国际贸易

Assignment 1Due date: May 7, 2014Section I Multiple choice questions (20 marks)1. . Which of the following is true of consumer surplus?A. I t is graphically represented as the area under the equilibrium price and abovethe supply curve of a good.B. I t is the net gain in economic well-being associated with producing and sellingthe equilibrium quantity of a good.C. I t is used to measure the impact of a change in price on the economicwell-being of the producers.D. I t is the difference between the value that one places on a good and the pricepaid for the good.2. Refer to Figure 2.1 below. At a price of $70, the consumer surplus equalsA. $6,000,000.B. $8,000,000.C. $5,000,000.D. $10,000,000.3.Refer to Figure 2.1.above. At a price of $70, the producer surplus equals:A. $6,000,000.B. $8,000,000.C. $15,000,000.D. $30,000,000.4. An increase in the imports of clothing into the United States from India will benefitthe _____ and hurt the ____.A. U.S. clothing producers; Indian clothing producersB. I ndian consumers; Indian clothing producersC. U.S. consumers; Indian clothing producersD. U.S. consumers; the U.S. clothing producers5. Suppose country A and country B are the only two countries in the world. CountryA imports good X from countryB and exports good Y. In the absence of any transportation cost, at the world price of good X:A. c ountry B's export supply curve is perfectly inelastic.B. both country A's import demand curve and country B's export supply curve arepositively sloped.C. country A's import demand curve will be perfectly inelastic.D. c ountry A's import demand curve will intersect country B's export supply curve.6. According to the Mercantilists, governments should:A. s ubsidize and encourage imports.B. s ubsidize and encourage exports.C. a llow for free trade unencumbered by government regulations and restrictions.D. n ot spend much on national defense.7. Labor productivity refers to:A. t he number of units of output that a worker can produce in one hour.B. the total number of units of a good that all workers in a firm produce in one day.C. the number of hours it takes a worker to produce one unit of output.D. t he total number of hours it takes all the workers in a firm to produce a givenamount of the output in one day.8. If a country exports the good that it can produce at a low opportunity cost and imports those goods that it would otherwise produce at a high opportunity cost, we say that such trade is based on:A. t he theory of absolute advantage.B. the arbitrage pricing theory.C. the theory of factor endowments.D. t he theory of comparative advantage.9. A bottle of wine can be produced in France with 2 labor hours, and in the United States with 4 labor hours. A pound of beef can be produced in France with 1 labor hour, and in the United States with ½ labor hours. Which of the following is true in this context?A. F rance has a comparative advantage in the production of beef.B. France has an absolute advantage in the production of beef.C. The United States has an absolute, but not a comparative advantage in theproduction of beef.D. T he United States has both comparative and absolute advantage in the productionof beef.10. In a two-country two-good model, if a country has an absolute advantage in theproduction of a certain good, it implies that:A. i t is not possible that this country can gain by importing this good from the othercountry.B. this country also has a comparative advantage in the production of this good.C. it has greater resources than the other country.D. t his country has higher labor productivity in the production of this good.11. Which of the following best explains why increasing marginal costs of productionarise?A. T he factor endowments vary across countries.B. All the factor inputs are not fully utilized in the production of differentcommodities.C. Different consumers have different taste and preference sets.D. D ifferent commodities use inputs in different proportions.12. China has 20% of the world's population but only 10% of the world's farmableland. Which of the following will be predicted by the Heckscher-Ohlin theory, ifChina begins to trade with other countries?A. C hina will export land-intensive goods like wheat and import labor-intensivegoods like clothing.B. China will shift resources into the production of agricultural goods and away frommanufactured goods.C. China will shift resources from the production of agricultural goods to theproduction of labor-intensive goods.D. C hina will export capital-intensive goods like automobiles and importlabor-intensive goods like clothing.13. The United States is relatively capital-abundant because:A. c apital costs more in the United States than in the rest of the world.B. the United States has more capital than the rest of the world.C. the United States produces and exports primary products to the rest of the worldand imports manufactured goods.D. t he ratio of capital to other inputs is greater in the United States than that in the restof the world.14. Refer to Figure 4.1.below. In the absence of trade Canada will:A. p roduce and consume at point S1.B. produce and consume at point C0.C. produce at point S1 and consume at point C0.D. p roduce and consume at point C1.In the figure given above-AB is the production-possibility curve of Canada. In the absence of trade, the price ratio is 1 bushel of wheat/bale of cotton as shown by the line PQ. The international price ratio is 0.25 bushels of wheat/bale of cotton as shown by the line RS. I1 and I2 are the pre-trade and the post-trade community indifference curves of Canadarespectively.15. Refer to Figure 4.1.above. After Canada engages in free trade, it will:A. p roduce at point S1 and consume at point C1.B. produce and consume at point C0.C. produce at point S1 and consume at point C0.D. p roduce and consume at point C1.16. In the short-run, following the opening of trade:A. i nputs move across sectors, but input returns remain constant.B. factor payments in the import-competing sectors will decline.C. the supply of resources to the export-oriented sectors will decline.D. w orkers in all the sectors will receive lower wages due to cheap imports.17. If trade corresponds to the Heckscher-Ohlin theory, which of the following ismost likely to happen in the long run after a labor-abundant country engages in free trade?A. T he rate of unemployment in the country is most likely to increase.B. The total output in the economy will decline.C. The capital to labor ratio in the export sector will increase.D. T he rental rates of capital will increase but the wage rates will decline.18. The Heckscher-Ohlin theory predicts that the opening of trade between aland-abundant country and a labor-abundant country should result in:A. h igher rents and wages in both countries.B. lower rents and wages in both countries.C. higher rents in the labor-abundant country and higher wages in the land-abundantcountry.D. h igher wages in the labor-abundant country and higher rents in the land-abundantcountry.19. The Stolper-Samuelson theorem indicates that given certain assumptions andconditions:A. t he real return to the factor used intensively in the import-competingindustry will rise in the long-run.B. the real return to the factor used intensively in the export industry will fall inthe long-run.C. the real return to all the resources in an economy will increase.D. t he real return to the factor used intensively in the export industry will rise inthe long-run.20. Which of the following is most likely to be predicted by the Heckscher-Ohlintheory?A. T he industrialized nations will mainly export labor-intensive goods.B. The developing countries will mainly export labor-intensive goods.C. The wage rate of the low-skilled workers will be higher in the developingcountries than in the developed countries.D. C ountries like the United States will completely specialize in the production ofprimary commodities.Section 2 II True or False Questions (20 marks)Indicate whether the following statements are true or false. If the statement is false, provide an explanation as to why it is false.1. Free trade is a zero-sum activity because a country always gains at the expense of its trading partner.2. If the world price is higher than the no-trade domestic price, then domestic producers gain and domestic consumers lose as a result of free trade.3. Mercantilists believed that a country gains from international trade only at the expense of another country or countries.4. If country X has a higher labor productivity than the rest of the world in the production of a good, then country X has a comparative advantage in the production of the good.5. According to the theory of comparative advantage, trade will not occur if one country is less efficient in the production of all products.6. The difference between the Heckscher-Ohlin theory of trade and the Ricardian model is that the former assumes that an economy produces only two goods.7. When increasing amounts of a variable factor are added to a fixed factor, the output increases but at a diminishing rate.8. According to the Heckscher-Ohlin model, countries will engage in trade only if they have different production technologies.9. International trade patterns are broadly consistent with the Heckscher-Ohlin prediction that nations tend to export the products that use their abundant factors intensively.10. Factor-price equalization theory predicts that post trade the input prices within a country will equalize.Section III Short answers/problems(40 marks)1. Why would winter clothing be produced in countries whose residents have very little demand for such clothing?2.Explain how a mutually beneficial trade is possible in a two-country two-good model even when one of the countries has absolute advantage in the production of both the commodities.3. (Exercise 2 of Chapter 4)"For a world in which international trade would be based only on the differences featured in the Heckscher-Ohlin theory, the shift from no trade to free trade is like a zero-sum game." Do you agree or disagree? Why?4. (Exercise 4 of Chapter 5)One of your relatives suggests to you that our country should stop trading with other countries because imports take away jobs and lower our national well-being. How would you try to convince him that this is probably not the right way to look at international trade and its effects on the country?Section IV Essay section(20 marks)1. (Exercise 12 of Chapter 2)Country I has the usual demand and supply curves for candy bars. Country II has a typical demand curve too, but it cannot produce candy bars.a. Use supply and demand curves for the domestic markets and for the international market. Show in a set of graphs the free-trade equilibrium for candy bars. Indicate the equilibrium world price. How does this world price compare to theno-trade price in Country I? Indicate how many candy bars are traded during each time period with free international trade.b. Show graphically and explain the effects of the shift from no trade to free trade on surpluses in each country. Indicate the net national gain or loss from free trade for each country.NOTE:1. Assessment CriteriaThe mai n purpose of Assignment 1 is to see if you can understand the basic principles of trade theories covered in Chapter 2,3,4 and 5, and to see how well you can use them to solve real-life problems. You should follow the basic principles in you textbook, and answer the questions and solve the p roblems in your own words. Sinceyou are working with a second language, generally, you will not loose points for language mistakes, but you have to try your best to make yourself clear.2. LayoutPaperA4 size blank white paper should be used for the assignments.Assignments should be word-processed using single spacing Times New Roman11.The front coverThe front cover of your assignment should include:1. Subject2. Assignment number3. Your name and student number.MarginsThe right-hand margin must be at least 5 cm wide to allow for marker’scomments. Unless you specifically request otherwise the marker reserves the right to place ink comments in the margins.PagesAll pages <except cover page if there is one> must be numbered. Use only one side of the paper. Number each page. Fasten pages securely in the topleft-hand corner with staples, do not use paper clips.3. PlagiarismIt is unfair to honest students that other students cheat or plagiarise. The University takes a serious view of plagiarism and cheating in any form of assessment,and will take appropriate steps to detect plagiarism.Plagiarism consists of a person using the words or ideas of another as if they were his or her own. That is, using, or attempting to use, another person’s work without acknowledgement. The phrase “using another person’s work” includes, but is not limited to:-paraphrasing the work of another person;-directly copying any part of another person’s work;-summarising the work of another person;-using or developing an idea or theme derived from another person’s work;-using experimental results obtained from another person’s work; and-in the collaborative projects, falsely representing the individual contributions of the collaborating students where individual contributions are to beidentified.Other forms of cheating will also be treated with the utmost seriousness.。