Second, advertising regulations may block implementation of standardized advertising. For example, Kellogg couldnot use a television commercial it produced in Great Britain to promote its cornflakes in many other European countries.A reference to the iron and vitamin content of its cornflakes was not permissible in the Netherlands, where claimsrelating to health and medical benefits are outlawed. A child wearing a Kellogg Tshirt had to be edited out of thecommercial before it could be used in France because French law forbids the use of children in product endorsements.The key line “Kellogg’s makes their cornflakes the best they have ever been” was disallowed in Germany because of aprohibition against competitive claims.
Trang 1ECO201 International economics
Quiz 1 - Vinh Pham Fall 2022
Instructions: Please identify the choice that best completes the statement or answers the questions.
You have exactly 45 minutes to finish the test There will be 35 questions, each is worth of 3 points
1) The Ricardian model demonstrates that
A) trade between two countries will benefit both countries
B) trade between two countries may benefit both regardless of which good each exports
C) trade between two countries may benefit both if each exports the product in which it has a
comparative advantage
D) trade between two countries may benefit one but harm the other
E) trade between two countries always benefits the country with a larger labor force
2) In a two-country, two-product world, the statement "Germany enjoys a comparative advantage
over France in autos relative to ships" is equivalent to
A) France having a comparative advantage over Germany in ships
B) France having a comparative disadvantage compared to Germany in autos and ships
C) Germany having a comparative advantage over France in autos and ships
D) France having no comparative advantage over Germany
E) France should produce autos
3) Based on the information in the table below, which of the following is correct:
Which of the following is correct
A) US has comparative advantage in wheat
B) US has comparative advantage in beef
C) Argentina has absolute advantage in wheat
D) Argentina has absolute advantage in beef
Trang 2Use the information in the table below to answer the following questions:
4) Given the information in the table above, Home's opportunity cost of cloth is
A) 0.5
B) 2.0
C) 6.0
D) 1.5
E) 3.0
5) Given the information in the table above, Foreign's opportunity cost of widgets is
A) 0.5
B) 2.0
C) 6.0
D) 1.5
E) 3.0
6) A nation engaging in trade according to the Ricardian model will find its consumption bundle
A) inside its production possibilities frontier
B) on its production possibilities frontier
C) outside its production possibilities frontier
D) inside its trade-partner's production possibilities frontier
E) on its trade-partner's production possibilities frontier
7) Assume that labor is the only factor of production and that wages in the United States equal
$20 per hour while wages in Japan are $10 per hour Production costs would be lower in the
United States as compared to Japan if
A) U.S labor productivity equaled 40 units per hour and Japan's 15 units per hour
B) U.S labor productivity equaled 30 units per hour and Japan's 20 units per hour
C) U.S labor productivity equaled 20 units per hour and Japan's 30 units per hour
D) U.S labor productivity equaled 15 units per hour and Japan's 25 units per hour
E) U.S labor productivity equaled 15 units per hour and Japan's 40 units per hour
Trang 38) The Ricardian model of international trade demonstrates that trade can be mutually beneficial
Why, then, do governments restrict imports of some goods?
A) Import restrictions are the result of trade wars between hostile countries
B) Trade can have significant harmful effects on some segments of a country's economy
C) Restrictions on imports can have significant beneficial effects on domestic consumers
D) The Ricardian model is often incorrect in its prediction that trade can be mutually beneficial
E) Imports are only restricted when foreign-made goods do not meet domestic standards of
quality
9) In the specific factors model, labor is defined as a(an)
A) intensive factor
B) mobile factor
C) variable factor
D) fixed factor
E) specific factor
10) In the specific factors model, which of the following is treated as a specific factor?
A) capital
B) technology
C) cloth
D) food
E) labor
11) In the specific factors model, a country's production possibility frontier is because
of
A) a straight line; diminishing marginal returns
B) a curved line; diminishing marginal returns
C) a straight line; constant marginal returns
D) a curved line; constant marginal returns
E) a curved line; a limited supply of labor
12) The slope of a country's production possibility frontier with cloth measured on the horizontal
Trang 4and food measured on the vertical axis in the specific factors model is equal to and it
as more cloth is produced
A) -MPLC/MPLF; becomes steeper
B) -MPLF/MPLC; becomes steeper
C) -MPLC/MPLF; is constant
D) -MPLF/MPLC; becomes flatter
E) -MPLF/MPLC; is constant
13) In the specific factors model, which of the following will increase the quantity of labor used
in food production?
A) an increase in the price of cloth relative to that of food
B) an increase in the price of food relative to that of cloth
C) a decrease in the price of labor
D) an equal percentage increase in the price of food and cloth
E) an equal percentage decrease in the price of food and cloth
14) The slope of a country's production possibility frontier is equal to and the optimal
production point is located where the slope is equal to Assume that output of good Y
is measured on the vertical axis, output of good X is measured on the horizontal axis, MPL is the
marginal product of labor with a subscript indicating which good, P is the price of a good, and w
is the wage rate
A) -PX/PY; -MPLY/MPLX;
B) -MPLY/MPLX; -PX/PY
C) -MPLX/MPLY; -PX/PY
D) -MPLY/w; -MPLF/w
E) -PX/w; -PY/w
15) In the specific factors model, a 5% increase in the price of food accompanied by a 5%
increase in the price of cloth will cause wages to , the production of cloth to ,
and the production of food to
A) increase by more then 5%; increase; remain unchanged
Trang 5B) increase by 5%; remain unchanged; remain unchanged
C) remain constant; decrease; decrease
D) remain constant; increase; increase
E) increase by less then 5%; decrease; increase
16) In the specific factors model, a 0% increase in the price of food accompanied by a 5%
increase in the price of cloth will cause wages to , the production of cloth to ,
and the production of food to
A) remain constant; decrease; decrease
B) increase by more than 5%; increase; remain unchanged
C) increase by less than 5%; increase; decrease
D) increase by 5%; remain unchanged; remain unchanged
E) remain constant; increase; increase
17) In the specific factors model, a 5% increase in the price of food accompanied by a 10%
increase in the price of cloth will cause in the welfare of labor, in the
welfare of the fixed factor in the production of food, and in the welfare of the fixed
factor in the production of cloth
A) an ambiguous change; an increase; a decrease
B) a decrease; an ambiguous change; an ambiguous change
C) an ambiguous change; an ambiguous change; an ambiguous change
D) an ambiguous change; a decrease; an increase
E) an increase; a decrease; an increase
18) Refer to the production possibility graph below Assume that the economy is in equilibrium
at point e If the price of good A increases, the new equilibrium is most likely to be
Trang 6A) point h.
B) point f
C) point e
D) point d
E) point b
19) The relative price of a unit of cloth in the small isolated country of Moribundia is 5 units of
food When the central city, Mudhole, puts in an airstrip, the country is able to engage in trade If
the relative price of cloth in the outside world is 8 units of food, then Moribundia will export
and factors used in the production of will benefit
A) cloth; immobile; food
B) food; mobile; food
C) food; immobile; food
D) cloth; immobile; cloth
E) cloth; mobile; cloth
20) In the specific factors model, the effects of trade on welfare overall are and for
fixed factors used to produce the imported good they are
A) ambiguous; positive
B) positive; negative
C) positive; positive
D) positive; ambiguous
E) negative; positive
21) Refer to the graph below Points A, B, and C represent , , and ,
respectively
Trang 7A) the global wage rate before migration; the wage rate in foreign after migration; the wage rate
in home after migration
B) the global wage rate before migration; the wage rate in home after migration; the wage rate in
foreign after migration
C) equilibrium wage rate after migration from foreign to home has occurred; the wage rate in
home before migration; the wage rate in foreign before migration
D) equilibrium wage rate after migration from home to foreign has occurred; the wage rate in
foreign before migration; the wage rate in home before migration
E) the wage rate in home before migration; the wage rate in home after migration; the wage rate
in foreign after migration
22) In the two-country model of international labor mobility
A) the effect of migration is to cause real wages in the two countries to diverge
B) the long-run equilibrium global real wage is equal to the greater of the pre-migration wages in
the two countries
C) labor has only limited international mobility
D) the long-run equilibrium global real wage is equal to the lesser of the pre-migration wages in
the two countries
E) the effect of migration is to cause real wages in the two countries to converge
Trang 823) 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
24) 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
25) 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
26) 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 capital-intensive product would decrease in Belgium
B) relative product prices would diverge between Australia and Belgium
C) the relative price of the land-intensive product would increase in Australia
D) the relative price of the land-intensive product would increase in Belgium
E) the relative price of the capital-intensive product would increase in Australia
Trang 927) 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) capital-intensive goods
B) labor-intensive goods
C) both labor- and land-intensive goods
D) both capital- and land-intensive goods
E) land-intensive goods
28) Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country H is
relatively labor abundant, then once trade begins
A) wages should fall and rents should rise in H
B) wages and rents should fall in H
C) wages should rise and rents should fall in H
D) rent will be unchanged but wages will rise in H
E) wages and rents should rise in H
29) Suppose that there are two factors, capital and land, and that the United States is relatively
land endowed while the European Union is relatively capital-endowed According to the
Heckscher-Ohlin model
A) European landowners should support U.S.-European free trade
B) the U.S should compensate European countries once trade commences
C) European capitalists should support U.S.-European free trade
D) all landowners should support free trade
E) all capitalists in both countries should support free trade
30) International trade has strong effects on income distributions Therefore, international trade
A) will be beneficial to all those engaged in international trade
B) will tend to hurt one trading country
C) will tend to hurt everyone in both countries
D) will tend to hurt some groups in each trading country
E) is beneficial to everyone in both trading countries
31) Why does the gravity model work?
Trang 10A) Large economies became large because they were engaged in international trade.
B) Large economies have relatively large incomes, and hence spend more on government
promotion of trade and investment
C) Large economies have relatively larger areas, which raises the probability that a productive
activity will take place within the borders of that country
D) Large economies tend to have large incomes and tend to spend more on imports
E) Large economies tend to avoid trading with small economies
32) We see that the Netherlands, Belgium, and Ireland trade considerably more with the United
States than with many other countries
A) This is explained by the gravity model, since these are all large countries
B) This is explained by the gravity model, since these are all small countries
C) This fails to be consistent with the gravity model, since these are small countries
D) This fails to be consistent with the gravity model, since these are large countries
E) This is explained by the gravity model, since they do not share borders
33) The gravity model suggests that over time
A) trade between neighboring countries will increase
B) trade between all countries will increase
C) world trade will eventually be swallowed by a black hole
D) trade between Earth and other planets will become important
E) the value of trade between two countries will be proportional to the product of the two
countries' GDP
34) The gravity model offers a logical explanation for the fact that
A) trade between Asia and the U.S has grown faster than NAFTA trade
B) trade in services has grown faster than trade in goods
C) trade in manufactures has grown faster than in agricultural products
D) Intra-European Union trade exceeds international trade by the European Union
E) the U.S trades more with Western Europe than it does with Canada
35) In general, which of the following do NOT tend to increase trade between two countries?
A) linguistic and/or cultural affinity
Trang 11B) historical ties
C) larger economies
D) mutual membership in preferential trade agreements
E) the existence of well controlled borders between countries
- Good luck!