ECN 306 Exam 1 Questions and
Answers12
fewer, more - ANSWERS -Mercantilists push for ____ imports and ______ exports
Absolute advantage - ANSWERS -When labor productivity is higher than the rest of the world or
other country.
Opportunity Cost - ANSWERS -The ____________ of producing more of a product in a country is
the amount of production of the other product that is given up
Relative Price - ANSWERS -The ratio of one product price to another product price
Autarky - ANSWERS -No trade between countries.
Consumer Surplus - ANSWERS -Difference between willingness to pay and actual price.
Producer Surplus - ANSWERS -Difference between amount paid, and cost
Adam Smith - ANSWERS -Who wrote "Weath of Nations"?
households - ANSWERS -Who does Adam Smith compare nations to in his book?
Labor Productivity - ANSWERS -The number of units of output that a worker can produce in one
labor hour
, Willingness to pay - ANSWERS -Max amount a buyer will pay for a good.
Producer Surplus - ANSWERS -The area above the supply curve & under the price
Total Surplus - ANSWERS -Consumer surplus + Producer surplus
Deadweight loss - ANSWERS -Loss of total surplus
Arbitrage - ANSWERS -Buying something in one market, and reselling the same thing in another
market to profit from a price difference.
True - ANSWERS -With no trade, differences in the price of a product between national markets
creates an arbitrage opportunity that can lead to international trade.
True/False
International/world price - ANSWERS -If there are no transport costs or other frictions, free
trade results in the new countries having the same price. What is this price called?
Mercantilism - ANSWERS -Goal of nations is to accumulate wealth.
World Price - ANSWERS -Under the Heckscher-Ohlin model, a small country is considered to be
any country that doesn't effect _______.
Heckscher-Ohlin Theory of trade - ANSWERS -Predicts that a country exports the product that
uses its relatively abundant factor(s) intensively and imports the product (or products) that uses
its relatively scarce factor(s) intensively.
Answers12
fewer, more - ANSWERS -Mercantilists push for ____ imports and ______ exports
Absolute advantage - ANSWERS -When labor productivity is higher than the rest of the world or
other country.
Opportunity Cost - ANSWERS -The ____________ of producing more of a product in a country is
the amount of production of the other product that is given up
Relative Price - ANSWERS -The ratio of one product price to another product price
Autarky - ANSWERS -No trade between countries.
Consumer Surplus - ANSWERS -Difference between willingness to pay and actual price.
Producer Surplus - ANSWERS -Difference between amount paid, and cost
Adam Smith - ANSWERS -Who wrote "Weath of Nations"?
households - ANSWERS -Who does Adam Smith compare nations to in his book?
Labor Productivity - ANSWERS -The number of units of output that a worker can produce in one
labor hour
, Willingness to pay - ANSWERS -Max amount a buyer will pay for a good.
Producer Surplus - ANSWERS -The area above the supply curve & under the price
Total Surplus - ANSWERS -Consumer surplus + Producer surplus
Deadweight loss - ANSWERS -Loss of total surplus
Arbitrage - ANSWERS -Buying something in one market, and reselling the same thing in another
market to profit from a price difference.
True - ANSWERS -With no trade, differences in the price of a product between national markets
creates an arbitrage opportunity that can lead to international trade.
True/False
International/world price - ANSWERS -If there are no transport costs or other frictions, free
trade results in the new countries having the same price. What is this price called?
Mercantilism - ANSWERS -Goal of nations is to accumulate wealth.
World Price - ANSWERS -Under the Heckscher-Ohlin model, a small country is considered to be
any country that doesn't effect _______.
Heckscher-Ohlin Theory of trade - ANSWERS -Predicts that a country exports the product that
uses its relatively abundant factor(s) intensively and imports the product (or products) that uses
its relatively scarce factor(s) intensively.
