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13. If the international terms of trade settle at a level that is between each country’s opportunity cost

a. There is no basis for gainful trade for either country 

b. Both countries gain from trade

c. Only one country gains from trade

d. One country gains and the other country loses from trade 

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Raushan Raj
Raushan RajLv8
2 Nov 2020

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Related questions

18. 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. the relative factor prices in the two countries diverge.

c. all factors in both countries will gain from trade.

d. all factors in one country will gain, but there may be no gains in the other country.

e. benefits from trade are evenly distributed between the two countries.

19. In the Heckscher-Ohlin model, when there is an international-trade equilibrium

a. the workers in the capital-abundant country will earn less than those in the capital-scarce country.

b. the capital-abundant country will charge less for the capital intensive good than the price paid by the capital-scarce country for the capital-intensive good.

c. the capital-abundant country will charge more for the capital intensive good than the price paid by the capital-scarce country for the capital-intensive good.

d. the workers in the capital-abundant country will earn more than those in the poor country.

e. the relative price of the capital intensive good in the capital-abundant country will be the same as that in the capital-scarce country.

 

 

Which of the following statements about trade is false?

a. Trade increases competition.

b. With trade, one country wins and one country loses.

c. Bulgaria can benefit, potentially, from trade with any other country.

d. Trade allows people to buy a greater variety of goods and services at a lower cost.

The law of comparative advantage states that:

a. each country should specialize in producing the good with the lowest opportunity cost.

b. a country that is able to produce something using fewer resources than other countries would gain from specialization and trade.

c. international trade barriers slow the introduction of new goods and better technologies.

d. countries can gain from trade if production is subject to economies of scale.

e. countries must agree on how much of one good exchanges for another.

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