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MGEC82H3 Lecture Notes - Lecture 2: Autarky, Absolute Advantage, Indifference Curve

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coppereagle879
13 Sep 2022
School
UTSC
Department
Economics for Management Studies
Course
MGEC82H3
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Document Summary

Mgec82 (frazer) - questions at the end of lecture 2: true, false, or uncertain. If one country is more productive at producing everything than another country, then it has nothing to gain from trading with other countries. To fix ideas, discuss in the context of a world with two countries, and two goods (say cheese and wine): true, false, or uncertain. Suppose that in a ricardian model trading equilibrium, canada is completely specialized in producing and exporting wheat to the u. s. , while the u. s. is completely specialized in producing and exporting autos to canada. Suppose that canada becomes three times as productive in producing autos as it was before.

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Related Questions

15. The classical trade theories of Smith and Ricardo predict that

a. Countries will completely specialize in the production of export goods.

b. Considerable trade will occur between countries with different levels of technology

c. Small countries could obtain all of the gains from trade when trading with large countries 

d. All of the above. 

1.True or False: In the Ricardian model, you always produce only the good you have a comparative advantage in producing.

2. True or False: In the Ricardian model, knowing who has a comparative advantage in each good is enough to know the quantity of exports and imports to/from each country.

3. True or false: In the two country two good Ricardian model, it is impossible to have a comparative advantage the production of both goods.

6. According to the theory of comparative advantage in international trade, a country will export a good only if

a. It can produce it using less labor than other countries.

b. Its productivity is higher in producing the goods than the productivity of other countries in producing it.

c. Its wage rate in producing the good is lower than in other countries.

d. Its cost of producing the good, relative to other goods, is at least as low as in other countries.