1、International Economics, 8e (Krugman) 6Chapter 4 Resources, Comparative Advantage, and Income Distribution 1) In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border would A) move the point of production along the production possibility curve. B) shift the producti
2、on possibility curve outward, and increase the production of both goods. C) shift the production possibility curve outward and decrease the production of the labor-intensive product. D) shift the production possibility curve outward and decrease the production of the capital-intensive product. E) No
3、ne of the above. Answer: D2) In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in A) tastes. B) military capabilities. C) size. D) relative availabilities of factors of production. E) labor productivities. Answer: D 3) The Heckscher-Ohlin model differs from the Ricardian model
4、of Comparative Advantage in that the former A) has only two countries. B) has only two products. C) has two factors of production. D) has two production possibility frontiers (one for each country). E) None of the above. Answer: C 4) A good cannot be both land- and labor-intensive. Discuss. Answer:
5、In a two good, two factor model, such as the original Heckscher-Ohlin framework, the factor intensities are relative intensities. Hence, the relevant statistic is either workers per acre (or acres per worker); or wage per rental unit (or rental per wage). In order to illustrate the logic of the stat
6、ement above, let us assume that the production of a broom requires 4 workers and 1 acre. Also, let us assume that the production of one bushel of wheat requires 40 workers and 80 acres. In this case the acres per person required to produce a broom is one quarter, whereas to produce a bushel of wheat
7、 requires 2 acres per person. The wheat is therefore (relatively) land intensive, and the broom is (relatively) labor intensive.5) No country is abundant in everything. Discuss. Answer: The concept of relative (country) factor abundance is (like factor intensities) a relative concept. When we identi
8、fy a country as being capital intensive, we mean that it has more capital per worker than does the other country. If one country has more capital worker than another, it is an arithmetic impossibility that it also has more workers per unit capital. 6) Refer to above figure. Can you guess which group
9、 of producers in Country P might lobby against free trade? Answer: In Country P, the owners of the relatively scarce factor of production are the owners of capital. Their relative and real incomes will decrease, and so they may well attempt to lobby for protectionism, which may prevent the country f
10、rom moving to a free trade equilibrium.An Economy can produce good 1 using labor and capital and good 2 using labor and land. The total supply of labor is 100 units. Given the supply of capital, the outputs of the two goods depends on labor input as follows: 7) Refer to the table above. (a)Graph the
11、 production functions for good 1 and good 2(b)Graph the production possibility frontier. Why is it curved? Answer: The production possibility frontier is curved because of the diminishing returns associated with the expansion of output in the short run in each of the two industries. 8) In the 2-fact
12、or, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade will benefit the owners of A) capital. B) the relatively abundant factor of production. C) the relatively scarce factor of production. D) the relatively inelastic factor of production. E) the factor of production with the la
13、rgest elasticity of substitution. Answer: B9) According to the Heckscher-Ohlin model, the source of comparative advantage is a countrys A) technology. B) advertising. C) human capital. D) factor endowments. E) Both A and B. Answer: D10) The Hechscher-Ohlin model states that a country will have a com
14、parative advantage in the good or service whose production is relatively intensive in the _ with which the country is relatively abundant. A) tastes B) technology C) factor of production D) opportunity cost E) scale economy Answer: C11) According to the Hecksher-Ohlin model, A) everyone automaticall
15、y gains from trade. B) the scarce factor necessarily gains from trade. C) the gainers could compensate the losers and still retain gains. D) a country gains if its exports have a high value added. E) None of the above. Answer:C Assume that only two countries, A and B, exist. 12) Refer to the table above. If good S is capital
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