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Study Resources (Business Management)

51In order for the production possibilities frontier to be a straight line, production must exhibit: •increasing costs. •decreasing costs. •constant costs. •increasing, then decreasing, then constant costs. 52In the absence of trade, a nation is in equilibrium where an indifference curve: •lies above its production possibilities frontier. •is tangent to.
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41As a nation opens trade, the relative prices of products it exports will __________ and the relative prices of products it imports will ___________. •rise; fall •fall; rise •remain constant; fall •rise; remain constant 42As a nation increases its production of exports, demand for all factors of production used in.
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81Which of the following countries has the most physical capital? •the United States •China •Japan •India 82Which of the following countries has the most R&D scientists? •the United States •China •Japan •India 83Which of the following countries has the most illiterate labor? •the United States •China •Japan •India 84Compared with the rest of.
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161With other things unchanged, a rise in the average price of imports or a fall in the average price of exports will: •improve the terms of trade. •worsen the terms of trade. •expand the production possibilities frontier. •contract the production possibilities frontier. 2006 2007 Export price 100 120 Import price 100 110 Table: The Prices of Ghana's Exports.
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91Compared with constant cost production, if production occurs under increasing cost conditions, it is more likely that countries will: •completely specialize. •incompletely specialize. •not engage in international trade. •trade with one another. 92As a nation increases the quantity produced and exports a product, to attract labor resources it must: •pay higher.
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91The paradox of India's importation of cotton textiles in the early twentieth century may also be explained by: •more accurate measurements of its imports and exports. •accounting for wide differences in labor productivity using effective factor endowments. •exploring ways to adjust for differences in national income and custom—Indian consumers purchased more.
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101If the international terms of trade settle at a level that is between each country's opportunity cost: •there is no basis for gainful trade for either country. •both countries gain from trade. •only one country gains from trade.   •one country gains and the other country loses from trade. 102Trade between.
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•exports should always be capital intensive. •imports should always be labor intensive. •U.S. exports were labor intensive. •U.S. exports were capital intensive. 72Using 1947 data, Leontief discovered a “paradox” in his test. If the Heckscher-Ohlin model is correct, the United States would have exported _____-intensive goods and imported _____intensive.
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191In the Ricardian model, a nation can have a comparative advantage in the production of both goods. •True •False 192In the Ricardian model, a nation can have an absolute disadvantage in the production of both goods. •True •False 193A nation must have comparative advantage in at least one good. •True •False.
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Chemicals and allied products $192,593 (Table: Capital Intensity Across Industries) Which industry is the most labor intensive? •apparel •lumber •primary metal industries •chemicals U.S. Capital/Labor Ratios in Selected Industries Industry K/L ($/worker) Apparel and other textile products $8,274 Leather and leather products $12,466 Furniture $21,736 Lumber and wood products $39,134 Textile mill products $44,060 Electronic and electric equipment $54,582 Primary metal industries $123,594 Paper and allied products $171,730 Chemicals and allied products $192,593 Table:.
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31Figure: Home and Foreign Autarky Equilibria (Figure: Home and Foreign Autarky Equilibria) At which point will the Home nation find its no-trade equilibrium consumption and production point? •A •B •C •U (Figure: Home and Foreign Autarky Equilibria) If shoes are a labor-intensive industry, which nation has more labor resources? •Home •Foreign •not enough.
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101Table: An Economy Before and After Trade The top part of the table gives manufacturing and agricultural prices, production, resource utilization, and resource payments in autarky (a no-trade situation). The bottom part of the table provides (some of) the same information after trade occurs. Manufacturing Agriculture No-Trade Situation Price per unit $10 $10 Output 100 units 100 units Wage $10/hour $10/hour Employment 50 hours 70 hours Return to.
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Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) How many shoes will this nation import? •0 •125 •350 •500 Figure: A Country's Before and After Trade Equilibria (Figure: A Country's Before and After Trade Equilibria) How many computers will this nation export? •0 •125 •350 •500.
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21The production possibility frontier is _______ sloping and ________ to the origin. •downward; convex •downward; concave •upward; concave •upward; convex 22In an economy in which labor is mobile and homogeneous, the wages between industries: •will be equal. •will be very unequal. •will be less in the export industry. •will be.
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71SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGE Poland requires 4 hours of labor to produce a ton of coal and 10 hours of labor to produce 10 bushels of wheat. The Czech Republic requires 6 hours of labor to produce a ton of coal and 10 hours of labor to produce 10 bushels.
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11When a country requires more resources to produce a product than other countries, it is said to have a(n): •absolute disadvantage in the production of the product. •comparative disadvantage in the production of the  product. •lower opportunity cost of producing the product.   •higher opportunity cost of producing the product. 12The.
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Consumption of good Y 1,000 units 2,000 units Capital used to produce good Y 1,500 units 1,000 units Labor used to produce good Y 500 days 250 days (Table: Data on Suburbia) Did the capital-labor ratio used in the production of good X rise, fall, or remain unchanged as Suburbia moved from autarky to free trade? •rise •fall •remain unchanged.
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91Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. What will happen to the amount of capital used in manufacturing production when trade occurs? •It will fall. •It will rise. •It will not change. •It will first fall, then rise. 92Suppose.
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41Where will a nation that gains from trade find its consumption point located? •inside its production possibilities frontier •along its production possibilities frontier •outside its production possibilities frontier  •at the center of its production possibilities frontier 42When a nation is in autarky (a no-trade state) and maximizes its living.
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111Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. Which specific factor will gain after trade occurs? •capital •land •both capital and land •labor 112Which of the following statements about the specific-factors model is true? •When exports of a product rise,.
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1Which statement is true? •The Heckscher-Ohlin model offers a good explanation of the pattern of trade and the gains from trade.   •The Heckscher-Ohlin trade model does not offer an explanation of the pattern of trade. •The Heckscher-Ohlin trade model does not offer an explanation of the gains from trade. •The Ricardian.
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141The General Agreement on Tariffs and Trade was established shortly after World War II. •True •False 142More than half of migration worldwide consists of people moving from lower-income countries to higher-income (OECD) countries. •True •False 143International trade can act as a substitute for movements of labor and capital across borders. •True.
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111Whenever foreign direct investment occurs between industrial countries, it is referred to as: •egalitarian FDI. •balanced FDI. •horizontal FDI. •vertical FDI. 112Which of the following is an example of horizontal FDI? •China invests $10 billion in Somalia. •German investors buy the Chicago Cubs baseball team. •Sri Lanka invests $10 billion in.
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61Table: Production and Prices in Two Industries Marginal Product of Labor in Agriculture (MPLa) Marginal Product of Labor in Manufacturing (MPLm) Price of Agriculture Good (Pa) Price of Manufacturing Good (Pm) 5 3 $10 $10 (Table: Production and Prices in Two Industries) According to the information provided in the table, the wage rate in the agriculture sector is: •$50. •$15. •$30. •$10. Marginal Product of Labor in.
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141When relative prices change due to international trade, returns to specific factors change by more than returns to mobile factors. •True •False 142To judge the effect on the incomes of the mobile factor when the relative price rises, we must know the composition of consumption in the economy. •True •False 143A case.
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131In the specific-factors model, usually labor is considered to be specific or fixed, and capital is mobile. •True •False 132The specific-factors model is considered to be a short-run model because labor cannot move between the two sectors. •True •False 133The specific-factors model helps explain how returns to factors of.
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141Suppose that the introduction of computers increases the productivity of workers in the developed world. What you would expect wages to do? •rise mainly in the developed countries •rise mainly in the developing countries •fall mainly in the developed countries •fall mainly in the developing countries 142If a home country is.
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1Bolivia's government attempted to solve some of its problems with inequality of outcomes due to foreign investment in its natural gas resources by: •taxing international firms. •insisting that the firms pay higher wages to workers in the industry. •shutting down the firms in the wake of protests.   •nationalizing the firms by.
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61Suppose Portugal has 700 workers and 26,000 units of capital, and France has 18,000 workers and 700 units of capital. Technology is identical in both countries. Assume that wine is the capital-intensive good and cloth is the labor-intensive good. Which of the following statements is correct if the nations.
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21The Ricardian model can be simplified and made more explanatory by assuming that there is only one resource used in producing goods. What did Ricardo assume the resource was? •capital •technology •labor •loanable funds •the average output of a unit of labor •the extra output obtained by using one more unit.
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81Under the 2009 jobs stimulus bill signed by President Obama, who can apply for aid after losing their job due to import competition? •service sector workers •farmers •both service sector workers and farmers •neither service sector workers nor farmers 82Some economists believe that an extended safety net for workers affected.
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•the ratio of abundance of capital to labor.    •the preferences of consumers in terms of marginal utility. •the ratio of the quantities of good 1 and good 2.    •the negative of the ratio of the marginal products of labor in producing each good. 32If the maximum number of cloth produced.
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11What resource is specific to the agriculture sector? •labor •land •capital •entrepreneurs 12What does the specific-factors model allow us to analyze? •the returns to factors of production •the allocation of resources between sectors •the returns to factors of production and the allocation of resources between sectors •the allocation of resources to the.
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171The focus of the Ricardian model is countries' resource bases as the explanation for international trade. •True •False 172According to Ricardo, all countries can gain from trade if they import goods in which they have a comparative disadvantage. •True •False 173Mercantilists argued that a country's overall welfare is improved.
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181The Ricardian model predicts that real wages will rise in all countries as a result of international trade. •True •False 182If a country has a comparative advantage in producing rice and a comparative disadvantage in producing good pencils, then the Ricardian model predicts that the real wage in rice.
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81Comparative advantage in production of a product is reflected in: •a lower relative price. •a lower opportunity cost. •higher labor productivity. •a lower relative price and a lower opportunity cost. U.S. Output per Worker Chinese Output per Worker Apparel $100,000 $10,000 Wheat $200,000 $5,000 82Table: Output in the United States and China (Table: Output in the United States and.
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131The direction of international trade has not changed over the past 100 years. •True •False 132Twenty-seven countries belong to the European Union. •True •False 133One of the features of the European Union is free trade (zero tariffs) on goods exported from one member country to another. •True •False 134Mexico is not a.
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21Identical technologies are a more reasonable assumption for: •the shoe industry. •the call center industry. •both the shoe and call center industries. •neither the shoe nor call center industries. 22A situation in which one nation produces good A using labor more intensively (relative to capital) and a second nation, producing.
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11In a capital-intensive industry, the capital/labor ratio will: •rise as the wage/rental ratio falls. •fall as the wage/rental ratio falls. •rise as the country's capital stock rises. •fall as the country's capital stock falls. 12The Heckscher-Ohlin model assumes that production techniques within a nation use the factors of production: •at different.
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1Which of the following is NOT a reason why countries trade goods with each other? •differences in technology used in different countries •differences in countries' total amount of resources •the proximity of countries to one another •differences in countries' languages and cultures 2David Ricardo's model, which provided an explanation of.
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111SCENARIO: CHILE AND ARGENTINA Chile and Argentina each produce jellybeans and peanut butter using labor as their only resource. Each country has 1,000 hours of labor. In Chile, 1 hour produces 1 pound of jellybeans and 2 hours produce 1 pound of peanut butter. In Argentina, 1 hour produces 1 pound.
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121For what reasons would firms engage in vertical FDI? •Firms want to engage in automated production techniques. •Firms anticipate higher technology and access to capital. •Legal structure, education, highways, and communications technology are usually better in lower-income nations.    •None of these answer choices provides a reason for why firms engage in vertical.
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121In order to raise money to compensate the losers from trade, in a specific-factors model the government may be able to tax: •the factor specific to the importing industry. •the factor specific to the exporting industry. •the factor that is mobile between industries.   •the factor specific to the exporting industry.
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61The “home” equilibrium will provide the highest level of consumer satisfaction from domestic resources whenever: •the marginal products of labor are equal. •capital and technology are not factors in the decision of what to produce. •perfect competition in product and labor markets exists. •Adam Smith's “invisible hand” is not an.
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71In an industrialized country, the amount of labor employed in the agriculture sector is: •larger than the manufacturing sector. •larger than the service sector. •lower than the manufacturing and service sector. •is about the same as the service sector. 72Which of the following is NOT a possible explanation for wage.
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