D) cloth; mobile; cloth
E) cloth; immobile; food
