Choose FOUR of the following questions and answer them.

Chapter 2

1. Suppose: Labor is the only one factor of production. L and L*are Home’s and Foreign’s labor force.、and 、are the unit labor requirement in cheese、wine at Home and Foreign, respectively. /is the retative price of cheese.Home and Foreign have a comparative advantage in cheese and wine,respectively.Please denote each of the following contents with one equation.
(1)Home’s comparative advantage.
(2)Foreign’s specialization
(3)World relative supply
(4)Home’s gains from trade
(5)Compare /、/and w/w*

2.Japanese labor productivity is roughly the same as that of the United States in the manufacturing sector (higher in some industries, lower in others), while the United States is still considerably more productive in the service sector. But most services are nontraded. Some analysts have argued that this poses a problem for the United States, because its comparative advantage lies in things it cannot sell on world markets. What is wrong with this argument?

3. In Ricardian model, trade benefit a country can be shown in two ways.
(1) Explain the two ways respectively;
(2) Can these ways suit for other trade model?
4.The proposition that trade is beneficial is unqualified. That is, there is no requirement that a country be “competitive” or that the trade be “fair”.
5.“Free trade is beneficial only if your country is strong enough to stand up to foreign competition”. Judge and explain the remark.
6. Judge and explain the following arguments:
(1)Foreign competition is unfair and hurts other countries when it is based on low wages.
(2)It is precisely because the relative wage is between the relative productivities that each country ends up with a cost advantage in one good.
7. Suppose that there are many countries capable of producing two goods, and that each country has only one factor of production, labor. What could we say about the pattern of production and trade in this case? (Hint: Try constructing the world relative supply curve.)

Chapter 3

8. In the specific factors model(QM=QM (K, LM); QF=QF (T, LF); L=LM+LF), If Home produces and trades food for manufactured goods , the change rates of goods price and factor price are shown as、、、、
respectively.

(1)Compare the five change rates (denote it with an equation).
(2)Will the real income of landowners、capitalists and workers increase or decrease? Explain these changes.
(3)Draw a conclusion on the effects of income distribution.
9. Although international trade has strong effects on income distribution, there are still possible in principle to make each individual better off.

Chapter 4

10. (1)What is Rybczynski effect ? Draw a figure using production possibility frontier to illustrate it.
(2) How can we relate Rybczynski effect to H-O theorem ?
11.What is Stolper-Samuelson effect ? Draw a figure relating goods price to factor price and factor input ratio and illustrate Stolper-Samuelson effect.

12. (1) Stolper-Samuelson effect.

(2) Immiserizing growth

13.“The world’s poorest countries can’t find anything to export. There is no resource is abundant—certainly not capital or land, and in small poor nations not even labor is abundant.”

14. According to an influential recent paper, the H-O model can predict not only the direction but the volume of trade. Factor trade in general turn out to be the same as the H-O model predicts.
15.In the discussion of empirical results on the Heckscher-Ohlin model, we noted that recent work suggests that the efficiency of factors of production seems to differ internationally. Explain how this would affect the concept of factor price equalization.
16. (1)What are the main conclusions of the H-O model? Are they confirmed by empirical evidences? Why?
(2)Can the H-O model predict the volume of trade? why? Does factor trade in general turn out to be the same as the H-O model predicts? why?