5.Assume that a nation produces commodities X and Y. Then its indifference curve is negatively sloped and _.

1)The slope represents the relative price of X.

2)The slope represents the amount of Y that a nation exchanges for an additional unit of X with another nation.

3)The slope represents the amount of X that a nation exchanges for an additional unit of Y.

The slope represents the amount of Y that a nation exchanges for an additional unit of X

7.If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 3X or 3Y (and labor is the only input):

1)nation A has a comparative advantage in Y

2)nation A has a comparative advantage in X

3)nation A does not have comparative advantage in any commodity

4)none of the above

14.Assume that there is a two-nation world. Based on a partial equilibrium analysis and that Nation 2 imports of bananas from nation 1.

1)Import demand MD is given as MD= Qd - Qs

2)Import demand MD is given as MD= Q's - Q'd

3)Export demand MD is given as MD= Q'd - Q's

4)Import supply MD is given as MD= Q'd - Q's

20.The existence of beneficial trade between the United States and Costa Rica in wheat and bananas requires_______.

1)The price of wheat relative to the price of bananas to be lower in the United States than in Costa Rica.

2)The price of wheat relative to the price of bananas to be the same in the United States than in Costa Rica.

3)The price of wheat relative to the price of bananas to be greater in the United States than in Costa Rica.

4)The price of bananas relative to the price of wheat to be lower in the United States than in Costa Rica.

27.The Leontief paradox refers to the empirical finding that U.S

1)Import substitutes are more K-intensive than exports

2)Imports are more K-intensive than exports

3)exports are more L-intensive than imports

4)exports are more K-intensive than imports substitutes

29.Assume that cloth is labor intensive commodity and that corn is capital intensive commodity. This means that______.

1)The ratio of labor to capital used in the production of cloth is lower than ratio of labor to capital used in the production of corn.

2)The ratio of labor to capital used in the production of cloth is higher than ratio of labor to capital used in the production of corn.

3)The ratio of labor to capital used in the production of cloth is the same as theratio of labor to capital used in the production of corn.

4)The amount of labor to capital used in the production of cloth is higher than the amount of laborused in the production of corn.

30.Which isnotan assumption of the H-O model

1)Constant return to scale

2)Equal tastes in both nations

3)Complete specialization

4)The same technology in both nations

33.Factor intensity reversal occurs _____.

1)When a labor-intensive commodity in a labor-abundant country is also the capital-intensive commodity in a labor abundant country.

2)When a labor-intensive commodity in a labor-abundant country is not a capital-intensive commodity in a capital abundant country.

3)When a labor-intensive commodity in a labor-abundant country is also the capital-intensive commodity in a capital abundant country.

When a labor-intensive commodity in a capital-abundant country is also the capital-intensive commodity in a capital abundant country.

39)Assume that there is trade in commodities X and Y between the United States and Costa Rica. Therefore, if the relative price of commodity X in the United States is Px/Py=1/2, then______.

1.The relative price of X in Costa Rica rises with trade.

2.The relative price of X in Costa Rica lower.

3.The relative price of X in Costa Rica is 2.

4.The relative price of X in Costa Rica is 1/2.

42)if the production possibilities frontier of Nation1 is concave from the origin and biased towards Y,______.

1.Nation1 produces commodity Y

2.Nation 2 has comparative advantage in Commodity Y

3.Nation1 has comparative advantage in Commodity Y

4.Nation 2 has comparative advantage in Commodity Y

47) With trade in bananas and corn between Nation 1 and Nation 2____.

1.The opportunity cost of bananas are the same in both nations.

2.The opportunity cost of bananas are different in both nations.

3.The opportunity cost of bananas are different from the relative price of bananas in both nations

4.The opportunity cost of bananas are different from the relative price of bananas in nation 1 only.