Question :
5.2 Effects of International Trade Between Two-Factor Economies
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5.2 Effects of International Trade Between Two-Factor Economies
1) In the 2-factor, 2 good Heckscher-Ohlin model, trade will ________ the owners of a country’s ________ factor and will ________ the good that uses that factor intensively.
A) benefit; abundant; export
B) harm; abundant; import
C) benefit; scarce; export
D) benefit; scarce; import
E) harm; scarce; export
2) According to the Heckscher-Ohlin model, the source of comparative advantage is a country’s
A) factor endowments.
B) technology.
C) advertising.
D) human capital.
E) political system.
3) In the 2-factor, 2 good Heckscher-Ohlin model, trade will ________ the owners of a country’s ________ factor and will ________ the good that uses that factor intensively.
A) harm; scarce; import
B) harm; abundant; import
C) benefit; scarce; export
D) benefit; scarce; import
E) harm; scarce; export
4) According to the Heckscher-Ohlin model
A) the gainers from trade could compensate the losers and still retain gains.
B) everyone gains from trade.
C) the scarce factor gains from trade and the abundant factor loses.
D) a country gains from trade if its exports have a high value added.
E) only the country with the more advanced technology gains from trade.
5) In the Heckscher-Ohlin model, when two countries begin to trade with each other
A) the relative prices of traded goods in the two countries converge.
B) relative factor prices in the two countries diverge.
C) benefits from trade are evenly distributed between the two countries.
D) all factors in both countries will gain from trade.
E) all factors in one country will gain, but there may be no gains in the other country.
Assume that only two countries, A and B, exist.
6) Refer to the table above. If good S is capital intensive, then following the Heckscher-Ohlin Theory
A) country B will export good S.
B) country A will export good S.
C) both countries will export good S.
D) trade will not occur between these two countries.
E) both countries will import good S.
7) Refer to the table above. If you are told that Country B is very much richer than Country A, then the correct answer is
A) country B will export good S.
B) country A will export good S.
C) both countries will export good S.
D) trade will not occur between these two countries.
E) both countries will import good S.
8) Refer to the table above. You are told that Country B is very much larger than country A. The correct answer is
A) country B will export good S.
B) country A will export good S.
C) both countries will export good S.
D) trade will not occur between these two countries.
E) both countries will import good S.
9) Refer to the table above. You are told that Country B has no minimum wage or child labor laws. Now the correct answer is
A) country B will export good S.
B) country A will export good S.
C) both countries will export good S.
D) trade will not occur between these two countries.
E) both countries will import good S.
10) If a good is labor intensive it means that the good is produced
A) using relatively more labor than goods that are not labor intensive.
B) using labor as the only input.
C) using more labor per unit of output than goods that are not labor intensive.
D) using labor such that the total cost of labor is greater than the total cost of capital.
E) using labor such that the cost of labor is more than 50% of total cost.
