Q6. Mike Harris in a research paper on free trade between high-wage countries and low-wage countries concluded free trade between low-wage countries such as China, India, and Pakistan and high-wage countries such as the U.S., Japan, and Germany would depress wages in high-wage countries. His conclusion was based on the following:

Point 1: U.S., Japanese, and German workers are unable to compete with cheap foreign labor from countries such as China, India, and Pakistan.

Point 2: U.S., Japanese, and German workers are less productive than workers in China, Pakistan, and India.

Point 3: Free-trade between high-wage countries and low-wage countries will reduce the consumption possibilities of people in high-wage countries.

Are Points 1, 2, and 3, as raised by Harris correct?

          Point 1                                          Point 2                                           Point 3

A)   Incorrect                                       Incorrect                                        Incorrect

B)   Incorrect                                       Correct                                          Correct

C)    Correct                                      Correct                                           Incorrect

Q7. The law of comparative advantage explains why a nation will benefit from trade when it:

A)   exports more than it imports.

B)   exports goods for which it is a low-cost producer, while importing those for which it is a high-cost producer.

C)   exports goods for which it is a high-cost producer, while importing those for which it is a low-cost producer.

Q8. According to the law of comparative advantage:

A)   if a foreign government subsidizes the textile industry, the domestic government should impose a tariff.

B)   Mexico is considered to have a comparative advantage in plastics if Mexico can produce plastic using fewer resources than the U.S.

C)   a nation will benefit from trade when it imports goods for which it is the high cost producer and exports goods for which it is the low-cost producer.

Q9. A country has a comparative advantage over another when:

A)     a nation can produce more output with a given amount of input than another nation.

B)     it can produce a product with the fewest resources.

C)     a nation has the ability to produce a good with a lower opportunity cost than another nation.

Q10. Which type of advantage determines the pattern of trade in the world?

A)     Absolute advantage.

B)     Advantages due to tariffs and quotas.

C)     Comparative advantage.

答案和详解如下：

Q6. Mike Harris in a research paper on free trade between high-wage countries and low-wage countries concluded free trade between low-wage countries such as China, India, and Pakistan and high-wage countries such as the U.S., Japan, and Germany would depress wages in high-wage countries. His conclusion was based on the following:

Point 1: U.S., Japanese, and German workers are unable to compete with cheap foreign labor from countries such as China, India, and Pakistan.

Point 2: U.S., Japanese, and German workers are less productive than workers in China, Pakistan, and India.

Point 3: Free-trade between high-wage countries and low-wage countries will reduce the consumption possibilities of people in high-wage countries.

Are Points 1, 2, and 3, as raised by Harris correct?

          Point 1                                          Point 2                                           Point 3

A)   Incorrect                                       Incorrect                                        Incorrect

B)   Incorrect                                       Correct                                          Correct

C)    Correct                                      Correct                                           Incorrect

Correct answer is A)

Points 1 and 3 are incorrect because due to the law of comparative advantage which states in part that when two countries trade products in which they both have a comparative advantage both countries will be better off because they will both be able to consume outside their respective production possibility frontiers. 

Point 2 is incorrect because as labor becomes more expensive as in industrialized countries, capital (technology) is substituted for labor increasing the productivity of each worker.

Q7. The law of comparative advantage explains why a nation will benefit from trade when it:

A)   exports more than it imports.

B)   exports goods for which it is a low-cost producer, while importing those for which it is a high-cost producer.

C)   exports goods for which it is a high-cost producer, while importing those for which it is a low-cost producer.

Correct answer is B)

Comparative advantage is the ability to produce a good at a lower opportunity cost than others can produce it. When trading partners specialize in producing products for which they have a comparative advantage; costs are minimized, output is greater, and both trading partners benefit.

Q8. According to the law of comparative advantage:

A)   if a foreign government subsidizes the textile industry, the domestic government should impose a tariff.

B)   Mexico is considered to have a comparative advantage in plastics if Mexico can produce plastic using fewer resources than the U.S.

C)   a nation will benefit from trade when it imports goods for which it is the high cost producer and exports goods for which it is the low-cost producer.

Correct answer is C)         

This statement is the law of comparative advantage.

The other choices are incorrect. The law of comparative advantage supports international trade. According to the law of comparative advantage, both trading partners are better off if they specialize in the production of goods for which they are the low-opportunity cost producer and trade for those goods for which they are the high-opportunity cost producer. Mexico is considered to have an absolute advantage in plastics if Mexico can produce plastic using fewer resources than the U.S.

Q9. A country has a comparative advantage over another when:

A)     a nation can produce more output with a given amount of input than another nation.

B)     it can produce a product with the fewest resources.

C)     a nation has the ability to produce a good with a lower opportunity cost than another nation.

Correct answer is C)         

A nation will have a comparative advantage in the production of good A when the number of units of B, given up to produce one unit of A, is lower than that for any other country.

Q10. Which type of advantage determines the pattern of trade in the world?

A)     Absolute advantage.

B)     Advantages due to tariffs and quotas.

C)     Comparative advantage.

Correct answer is C)         

Comparative advantage is the ability to produce a good at a lower opportunity cost than others can produce it. According to the law of comparative advantage, trading partners are both better off if they specialize in the production of goods for which they are the low-opportunity cost producer and trade for goods for which they are the high-opportunity cost producer.

snvvv