If we measure scarcity or abundance correctly, we should use the concept of “effective factor endowment.”  This means:

In what way does the specific-factors model add to the conclusions of the Ricardian model?

The Ricardian model can be simplified and made more explanatory by assuming that there is only one resource used in producing goods. What did Ricardo assume the resource was?

As a nation opens for trade, the relative prices of products it imports will ________ and the relative prices of products it exports will ________.

Which of the following is an example of reverse-vertical FDI?

Trade Adjustment Assistance provides:

In the two-sector specific-factors model, diminishing returns to labor implies:

Assume that two countries (Home and Foreign) each produce two goods (corn and wheat) under constant cost production.  Home produces 0.5 ton of corn, or 1 ton of wheat, with a day of labor.  Foreign produces 1 ton of corn, or 0.5 ton of wheat, with a day of labor.  Without trade (in autarky), Home’s daily production is 20 tons of wheat and 10 tons of corn.  At which international price will Home’s gains from trade be largest?

In a two-sector (manufacturing and agriculture) specific-factors model:

Which of the following is NOT a reason for horizontal FDI?