Question : 11) In the Heckscher-Ohlin model, when there international-trade equilibrium A) the : 1303498

 

 

11) In the Heckscher-Ohlin model, when there is international-trade equilibrium

A) the relative price of the capital intensive good in the capital rich country will be the same as that in the capital poor country.

B) the capital rich country will charge less for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.

C) the capital rich country will charge more for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.

D) workers in the capital rich country will earn more than those in the poor country.

E) the workers in the capital rich country will earn less than those in the poor country.

 

 

12) If a good is capital intensive it means that the good is produced

A) using relatively more capital than goods that are not labor intensive.

B) using capital as the only input.

C) using more capital per unit of output than goods that are not capital intensive.

D) using capital such that the total cost of capital is greater than the total cost of labor.

E) using capital such that the cost of capital is more than 50% of total cost.

 

13) The Heckscher-Ohlin model predicts all of the following EXCEPT

A) the volume of trade.

B) which country will export which product.

C) which factor of production within each country will gain from trade.

D) that relative wages will tend to become equal in both trading countries.

E) that trade increases a country’s overall welfare.

 

 

14) If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries

A) the relative price of the land-intensive product would increase in Australia.

B) the relative price of the capital-intensive product would increase in Australia.

C) the relative price of the land-intensive product would increase in Belgium.

D) the relative price of the capital-intensive product would decrease in Belgium.

E) relative product prices would diverge between Australia and Belgium.

 

 

15) If Australia has more land per worker, and Belgium has more capital per worker,then if trade began between these two countries

A) the real income of landowners in Belgium would decline.

B) the real income of capital owners in Australia would increase.

C) the real income of labor in Australia would decline.

D) the real income of labor in Belgium would decline.

E) the real income of labor in both countries would decline.

 

 

16) If Japan is relatively capital rich and the United States is relatively land rich, and if food is relatively land intensive then trade between these two, formerly autarkic countries will result in

A) an increase in the relative price of food in the U.S.

B) an increase in the relative price of food in Japan.

C) a global increase in the relative price of food.

D) a decrease in the relative price of food in both countries.

E) an increase in the relative price of food in both countries.

 

17) Trade benefits a country by

A) increasing available consumption choices.

B) reducing the need for specialization in production.

C) reducing the relative price of the exported good.

D) increasing the real income of all resource owners.

E) increasing the wage rate.

 

 

18) If Gambinia has many workers but very little land and even less productive capital, then, following the Heckscher-Ohlin model, we predict that Gambinia will export

A) labor-intensive goods.

B) capital-intensive goods.

C) both capital- and land-intensive goods.

D) land-intensive goods.

E) both labor- and land-intensive goods.

 

 

19) If Gambinia has many workers but very little land and even less productive capital, then, following the Heckscher-Ohlin model, in order to improve the country’s economic welfare, the Gambinian government should

A) engage in free trade.

B) protect the capital-intensive product.

C) protect the land-intensive product.

D) protect the labor-intensive product.

E) discontinue all international trade.

 

 

 

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