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Multiple Choice Quiz
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1

The Leontief Paradox found fault with:
A)the theory of absolute advantage.
B)the theory ofcomparative advantage.
C)Heckscher-Ohlin (H-O) theory.
D)the Stopler-Samuelson theorem.
2

Heckscher-Ohlin theory can also be called:
A)the theory of comparative advantage.
B)factor-endowmenttheory.
C)the theory of absolute advantage.
D)theLeontief Paradox.
3

All of the following are long-run results of free trade except:
A)commodity prices equalize between countries.
B)countries specialize more.
C)one country gains while the other loses.
D)factor prices equalize between countries.
4

In a labor-abundant country:
A)wage rates will fall with the opening of free trade.
B)wage rates will rise with the opening of free trade.
C)wage rates will stay the same with the opening of freetrade.
5

If, following the opening of free trade, a country specializes in the production of a land-intensive good, we would expect that:
A)land rental rates would rise.
B)land rental rates would fall.
C)land rental rates would stay the same.
6

Which of the following would be winners when trade breaks out in a land abundant country:
A)landowners
B)workers
C)capitalowners
7

If the U.S. has a comparative advantage in the production of corn (land-intensive) and has a comparative disadvantage in the production of textiles (labor-intensive), in the short-run, landowners in which sectors would gain?
A)corn
B)textiles
C)both
D)neither
8

If the U.S. has a comparative advantage in the production of corn (land-intensive) and has a comparative disadvantage in the production of textiles (labor-intensive), in the long-run, landowners in which sectors would gain?
A)corn
B)textiles
C)both
D)neither
9

Before trade, Australia is relatively abundant in capital and China is relatively abundant in labor. We would expect that the incomes of _________ in China and of _________ in Australia would increase.
A)capital owners; workers
B)workers; capital owners
C)nobody; capital owners
D)workers; nobody





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