Tutorial 3 & 4 Chapter 3 1) Mercantilism A) is the philosophy of free international trade.

B) was a system of export promotion and arriers to imports practiced y !o"ernments# especially in the 1$th and 1%th centuries. C) was praised y Adam &mith in The 'ealth of (ations. )) Both A and C. *) +f factors of production cannot flow etween countries A) there is no reason to expect that wa!es should e e,ual worldwide. B) multinational corporations would not exist. C) trade in !oods could still occur. )) All of the a o"e. 3) The la or theory of "alue A) is what economists elie"e determines prices today. B) says that wa!es must always e !reater than prices. C) says that the price of a !ood is determined y the amount of la or re,uired to produce it. )) All of the a o"e. 4) -i"en constant returns to scale etween la or and output# if it ta.es 1/ hours to ma.e 1 yard of cloth# then 1// yards of cloth can e made in A) 1/ hours. B) 1// hours. C) 1/// hours. )) Can0t tell without .nowin! how much capital is used.

uili rium# this country produces at point A) B. B) C.uili rium# this country consumes at point A) B. C) AC units of 3. C) 3. %. )) 6. )) 6. +n e. This country has comparati"e ad"anta!e in !ood A) &. C) ).2efer to the fi!ure a o"e.1. 6xports for this country e. C) ). )) 4. +n e.ual A) 7A units of 4. B) T. B) AB units of 4. $) 2efer to the fi!ure a o"e. 5) 2efer to the fi!ure a o"e. . B) C. )) A) units of 3. 2efer to the fi!ure a o"e.

A) tastes B) technolo!y C) factor )) opportunity costs 1) 2efer to the fi!ure elow. B) -8 units of 3.ual A) C6 units of <. *) The 87 model rules out the classical model0s asis for trade y assumin! that . A) factor endowments B) factor intensities C) technolo!y )) opportunity costs 3) +f tastes are identical etween countries# then comparati"e ad"anta!e is determined y A) supply conditions only. B) 3. )) Can0t tell without more information. This country0s exports e. )) )6 units of 3.Chapter 4 Accordin! to the 8ec. This country0s imports e... This country has comparati"e ad"anta!e in A) <.. %) 2efer to the fi!ure elow. )) Can0t tell without more information.ual A) C6 units of <. 5) 2efer to the fi!ure elow... 4) The 87 theorem states that a country will ha"e comparati"e ad"anta!e in the !ood whose production is relati"ely intensi"e in the . )) )6 units of 3..scher97hlin :87) model the source of comparati"e ad"anta!e is a country0s A) technolo!y. C) supply and demand conditions. $) 2efer to the fi!ure elow... )) Both A and C. B) demand conditions only. B) -8 units of 3. is :are) identical etween countries. C) C) units of <. with which the country is relati"ely a undant. C) oth < and 3.. C) C) units of <. C) factor endowments.. .... B) ad"ertisin!.. 'hich of the followin! is true= A) This country is completely speciali>ed in the production of <.

B) This country consumes at point ?. .uals the "alue of its production. )) (one of the a o"e. C) The "alue of this country0s consumption e.