Q. In international-trade equilibrium in the Heckscher-Ohlin model,
✅ Correct Answer: (The capita)
International Economics MCQs and Notes
Q. The following are all assumptions that must be accepted in order to apply the Heckscher - Ohlin Theory, except for one:
✅ Correct Answer: (B)
Countries differ in their technologies.
Q. If a very small country trades with a very large country according to the Ricardianmodel, then
✅ Correct Answer: (C)
The small country will enjoy gains from trade.
Q. In the Ricardian model, if a country's trade is restricted, this will cause all except which?
✅ Correct Answer: (C)
Cause nations to produce inside their production possibilities curves
Q. A nation engaging in trade according to the Ricardian model will find its consumption bundle
✅ Correct Answer: (C)
Outside its production possibilities frontier.
Q. As a result of trade, specialization in the Ricardian model tends to be
✅ Correct Answer: (B)
Complete with constant costs and incomplete with increasing costs.
Q. In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ____unit labor requirements
✅ Correct Answer: (D)
Four
Q. The Ricardian theory of comparative advantage states that a country has a comparative advantage in widgets if
✅ Correct Answer: (D)
The output per worker of widgets as compared to the output of some other product ishigher in that country.
Q. Trade between two countries can benefit both countries if
✅ Correct Answer: (A)
Each country exports that good in which it has a comparative advantage.
Q. Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land. Note that wages are the returns to labor and rents are the returns to land. According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B.
✅ Correct Answer: (C)
Wages should rise and rents should fall in Country A