f the price of manufactures and the price of food increase by 25%, then

• the economy moves down its aggregate supply curve.
• the economy moves back along its aggregate demand curve.
• the relative quantities of manufactures and food remain unchanged.
• the relative quantities of products change by 25%.
• None of the above.

Answer: C18.
If the price of manufactures rises, then

• the price of food also rises.
• the quantity of food produced falls.
  
• the quantity of both manufactures and food falls.
• the purchasing power of labor in terms of food falls.
• None of the above.

Answer: B19.
Groups that lose from trade tend to lobby the government to

• shift the direction of comparative advantage.
• abolish the Specific Factor model from practical application.
• provide public support for the relatively efficient sectors.
• provide protection for the relatively inefficient sectors.
• None of the above.

Answer: D20.
The specific factor model argues that if land can be used both for food production and for manufacturing, then a quota that protects food production will

• clearly help landowners.
• clearly hurt landowners.
• clearly help manufacture but hurt food production.
• have an ambiguous effect on the welfare of landowners.
• None of the above.

Answer: D
21.
If, relative to its trade partners, Gambinia has many workers but very little land and even less productive capital, then, following the specific factor model, we know that Gambinia has a comparative advantage in

• manufactures.
• food.
  
• both manufactures and food.
• neither manufactures nor food.
• None of the above.

Answer: B
22.
In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border would

• move the point of production along the production possibility curve.
• shift the production possibility curve outward, and increase the production of both goods.
• shift the production possibility curve outward and decrease the production of the labor-intensive product.
• shift the production possibility curve outward and decrease the production of the capital-intensive product.
• None of the above.

Answer: D23.
The 1987 study by Bowen, Leamer and Sveikauskas

• supported the validity of the Leontieff Paradox.
  
• supported the validity of the Heckscher-Ohlin model.
• used a two-country and two-product framework.
• demonstrated that in fact countries tend to use different technologies.
• proved that the U.S.'s comparative advantage relied on skilled labor.

Answer: A
24.
The Case of the Missing Trade refers to

• the 9th volume of the Hardy Boys' Mystery series.
• the fact that world exports does not equal world imports.
• the fact that factor trade is less than predicted by the Heckscher-Ohlin theory.
• the fact that the Heckscher Ohlin theory predicts much less volume of trade than actually exists.
• None of the above.

Answer: C25.
One way in which the Heckscher-Ohlin model differs from the Ricardo model of comparative advantage is by assuming that __________ is (are) identical in all countries.

• factor of production endowments
• scale economies
• factor of production intensities
• technology
  
• opportunity costs