MBA 680 EXAMS (1-3) | 60 COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS | 2026 LATEST UPDATED | GET A+
The following input-requirements data are for Country A, a capital-abundant country that
produces nothing but bread and wine using only capital and labor as inputs. Which of the
following can most reasonably be inferred for the short run after this country opens to free trade?
- (Answer)The wage rates and rental rates of capital will rise in the wine industry but will fall in
the bread industry.
In the absence of trade, a country produces at a point where its production-possibility curve is
tangent to the highest possible community indifference curve. - (Answer)True
When factors of production move to better-paying sectors of the economy in the long run after
the opening of trade in the country, wages and rents will be bid back to their pre-trade levels. -
(Answer)False
Assume the standard trade model with two countries (Alpha and Beta), two goods (food and
drink), and two factors of production (land and labor). Further assume that Alpha is relatively
labor-abundant and food is relatively land-intensive. According to the Heckscher-Ohlin theory,
Alpha has a comparative advantage in the production of - (Answer)Drink
, Consider a two-country, two-commodity model. The table below shows the units of Good X and
Good Y produced in Country A and Country B per labor hour. Which of the following statements
is true? - (Answer)Country A has an absolute advantage in the production of Good X.
With a shift from no trade to free trade, if Country X is relatively labor-abundant and relatively
land-scarce and Country Y is relatively labor-scarce and relatively land-abundant, the factor-
price equalization theorem predicts that - (Answer)Wages will rise in Country X and fall in
Country Y until they equalize.
In the figure below, AB is the production-possibility curve of Canada. I1 and I2 are two of the
community indifferences curves of Canada. In the absence of trade Canada will: -
(Answer)produce and consume at point C0.
When factors of production move to better-paying sectors of the economy in the long run after
the opening of trade in the country, wages and rents will be bid back to their pre-trade levels. -
(Answer)False
When Wassily Leontief tested the predictions of the Heckscher-Ohlin theory, he found that in
1947 the United States was exporting relatively labor-intensive goods and importing relatively
capital-intensive goods. His findings - (Answer)contradicted the Heckscher-Ohlin theory,
because the United States was relatively capital-abundant.
SOLUTIONS | 2026 LATEST UPDATED | GET A+
The following input-requirements data are for Country A, a capital-abundant country that
produces nothing but bread and wine using only capital and labor as inputs. Which of the
following can most reasonably be inferred for the short run after this country opens to free trade?
- (Answer)The wage rates and rental rates of capital will rise in the wine industry but will fall in
the bread industry.
In the absence of trade, a country produces at a point where its production-possibility curve is
tangent to the highest possible community indifference curve. - (Answer)True
When factors of production move to better-paying sectors of the economy in the long run after
the opening of trade in the country, wages and rents will be bid back to their pre-trade levels. -
(Answer)False
Assume the standard trade model with two countries (Alpha and Beta), two goods (food and
drink), and two factors of production (land and labor). Further assume that Alpha is relatively
labor-abundant and food is relatively land-intensive. According to the Heckscher-Ohlin theory,
Alpha has a comparative advantage in the production of - (Answer)Drink
, Consider a two-country, two-commodity model. The table below shows the units of Good X and
Good Y produced in Country A and Country B per labor hour. Which of the following statements
is true? - (Answer)Country A has an absolute advantage in the production of Good X.
With a shift from no trade to free trade, if Country X is relatively labor-abundant and relatively
land-scarce and Country Y is relatively labor-scarce and relatively land-abundant, the factor-
price equalization theorem predicts that - (Answer)Wages will rise in Country X and fall in
Country Y until they equalize.
In the figure below, AB is the production-possibility curve of Canada. I1 and I2 are two of the
community indifferences curves of Canada. In the absence of trade Canada will: -
(Answer)produce and consume at point C0.
When factors of production move to better-paying sectors of the economy in the long run after
the opening of trade in the country, wages and rents will be bid back to their pre-trade levels. -
(Answer)False
When Wassily Leontief tested the predictions of the Heckscher-Ohlin theory, he found that in
1947 the United States was exporting relatively labor-intensive goods and importing relatively
capital-intensive goods. His findings - (Answer)contradicted the Heckscher-Ohlin theory,
because the United States was relatively capital-abundant.
