Reference no: EM132299179
Answer the following questions as true or false:
1. In the Specific Factors model, when capital leaves the manufacturing sector and move to the food sector marginal product of capital falls in the manufacturing sector.
2. Tariffs on goods from China hurts US consumers
3. The best definition of an import quota is a direct restriction on the quantity of a good imported.
4. A country has a comparative advantage in producing a good if its opportunity cost of producing that good is higher than elsewhere.
5. The basic reason why trade benefits a country is that it increases the country's power in world trade.
6. Assume a specific factors economy produces two? goods, cloth and? food, and that when representing the output of this economy ?graphically, cloth is on the? x-axis and food is on the? y-axis. When the price of cloth increases by 8% and the price of food remains unchanged then output of food will fall.
7. Multinationals are an important part of international factor movement.
8. Economies of scale gives a country an incentive to specialize and trade with other countries.
9. According to the Heckscher-Ohlin model, a consequence of international trade is that factor prices across trading nations converge but are not equalized.
10. The movement of labor from one sector to the other in the SF (Specific Factors) model will equalize wages.