Mid-term Examination for International EconomicsLMultiple choices: 30%1.Mercantilists believedA.That trade can only benefit a country at the expense of all other countries・B.That maintaining a balance of trade surplus was best.ernment should have no control over trade.D.Amassing large quantities of gold and silver were damaging to the health of a country.2.Specialization in production is ______ with _______ ・A.Incomplete; constant costsB.Incomplete; increasing costsC.Variable; constant costsplete; increasing costs3.China is relatively labor-abundant and Australia is relatively land-abundant. Textiles are relatively more labor-intensive than the production of wool According to Hcckschcr-Ohlin (H-O) theory, Australia will have:A.A comparative advantage in textiles. B・ An absolute advantage in textiles.C.A comparative advantage in wool.D. An absolute advantage in wool.4.Considering a world economy with two goods, two countries・ Suppose country 1 specializes in and exports commodity x in exchange of commodity y. Which of the following is the possible basis for international trade according the absolute advantage theory ?A.The unit labor requirment in x production is less in Country 2 than that in Country 1 ・B.The relative price of x in Country 1 exceeds the relative price of x in country 1C・ Country 1 can produce a unit of x with less labor than country 2D.All of the above.5.Which of the following is not the assumption generally used in the study of classical intcrnational trade theory?A.perfect competitionB.difference in factor endowmentplete specializationD.pefect intemaional moility of factors6.Gains from trade can be demonstrated in the neoclassical model by noting thatA.trade leads to specializationB.trade brings out diversity in consumptionC.trade results in more consumption above the production possbility frontierD.trade allows a country to learn new technology7.Which of the following is not long-run results of free trade:modity prices equalize between countries.B.Countries specialize more・C.One country gains while the other loses・D.Factor prices equalize between countries・8.In a labor-abundant country:A.Wage rates will fall with the opening of free trade・B.Wage rates will rise with the opening of fi-ee trade.C・ Wage rates will stay the same with the opening of free trade.D・ The change of wage rates is ambiguous・9. Which of the following would be winners when trade breaks out in a land abundant country:ndownersB. workersC. capital owners D・ all of them10.If the U.S. has a comparative advantage in the production of corn (land-intensive, and has a comparative disadvantage in the production of textiles (labor-intensive., in the short-mn, landowners in which sectors would gain?A. cornB. textilesC. bothD. neither11 ・Before trade, Australia is relatively abundant in capital and China is relatively abundant in labor. We would expect that the incomes of ________ in China and of _________ in Australia would increase・12.Heckscher-Ohlin theory can also be called:A.The theory of comparative advantage・B・ Factor-endowment theory.C・ The theory of absolute advantage・ D. The factor-proportions theory.13.Gains from trade can be broken down into two components:A.From exchange;from spccializationB.From specialization; from progress in producitivityC.From the technology change;from specializationD・ From factor transition; from exchange14.Which of the following is one of the assumptions of the H-O Model?A.Nations use diffcrcncc tech no logy in productionB.Both commodities are produced under increasing returns to scaleC.Tastes are equal in both nationsD・ There is imperfect factor mobility within each nation and no international factor mobility15.Equilibrium Relative Commodity Price with trade detennined byA.Mutual demand and supply in the world marketB.Trade neogiation between the two countriesC.The international unit labor requirments of the commodityD.The management by both governments16.Which of the following can lead to international tradeA.diffcrcnccs in taste B・ differences in resourcesC・ differences in productivity D. all of the above17.The Leontief Paradox found fault with:A.The theory of absolute advantage・B. The theory of comparative advantage・C.Heckschcr・Ohlin (H-O) theory.D. The Factor Price Equalization theorem.18.IfY production uses 80 workers and 200 units of capital, while X production uses 20 workers and 20 units of capital, thenA.Y production is Capital intensiveB.X production is Capital intensiveC.If country 1 is labor aboundant, she should specialize in and export X.D.All of the above are false.19.In a specific factors model, the increase of price of manufocturcs will not leads tobor shifts from the food sector to the manufacturing sectorB.output of manufactures rises while that of food falls.C.Workers are definitely better offD.The wage rate rises in both sectors.20.Only doubling labor with trade in a large labor-abundant country _____ ・A. deteriorate the country's terms of trade B・ can increase or reduces the volume of tradeC.reduces the country's social welfareD.all of the above・2 l.The Rybczynski theorem postulates that doubling labor at constant relative commodity price _____ ・A.doubles the output of the labor-intensive commodityB.reduces the output of the capital-intensive commodityC.keeps the output of the capital-intensive commodity unchanged23. A monopoly firm engaged in international trade will _____ . A. equate average to local costsB. equate marginal costs with foreign marginal revenuesC. equate marginal costs with the highest price the market will bearD. equate marginal costs with marginal revenues in both domestic and foreign markets.24.If some industries exhibit internal increasing returns to scale in each country, wc should NOT expect to see ______ ・A. intra-industiy trade between countriesB.perfect competition in these industriesC.interindustry trade between countriesD.high levels of specialization in both countries25.In the domestic monopolistically competitive market, as the number of varieties increases, the price ________ and the unit cost26.A product is produced in a monopolistically competitive industry with scale economies ・ If this industry exists in two countries, and these two countries engage in trade one with the other, we would expectA. the country in which the price of the product is lower will export the product.B. thc country with a relative abundance of the factor of production in which production ofC. the product is intensive will export this product.D. each of the countries will export different varieties of the product to the other.27.International trade based on internal scale economies in both countries is likely to be carried out by a ______ ・A. relatively large number of price competing firmsB. relative small number of price competing firmsC. relative small number of competing oligopolistsD. monopoly firms in each country/industry.28. Which of the following is not correct about the intraindustry trade and intraindustry trade:A The basis for trade in interindustiy trade is comparative advantage, and that in intraindustry trade is not comparative advantageB The pattern of inteeindustry trade itself is unpredictable, and the pattern of interindustry can be predicted through the pretrade relative price of commodites.C If Home and Foreign are similar, there will be more interindustry trade ・D Intraindustry trade can make all factors better off.29. Which of the following factors would NOT be likely to contribute to a worsening of the terms of trade of developing countries?A. Heavy reliance on primary production exports ・B. The differing price effects of technological change compared to developed countries ・C. Developing countries' attempts to diversify their exports and include more manufactured goods in their export commoditiesD. Differences in the demand characteristics of the developing countries' exports and imports.30. Assume a country that produces cloth and coal. Assume that cloth production requires significant amounts of labor and capital, but relatively little land. Assume that coal production requires relatively little labor and capital, but relatively large amounts of coal-rich land. Given increases in the country's endowments of capital and labor, we can expect thatA. both cloth and coal production will in crease ・A.increases; increasesB. increases; decreasesC. decreases; increasesD.decreases; decreases D.any of the above.B.cloth production will increase, but coal production will remain constant.C.coal production will increase, but cloth production will remain constant.D.cloth production will increase, but coal production will decline・II.True or False:10%31.To increase one country's wealth, the country must sell more to strangers than consume of theirs in value yearly.32.If one nation is less efficient than the other country in the production of both commodities, there is not a basis for mutuallybeneficial trade・33.The Ricardian model explains why abosulute advantage is not nessecarily for international trade.34.Countrics A and B have two factors of production, capital and labor, with which they produce two goods, X and Y.Technology is the same in the two countries・ Good X is capital intensive; Country A is capital abundant. An increase in A's labor induces an increase in B、s terms of trade・35.Increasing opportunity cost arise when resources are perfect substitutes for each other or used in fixed proportion in theproduction.36.Small Country have no effects on the relative price on the world market37.The Heckscher-Ohlin model with two factors of production, labor and capital, shows that free trade between the US andMexico would lower US wages to the level of Mexican wages that prevails prior to the opening to trade・3& In a specific factors model, where labor is the mobile factor, trade is beneficial for the workers of the export secto匚39.Foreign competition is unfair and hurts other countries when it is based on low wages・40.Free trade is beneficial only for strong economics・III.Essay questions: 20%41.Consider an economy where the factors of production are labor (mobile) and capital (sector-specific in the Specific Factors model and mobile in the Heckscher-Ohlin model). Contrast the welfare effect of trade on the capital owners in the Specific Factors and the Hcckschcr-Ohlin models.42.What is the Leontief Paradox? Give two explanations to it.43.Many theoretical trade models assume that all goods are perfect substitutes and that all goods are traded・ There are also many models that specify the existence of non-lraded goods or that traded goods are imperfect substitutes. What are the implications for the H・O model with non-traded goods and/or goods that are imperfect substitutes?IV.Graphic problems or quantitative problems: 40%44.Specific model. Suppose that the United States produces only food and manufactures. Land is a specific factor input in food production and capital is a specific factor input in manufactures while labor is freely allocated across both sectors of the economy. All of a sudden, agricultural policy in the European Union induces an increase in the world food supply and reduces the international price of food. Illustrate the impact of the reduction in the price of food on the US labor demand curves for food and manufactures. What is the impact on labor allocation in the US and what is the impact on the wage rate? 45. Ricardian model. Suppose the unit labor requirements (the number of hours of labor required to produce one unit commodity) for country I and 2 are the following:Country 1 Country 2corn 2 20banana 6 48tomato 5 20apples 7 20wheat 12 645.1Suppose that all residents in both countries merely consume tomato and wheat. Then which goods will country Aproduce and export? Which goods will country B produce and export?45.2This problem is based on 29」・Suppose that every country has 120 hours of labors・ Prove that each country canbenefit from trade under such assumptions・45.3If the wage rate in A is five times that of B, which goods will country A export? which goods will country B export?46. A free-trade equilibrium exists in a two-region, two-product world. The United States trade with the Rest-of^the-World,exporting manufacturing and importing energy. Suppose that environmental consciousness has reduced the demand for energy in the US.46.1.At given international price, what is the effect in the US of this change in demand on the desired levels of imports andof exports?46.2.Illustrate this result on a graph showing the inipact of this decline in the demand for energy on the US offer curve ・46.3Assume that the United States is large enough to influence international prices, show on the previous graph how thisreduction in the demand for energy in the US affects the equilibrium international price ratio and volume of trade.46.4Show on a PPF graph and explain the eftect of this change in the terms of trade in the Rest of the World on Rest of theWorld's welfare・47. Monopolistic competition and international trade・Imagine an industry consisting of a number of firms producingdifferentiated products. The particular equation for the demand and the for the cost facing a firm are:Q = S X [1/n-b X (P — P*)]AC = F/Q + cwhere:Q is the firm's sales, S is the total sales of the industry, n is the number of firms in the industry, b is a constant term representing the responsiveness of a firm's sales to its price, P is the price charged by the firm itself, and P* is the average price charged by other competitors・Assume the following: b = 1/30000, F = $750,000,000, c = $5000 .And assume there are two countries (Home and Foreign) that have the same costs of automobile production. Annual sales of automobiles are 1600 million at Home and 4900 million at Foreign.47.1Show the equilibrium price and numbers of firms of Home and Foreign in the absence of trade.47.2Show the equilibrium price and numbers of firms of Home and Foreign in open economies・一.单项选择:BBCCDCCBABBDACADCACABBDBCDDCCD二.判断对错xxppx xpxxx三.简答1.7分要点：1)特定要素模型中的资本属于特定要素，在国际贸易后，资本柑对丰裕的国家出口特定被特定使用的产品，并从中获益；反Z，资本相对稀缺的国家资本受损。
