The Ricardian theory of comparative advantage states that a country has a comparative advantage in widgets if

Related MCQs

• Country A has 100 units of labor and Country B has 200 units of labor. Both countries produce computers and Web pages. The unit labor requirements are given in the table below: Computers Web pages Country A 50 1 Country B 100 1 Assume free trade exists and that the relative price is such that both countries specialize completely in the industry in which they have a comparative advantage (neither country produces both goods). The supply of computers relative to Web pages will be:
• Assume that Country A is relatively abundant in labor and Country B is relatively abundant in land. Note that wages are the returns to labor and rents are the returns to land. According to the factor price equalization theorem, once Country A begins specializing according to comparative advantage and trading with Country B.
• The Heckscher-Ohlin model differs from the Ricardian model of Comparative Advantage in that the former
• As opposed to the Ricardian model of comparative advantage, the assumption of diminishing returns in the Heckscher-Ohlin model means that the probability is greater that with trade
• The opportunity cost of producing computers in terms of Web pages is 50 in Country A and is 10 in Country B. Based on the Ricardian model, what can we conclude about the pattern of trade?
• Country A and Country B produce computers and Web sites. The unit labor requirements are given in the table below: Computers Web pages Country A 50 1 Country B 100 1 At which of the following relative prices (computers in terms of Web sites) will Country B produce both goods under free trade?
• In order to know whether a country has a comparative advantage in the production of one particular product we need information on at least ____unit labor requirements
• In the Ricardian model, if a country's trade is restricted, this will cause all except which?
• According to the Heckscher-Ohlin model, the source of comparative advantage is a country’s:
• According to the Heckscher-Ohlin model, the source of comparative advantage is a country's