Econ Exam 2 Reading Quiz Questions And Answers 2024

Econ Exam 2 Reading Quiz Questions And Answers 2024If country A's (P X/P Y) in autarky is greater than the (P X/P Y) on the world market, then, as the country moves from autarky to trade, the relative price of good X facing A's producers will ________, and A's producers will hence want to shift their production toward producing ________. - correct answer-decrease; more of good Y and less of good X Given the following graph showing production-possibilities frontiers for country A and country B in a situation where both countries are on the same community indifference curve S 1 in autarky: Prior to trade, P X/P Y in country A is ________ P X/P Y in country B, and, when trade begins, country A will import good ________. - correct answer-greater than; X Given the production-possibilities-frontier/community-indifference-curve diagram below, where P is the autarky production point, C is the free trade consumption point, P 1 represents autarky prices, and P 2 represents free-trade prices, the free-trade production point is ________ and the autarky consumption point is ________. - correct answer-R; P Given the production-possibilities-frontier/community-indifference-curve diagram below, where P is the autarky production point, C is the free trade consumption point, P 1 represents autarky prices, and P 2 represents free-trade prices, as the country moves from autarky to free trade, the difference between the S 0 and S 1 satisfaction levels is called the - correct answer-"consumption gain" (or "gains from exchange") n the following graph showing indifference curves for country A (a 1) and for country B (b 1) in a situation where both countries have the same production-possibilities frontier, in autarky, P X/P Y in country A is ________ P X/P Y in country B, and, if trade begins, country A will export good ________. - correct answer-less than; X If two countries with increasing opportunity costs have identical PPFs but different tastes, - correct answer-the countries will have different relative commodity prices under autarky, and each country can gain by exporting the good for which its consumers have the lower relative preference If a country's P X/P Y in autarky is less than the P X/P Y on the world market, then this country has a comparative advantage in the ________ good, and, if the country now engages in international trade and moves along its production-possibilities frontier, its production of the X good will ________. - correct answer-X; increase Given the diagram below, which shows country A in its autarky position at point E [where the price line labeled p 0 is tangent to both country A's production-possibilities frontier (PPF) and country A's indifference curve S 0]: If country A now is opened to international trade in a situation where the price of bread relative to the price of meat is lower on the world market than it is in A's autarky position, then ________; with international trade, country A will be ________. - correct answer-country A will face a flatter price line than p0 and will change production to a point on the PPF that is upward and to the left from point E; exporting meat and importing bread In the neoclassical model of trade, the movement of a country from autarky to free trade generally results in ________ specialization in production, ________ the situation in the Classical model. - correct answer-partial; unlike If a country's P X/P Y in autarky is less than the P X/P Y on the world market, then, as the country moves from autarky to trade, the relative price of good Y will ________ for home consumers. Thus, consumers with a strong relative preference for good ________ would tend to oppose the movement to trade. - correct answer-decrease; X If two countries have identical production-possibilities frontiers but different tastes, it is possible for each country to gain from trade with the other country - correct answer-in the neoclassical model but not in the classical model In the neoclassical (or modern) theory, two countries with identical production-possibilities frontiers (PPFs) - correct answer-can gain from trade with each other if demand conditions (tastes) differ in the two countries and the identical PPFs demonstrate increasing opportunity costs As a country moves from autarky to trade, the relative price of the country's export good will ________ for home consumers, and the relative price of the country's import good ________ for home consumers.__ - correct answer-rise; will fall In the following graph, at point W (and ignoring the negative signs), the marginal rate of transformation (MRT) in production ________ the marginal rate of substitution (MRS) in consumption. - correct answer-is less than Given the diagram below, in which country A is producing at point P and consuming at point C: Country A is ________, and the ratio of the price of food relative to the price of books [i.e., (P food/P books)] reflected by price line P 0 is ________ than the (P food/P books) ratio that existed when country A was in autarky. - correct answer-exporting food and importing books; higher