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1) According to the principle of comparative advantage ? a. South Korea should export steel b. South Korea should export steel and DVDs c. Japan should export steel d. Japan should export steel and DVDs
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2) The opportunity cost of one DVD in South Korea is ? a. One-half ton of steel b. One ton of steel c. One and one-half tons of steel d. Two tons of steel
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3) G. MacDougall’s empirical results can be interpreted as ? a. evidence against the classical model b. evidence against the Heckscher-Ohlin model c. Support for the Ricardian modal d. Support for the Heckscher-Ohlin model
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4) G. MacDougal compared export ratios and labor productivity ratios for the United States and the United Kingdom in order to test the: a. Ricardian theory of comparative b. Heckscher Ohl in theory of comparative advantage c. Linder theory of overlapping demand all of the above d. None of these
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5) John Stuart Mill was the founder of the ? a. Theory of reciprocal demand b. Theory of absolute advantage c. Theory of comarative advantage d. Theory of mercantilism
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6) If the autarky price of S were lower in country A than in country B then if trade were allowed ? a. A would likely export S to B b. A would likely import S from B c. neither country would want to trade d. None of the above
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7) In autarky equilibrium ? a. Production equals consumption b. Exports equal imports c. there is no trade d. All of the above
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8) Given free trade, small nations tend to benefit the most from trade since they ? a. Are more productive than their large trading partners b. Are less productive than their large trading partners c. Have demand preferences and income levels lower than their large trading partners d. Realize terms of trade lying near the MRTs of their large trading partners
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9) The terms of trade is given by the prices ? a. Paid for all goods exported by the home country b. Received for all goods exported by the home country c. Received for exports and paid for imports d. Of primary products as opposed to manufactured products
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10) If a country has a bowed out (concave to the origin) production possibility frontier then production is said to be subject to ? a. constant opportunity costs b. decreasing opportunity costs c. first increasing and then decreasing opportunity costs d. increasing opportunity costs
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