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International Economics Questions

I would like some assistance in the checking of my answers to my multiple choice questions. I'm not sure about some of my choices and could use a second opinion concerning the answers. Any help is greatly appreciated.

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1. Assume that corn production requires only land and can production requires only labor. The United States can produce either 70 kilograms of corn or 100 cans in an hour. Mexico can produce either 60 kilograms of corn or 20 cans in an hour. Which of the following statements is TRUE?

The United States has more efficient resources for the production of cans than Mexico.

Mexico can produce more corn than the United States.

(selected) Both countries jointly can produce 120 cans and 120 kilograms of corn.

Neither country is better endowed for producing cans.

2. The greatest proof against the factor-proportions theory was the post World War II occurrence of:

U.S. importation of capital intensive goods.

U.S. exportation of capital intensive goods.

Germany's unprecedented wartime debt.

(selected) U.S. importation of labor intensive goods.

3. In the Heckscher-Ohlin model, a decrease in the factors of production required to produce rice and beans would:

Shift the production possibilities frontier for rice and beans outward.

Shift the production possibilities frontier for rice and beans upward.

Shift the production possibilities frontier for rice and beans rightward.

(selected) Shift the production possibilities frontier for rice and beans inward.

4. Which of the following models examines trade based on variations in resource abundance?

(selected) Heckscher-Ohlin theory

Ricardian model

Resource endowment Theory

Gravity model

5. In the Heckscher-Ohlin model, the production possibilities frontier is bowed outward due to which of the following?

(selected) Production resource constraints

Holes in available resources

Decreasing marginal costs

Increasing relative wages

6. Which of the following is NOT a reason why the Ricardian model is not thorough in its assessment of international trade?

Countries are endowed with different resources.

Labor productivity is not important when it comes to international trade.

Trade is partly explained by varying factors of production among trading nations.

(selected) Both labor productivity and resources determine advantages in trade.

7. According to Bowen, Leamer, and Sveikauskas, which of the following is true?

(selected) A nation indirectly exports its most abundant factors of production.

A nation indirectly imports its most abundant factors of production.

A nation directly exports its most abundant factors of production.

A nation directly imports its least abundant factors of production.

8. Which of the following statements regarding the Heckscher-Ohlin model and Ricardian trade theory is TRUE?

Both the Heckscher-Ohlin and Ricardian models are current, relevant, and applicable in explaining world trade patterns.

(selected) The Ricardian model is an excellent simplified introduction to world trade patterns, but the Heckscher-Ohlin model is more relevant in regards to explaining empirical evidence.

The Ricardian model is useless in explaining trade patterns, and the Heckscher-Ohlin theory, though more applicable, is not sufficient for explaining real world trade patterns.

The Ricardian model is extremely useful in analyzing trade patterns, but the Heckscher-Ohlin model is only useful in theoretical applications.

Solution Preview

These questions are pretty difficult. There are several of your answers that you might want to reconsider. Here is my reasoning:

1. Jointly, the US and Mexico could produce either 130 kg of corn (70+60), or 120 cans (100+20), but not both. The US has more efficient resources for producing cans, since it produces many more per hour.

2. Factor proportions theory predicts that countries import their most abundant factor of production, be it labor or ...

Solution Summary

The international economic questions are provided.

$2.19