International Economics Exam

in the absence of government

in the absence of agriculture

in the absence of international trade

in the absence of exchange rates

avoid the fundamental economic problem of scarcity

reach points outside their production possibilities frontiers

avoid being forced into international trade

none of the above

lived in England around the turn of the sixteenth century

is credited with originating the concept of comparative advantage

was unfamiliar with the work of Adam Smith, since Smith lived after Ricardo

all of the above are correct.

Australia should export melons and import ore

Australia should export ore and import melons

Australia would not find trade advantageous

None of the above

Australia should export melons and import ore

Australia should export ore and import melons

Australia would not find trade advantageous

Both countries should export melons and import ore

1 melon = 0.4 ore

1 melon = 1.33 ore

1 melon = 2.5 ore

1 melon = 24 ore

trade permits a country to produce and consume on its production possibilities frontier.

trade allows a country to consume at points on higher indifference curves than was possible in autarky.

Trade almost always leads a country to completely specialize in the production of one good.

None of the above.

trade will be mutually advantageous only if the international relative price of good X is the same as both countries' autarky relative price of good X.

trade will not be mutually advantageous.

Trade will be mutually advantageous only if the two countries also have identical community indifference curves.

Trade will be mutually advantageous only if the two countries have different community indifference curves.

trade will not occur.

Trade will occur if the countries involved have different production possibilities frontiers

Trade will occur only if each country completely specializes in their respective comparative advantage good.

Trade will occur, but each country will remain on the pre-trade (autarky) community indifference curve.

factors of production are fully employed

factors of production can move within a country easily and without cost

demand conditions in each country are the same.

individuals within an economy have reasonably similar tastes.

Land must be relatively abundant on Mars.

Capital must be relatively abundant on Mars.

Land must be relatively abundant on Earth.

b and c are both correct.

in relative terms, the wage will rise in the relatively capital abundant country

in relative terms, the wage will fall in the relatively capital abundant country

the relatively capital abundant country will eventually become relatively labor abundant.

None of the above.

If A and B each betray the other, each of them serves 2 years in prison

If A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa)

If A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge)