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14. Use Exhibit 2. Which of the following statements is (are) correct? (x) In autarky, the relative price of hats, in terms of caps, in Canada is greater than the relative price of hats in Mexico. (y) Mexico has both an absolute advantage and comparative advantage in the production of hats, and it would be willing to trade with Canada at terms of trade equal to 20 caps for 12 hats. (z) Canada does not have an absolute advantage in either caps or hats but it has a comparative advantage in caps and it would be willing to trade with Mexico at terms of trade equal to 20 caps for 12 hats. А. (х), (у) and (2) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only Exhibit 2 Output per labor hour Caps Hats Canada 8 Меxico 9

14. Use Exhibit 2. Which of the following statements is (are) correct? (x) In autarky, the relative price of hats, in terms of caps, in Canada is greater than the relative price of hats in Mexico. (y) Mexico has both an absolute advantage and comparative advantage in the production of hats, and it would be willing to trade with Canada at terms of trade equal to 20 caps for 12 hats. (z) Canada does not have an absolute advantage in either caps or hats but it has a comparative advantage in caps and it would be willing to trade with Mexico at terms of trade equal to 20 caps for 12 hats. А. (х), (у) and (2) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only Exhibit 2 Output per labor hour Caps Hats Canada 8 Меxico 9

Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains From Trade
Section: Chapter Questions
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14. Use Exhibit 2. Which of the following statements is (are) correct? (x) In autarky, the relative price of hats, in terms of caps, in Canada is greater than the relative price of hats in Mexico. (y) Mexico has both an absolute advantage and comparative advantage in the production of hats, and it would be willing to trade with Canada at terms of trade equal to 20 caps for 12 hats. (z) Canada does not have an absolute advantage in either caps or hats but it has a comparative advantage in caps and it would be willing to trade with Mexico at terms of trade equal to 20 caps for 12 hats. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only Exhibit 2 Output per labor hour Caps Hats Canada 8 5 Mexico 6 15. Suppose that a worker in Mahogany can produce either 239 wooden chairs or 127 wooden desks per year, and a worker in Poplar can produce either 284 wooden chairs or 144 wooden desks per year. There are 100 workers in Mahogany and 100 workers in Poplar. Suppose Mahogany and Poplar specialize according to each country's comparative advantage and then engage in trade. Which of the following terms of trade is (are) acceptable to both countries? A. 64 chairs for 35 desks B. 76 chairs for 40 desks C. 88 chairs for 45 desks D. Both A and B, but not C E. Both B and C, but not A 16. Suppose that international trade results in an outward shift in a country's production possibilities frontier. This would be described as A. static gains from trade. B. dynamic gains from trade. C. protectionist gains from trade. D. allocative gains from trade. E. Both C and D
Transcribed Image Text:14. Use Exhibit 2. Which of the following statements is (are) correct? (x) In autarky, the relative price of hats, in terms of caps, in Canada is greater than the relative price of hats in Mexico. (y) Mexico has both an absolute advantage and comparative advantage in the production of hats, and it would be willing to trade with Canada at terms of trade equal to 20 caps for 12 hats. (z) Canada does not have an absolute advantage in either caps or hats but it has a comparative advantage in caps and it would be willing to trade with Mexico at terms of trade equal to 20 caps for 12 hats. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only Exhibit 2 Output per labor hour Caps Hats Canada 8 5 Mexico 6 15. Suppose that a worker in Mahogany can produce either 239 wooden chairs or 127 wooden desks per year, and a worker in Poplar can produce either 284 wooden chairs or 144 wooden desks per year. There are 100 workers in Mahogany and 100 workers in Poplar. Suppose Mahogany and Poplar specialize according to each country's comparative advantage and then engage in trade. Which of the following terms of trade is (are) acceptable to both countries? A. 64 chairs for 35 desks B. 76 chairs for 40 desks C. 88 chairs for 45 desks D. Both A and B, but not C E. Both B and C, but not A 16. Suppose that international trade results in an outward shift in a country's production possibilities frontier. This would be described as A. static gains from trade. B. dynamic gains from trade. C. protectionist gains from trade. D. allocative gains from trade. E. Both C and D
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