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Exam 4: Specific Factors and Income Distribution

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Question 1

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In the specific factors model,a 5% increase in the price of food accompanied by a 5% increase in the price of cloth will cause ________ in the welfare of labor,________ in the welfare of the fixed factor in the production of food,and ________ in the welfare of the fixed factor in the production of cloth.

A) no change; no change; no change
B) an increase; an increase; an increase
C) a decrease; an increase; an increase
D) an increase; a decrease; a decrease
E) a decrease; a decrease; a decrease

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Question 2

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The slope of a country's production possibility frontier is equal to ________ and the optimal production point is located where the slope is equal to ________.Assume that output of good Y is measured on the vertical axis,output of good X is measured on the horizontal axis,MPL is the marginal product of labor with a subscript indicating which good,P is the price of a good,and w is the wage rate.

A) -MPLY/MPLX; -PX/PY
B) -PX/PY; -MPLY/MPLX;
C) -PX/w; -PY/w
D) -MPLY/w; -MPLF/w
E) -MPLX/MPLY; -PX/PY

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Question 3

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In the specific factors model,which of the following will increase the quantity of labor used in cloth production?

U) S.imports of sugar are limited by an import quota that,according to a study updated in 2013,imposed a total cost on American consumers close to $________,or an average cost of ________ per year for every man,woman,and child in the country.

The effect of trade on specialized employees of exporting industries will be ________ jobs and ________ pay because they are relatively ________.

In the four-quadrant diagram of the specific factors model,the graph in the upper right quadrant is a country's

U) S.imports of sugar are limited by an import quota that,according to a study updated in 2013,imposed annual costs on American consumers of

The slope of a country's production possibility frontier with cloth measured on the horizontal and food measured on the vertical axis in the Ricardian model is equal to ________ and it ________ as more cloth is produced.

In the four-quadrant diagram of the specific factors model,the graph in the upper right quadrant is a country's

The effect of trade on income distribution

The degree of a factor's specificity is directly related to

In the two-country model of international labor mobility

The effect of trade on specialized employees of import-competing industries will be ________ jobs and ________ pay because they are relatively ________.

In the specific factors model,a country's production function is ________ because of ________.

-Refer to the production possibility graph above.Assume that the economy is in equilibrium at point e.If the labor supply increases due to immigration,the new equilibrium is most likely to be

Immigration into the U.S.over the past century has caused the percentage of immigrants in the U.S.population to

In the specific factors model,a 5% increase in the price of food accompanied by a 1% increase in the price of cloth will cause ________ in the welfare of labor,________ in the welfare of the fixed factor in the production of food,and ________ in the welfare of the fixed factor in the production of cloth.

In the specific factor model,the effect of an increase in the productivity of labor in the production of cloth will cause a(an) ________ in the quantity of labor used to produce cloth,a(an) ________ in the quantity of labor used to produce food and a(an) ________ in the wage rate.

In the four-quadrant diagram of the specific factors model,the graph in the lower right quadrant is a country's

The specific factors model assumes that there are ________ goods and ________ factor(s) of production.