WHALES Workshop: Assignment on International Trade

Brazil is able to produce 10 cars and 5 computers in one hour while India is able to produce 1 car and 4 computers in one hour. Brazil has a comparative advantage in producing _____, and India has a comparative advantage in producing _____.

• a. cars; cars

• b. computers; cars

• c. cars; computers

• d. computers; computers

American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Which country has an absolute advantage in producing cars?

• America

• Japan

• None

American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a year, whereas a Japanese worker can produce 5 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Which country has a comparative advantage in producing cars?

• America

• Japan

• None

According to the principle of comparative advantage, on what does a country's gains from international trade depend?

A. Its level of money wage rates compared to its trading partners.

B. It imposing a higher level of tariffs compared to those of its trading partners.

C. Its greater productive capacity in some goods compared to its trading partners.

D. Its lower opportunity cost in the production of some goods compared to its trading partners.

• A

• B

• C

• D

Comparative advantage exists when a person or a country can produce a good or service at a lower _____ than others.

A. Fixed cost

B. Total cost

C. Marginal cost

D. Variable cost

E. Opportunity cost

• A

• B

• C

• D

• E

Since 2000 a country’s export prices have increased on average by 50 % and its import prices by 25%. What is the current figure for the country’s terms of trade (2000 = 100)? A 75 B 83 C 120 D 125

• A

• B

• C

• D

With an exchange rate of 5 Egyptian pounds (EGP) = 1 US dollar ($), an American product sells in Egypt for EGP 100. Assuming that the dollar price remains unchanged, what will be the price of the product in Egypt if the Egyptian pound appreciates to 4 EGP = 1 US$?

A EGP 75

B EGP 80

C EGP 120

D EGP 125

• A

• B

• C

• D

Which statement about economic integration is correct?

A A customs union has a common currency.

B A customs union has a common external tariff.

C A free trade area has internal trade barriers.

D A free trade area has no external trade barriers.

• A

• B

• C

• D

Japan introduces import quotas on consumer durables imported from Malaysia. These goods have a high price elasticity of demand. What effect is this likely to have on the prices paid for these goods by Japanese consumers and on the revenues received by Malaysian producers?

• A

• B

• C

• D

In the diagram, MN is the production possibility curve of a country that has a comparative advantage in the production of good Y. What might enable the country to consume the quantities of X and Y indicated by point R?

A increased specialisation in the production of good X

B international trade

C a reduction in unemployment

D increased specialisation in the production of good Y

• A

• B

• C

• D