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Econ 321 Exam 1 Review 2022/2023# 22 questions and correct answers.
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Econ 321 Exam 1 Review 2022/2023# 22 questions and correct answers.
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Econ 321 Exam 1 Review 2022/2023#22 questions and correct answers.
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: - -absolute advantage but not necessarily comparative advantage in the
production of the product
-According to the Ricardian model, a country that has comparative advantage in the
good on the x-axis of the PPF, will have - -a flatter slope than 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, - -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 that MPLt = 10 tennis rackets and MPLb = 5 baseball bats. If the economy has
500 workers, then the economy can produce - -2500 rackets and 1250 baseball bats
-If a consumer moves to a higher point on her indifference curve, her satisfaction - -
Remains unchanged
-One way to determine that a nation has gained from trade is that it - -consumes
outside of its PPF and produces along its PPF
-A production possibilities curve that is bowed out represents the case of.......................
while a production possibilities curve that is a straight line represents the case
of.............................. - -increasing costs; constant costs
-The Ricardian two-country, two good model predicts that there are potential benefits
from trade, but NOT - -the effect of trade on income distribution
-According to the specific factors model, International trade can have important effects
on the distribution of income because - -some resources are immobile in the short run
-In the specific factors model - -Land is a fixed factor, Capital is a fixed factor, Labor is
a mobile factor
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