Trade between two countries can be useful if cost ratios of goods are:

Related MCQs

• Trade between two countries can benefit both countries if
• Countries H and F operate in an H-O world. Each country produces two goods, A and B. Good A is relatively capital intensive and country F is relatively labor abundant. Suppose however, that the production technology is not the same in the two countries. That is, H has a superior technology of production compared to F.
• 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:
• ------------theory states that countries which are rich in labour will export labour intensive goods and countries which are rich in capital will export capital intensive goods
• If relatively capital-abundant country A opens trade with relatively labor- abundant country B an the trade takes place in accordance with the Heckscher-Ohlin Theorem. What would be the consequence for factor prices (w/r) in the two countries?
• In the Ricardian model, when two countries trade freely, the relative price of the goods they are trading is determined by:
• “Free trade between two countries in H O model will equalize relative factor prices provided there is incomplete specialization.” This is
• In free trade between two countries in an H-O world:
• According to the Heckscher - Ohlin model, if the United States is richly endowed in human capital relative to Mexico, then as NAFTA increasingly leads to more bilateral free trade between the two countries,
• What would encourage trade between two countries: