Awesome Quiz On Agriculture

20 Questions | By Raghaaadboodai | Updated: Nov 9, 2022 | Attempts: 1264

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Econ.

Questions and Answers

1.

Suppose that the wage is $20 per hour in a two-sector (manufacturing and agriculture) specific-factors model. Currently, the prices of manufactured and agricultural outputs are $5 and $1, respectively; the marginal product of labor in the manufactured sector is 6 units per hour; and the marginal product of labor in the agricultural sector is 10 units per hour. What will happen to the distribution of labor between the two sectors?
- A.
  
  Nothing. The current allocation of labor between the two sectors is ideal.
- B.
  
  The manufacturing sector will demand more labor, and the agricultural sector will demand less labor at the current wage.
- C.
  
  The agricultural sector will demand more labor, and the manufacturing sector will demand less labor at the current wage.
- D.
  
  Both the agricultural and the manufacturing sector will demand more labor at the current wage.
2.

Consider the information provided about the price of agriculture and manufacturing goods in two countries (Home and Foreign). i) Under the condition of no trade, how is the relative price of manufacturing goods given?___; ii) If the two countries open their markets for trade, then___; iii) Under free trade conditions, Foreign will export __goods and Home will export __goods; and iv) as a nation begins to export, its own relative price of exported goods will ___, as it imports other goods, the relative price of those will ___, and thus____: جدول
- A.
  
  I) 0.40 in Foreign; ii) Home has the comparative advantage in agriculture; iii) agriculture; manufacturing; and iv) rise; fall; raising its standard of living
- B.
  
  I) 1.66 in Homes; ii) Home has the comparative advantage in manufacturing, iii) manufacturing and agriculture iv) rise; fall; raising its standard of living.
- C.
  
  I) 0.66 in Homes; ii) Home has the comparative advantage in manufacturing, iii) agriculture; manufacturing; and iv) rise; fall; raising its standard of living.
- D.
  
  I) 1.66 in Homes; ii) Home has the comparative advantage in manufacturing, iii) agriculture; manufacturing; and iv) rise; fall; raising its standard of living.
- E.
  
  I) 0.60 in Home; ii) Foreign has a comparative advantage in manufacturing; iii) manufacturing; agriculture; and iv) rise; fall; lowering its standard of living.
3.

Suppose that world demand shifts away from agricultural goods toward high-tech manufactured goods. If land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors, which of the following is true?
- A.
  
  The percentage change in capital income is less than the percentage change in labor income.
- B.
  
  The percentage change in labor income is greater than the percentage change in the relative price of manufacturing goods.
- C.
  
  The percentage change in capital income may be greater than zero.
- D.
  
  The percentage change in labor income is less than the percentage change in the relative price of manufacturing goods.
4.

If a nation begins to trade, i) it will be able to sell (export) the product for which its own relative price is___; ii) it will wish to buy (import) the product for which its own relative price is___; and iii) what will happen to the relative price of the export when trade occurs?____.
- A.
  
  I) Higher than other nations, ii) Higher than other nations; and iii) it fall rise.
- B.
  
  I) Higher than other nations, ii) lower than other nations; and iii) it will rise.
- C.
  
  I) lower than other nations, ii) lower than other nations; and iii) it fall rise.
- D.
  
  I) lower than other nations, ii) Higher than other nations; and iii) it will rise.
- E.
  
  I) lower than other nations, ii) Higher than other nations; and iii) it will fall.
5.

Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in agricultural output. Will workers be better or worse off following the opening of trade with other countries?
- A.
  
  Workers will be better off because the nominal wage increases.
- B.
  
  Workers will be worse off because the nominal wage decreases.
- C.
  
  Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls.
- D.
  
  Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the real wage in terms of the manufactured good rises.
- E.
  
  We need more information about nominal wages to determine winners and losers.
6.

I) As relative prices in various industries change due to trade, the marginal product of the mobile resources used in the expanding industry ___, and the marginal product of the mobile resources used in the contracting industry ___; ii) As relative prices in various industries change due to trade, the marginal product of the fixed resources used in the expanding industry ___, and the marginal product of the fixed resources used in the contracting industry ___; and iii) If the relative price of one product rises and labor is mobile, the equilibrium real wage compared with the rise in relative price will:__.
- A.
  
  I) rises; rises, ii) rises and falls; and iii) rise by less than the price increase in real terms.
- B.
  
  I) falls; rises, ii) rises and falls; and iii) rise by less than the price increase in percentage terms.
- C.
  
  I) falls; rises, ii) falls and rises; and iii) rise by less than the price increase in percentage terms.
- D.
  
  I) falls; rises, ii) rises and falls; and iii) rise by more than the price increase in real terms.
- E.
  
  I) falls; rises, ii) falls and rises; and iii) rise by more than the price increase in percentage terms.
7.

Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. Will workers be better or worse off following the opening of trade with other countries?
- A.
  
  Workers will be better off because the nominal wage increases.
- B.
  
  Workers will be worse off because the nominal wage decreases.
- C.
  
  Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls.
- D.
  
  Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the real wage in terms of the manufactured good rises.
- E.
  
  More information is needed to answer the question
8.

According to the information provided in the table, i) the wage rate in the agriculture sector is___; ii) the wage in the manufacturing sector is ___; iii) we can expect the following to happen in the economy?___; and iv) if the price of the agriculture good decreases to $5, then what happen? ___ جدول
- A.
  
  I) $30; ii) $50; iii) Labor will migrate from the manufacturing to the agriculture sector; and iv) wage rate in the agricultural sector will be $25.
- B.
  
  I) $50; ii) $30; iii) Labor will migrate from the agriculture to manufacturing sector; and iv) wage rate in the agricultural sector will be $25.
- C.
  
  I) $30; ii) $50; iii) Labor will migrate from the manufacturing to the agriculture sector; and iv) wage rate in the agricultural sector will be $25.
- D.
  
  I) $50; ii) $30; iii) Labor will migrate from the manufacturing to the agriculture sector; and iv) wage rate in the agricultural sector will be $25 and more goods imported.
- E.
  
  I) $50; ii) $30; iii) Labor will migrate from the manufacturing to the agriculture sector; and iv) wage rate in the agricultural sector will be $25.
9.

Suppose that labor is mobile between sectors but that capital and land are specific. Then labor will tend to benefit from trade when:
- A.
  
  It spends a large amount of its income on the imported good.
- B.
  
  It spends a large amount of its income on the exported good.
- C.
  
  Wages do not change much in percentage terms.
- D.
  
  All of these answer choices will occur.
10.

Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors. I) if comparative advantage is in manufacturing output, what will happen to the amount of land used in producing agricultural output when trade occurs?___; ii) if comparative advantage is in manufacturing output, what will happen to the amount of capital used in manufacturing production when trade occurs?___; iii) if comparative advantage is in manufacturing output, what will happen to the return (rental) on land when trade occurs?__; iv) if comparative advantage is in manufacturing output, what will happen to the return (rental) on capital when trade occurs?__; v) if comparative advantage is in manufacturing output, what will happen to the return (rental) on capital when trade occurs?__; vi) if comparative advantage is in the agricultural output, what will happen to the return (rental) on land when trade occurs?___; vii) if comparative advantage is in agriculture output, what will happen to the return (rental) on capital when trade occurs?___;
- A.
  
  I) unchanged; ii) unchanged; iii) fall; iv) rise; v)rise; vi) rise; and vii) fall
- B.
  
  I) decrease; ii) unchanged; iii) fall; iv) rise; v)rise; vi) rise; and vii) fall
- C.
  
  I) decrease; ii) increase; iii) fall; iv) rise; v)fall; vi) rise; and vii) fall
- D.
  
  I) decrease; ii) increase; iii) fall; iv) rise; v)rise; vi) rise; and vii) fall
- E.
  
  I) increase ; ii) increase; iii) fall; iv) fall; v)rise; vi) rise; and vii) fall
11.

The specific-factors model concludes that if there is a decrease in relative price (and an expansion) in one industry, the factor specific to that industry will:
- A.
  
  Experience an increase in its marginal product.
- B.
  
  Experience a decrease in its marginal product.
- C.
  
  Be transferred to other industries.
- D.
  
  Have competition as additional units of that specific factor are hired from other industries.
12.

Why does the return to capital change after trade occurs?
- A.
  
  There is more labor used per unit of capital in the manufacturing sector.
- B.
  
  There is more capital used per unit of labor in the manufacturing sector.
- C.
  
  There is more labor used per unit of land in the agricultural sector.
- D.
  
  There is more land used per unit of labor in the agricultural sector.
- E.
  
  Amount of land or capital will depend on amount of labor
13.

The table shows an economy before and after trade. According to the table, what is the return to capital after trade occurs? ___; ii) What is the return to land after trade occurs?___; and iii) Why does the return to capital change after trade occurs?___ جدول طويل
- A.
  
  I) $12.00 per unit; ii) $2.5 per acre; and iii) There is more labor used per unit of capital in the manufacturing sector.
- B.
  
  I) $24.00 per unit; ii) $3.00 per acre; and iii) There is more capital used per unit of labor in the manufacturing sector.
- C.
  
  I) $17.60 per unit; ii) $3.00 per acre; and iii) There is more labor used per unit of capital in the manufacturing sector.
- D.
  
  I) $24.00 per unit; ii) $5.00 per acre; and iii) There is more labor used per unit of capital in the manufacturing sector
14.

I) As a general rule, when there are specific factors, owners of factors specific to the importing industry___, owners of factors specific to export industries___, and mobile factor owners (such as labor) in that importing industry ___.
- A.
  
  Benefited; benefited; and either benefited or harmed depending on consumption patterns
- B.
  
  Benefit; benefited; and either benefited or harmed depending on consumption patterns
- C.
  
  Harmed; benefited; and either benefited or harmed depending on consumption patterns
- D.
  
  Either benefited or harmed depending on consumption patterns; benefited; and either benefited or harmed depending on consumption patterns
- E.
  
  Harmed; benefited; and benefited
15.

The table shows the revenues and costs for 2 industries) Suppose the price of manufacturing goods increases by 10% (PM), and the change in wages is given as 5%; then the i) rental rate on capital will___; ii) rental rate on land will___; and iii) what would we expect to take place?___ جدول
- A.
  
  I) decrease by 21.67%; ii) decrease by 7.5%; and iii) More output will be produced in the manufacturing sector.
- B.
  
  I) increase by 21.67%; ii) increased by 7.5%; and iii) More output will be produced in the manufacturing sector.
- C.
  
  I) increase by 21.67%; ii) decrease by 7.5%; and iii) More output may be produced in the manufacturing sector.
- D.
  
  I) increase by 21.67%; ii) decrease by 5%; and iii) rental rate of capital will decline.
- E.
  
  I) increase by 21.6%; ii) decrease by 7.5%; and iii) more output will be produced in the manufacturing sector.
16.

Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. Which statement below best describes changes in returns on capital and land after trade occurs?
- A.
  
  The return on capital and land will both rise
- B.
  
  The return on capital and land will both fall.
- C.
  
  The return on capital will rise and the return on land will fall.
- D.
  
  The return on capital will fall and the return on land will rise
- E.
  
  More information is needed to reach a conclusion
17.

Suppose that the Home country in the two-sector (manufacturing and agriculture) specific-factors model has a comparative advantage in manufactured output. After trade occurs, the return on capital will ___ than the price of the manufactured good.
- A.
  
  Increase faster
- B.
  
  Increase slower
- C.
  
  Increase at the same rate
- D.
  
  Decrease
- E.
  
  More information is needed to draw conclusion
18.

Which of the following statements about the specific-factors model is true?
- A.
  
  When exports of a product rise, the increase in revenue is divided among the factors of production equally.
- B.
  
  When imports rise, revenues of firms that compete with imports fall. The decrease in revenue is divided among the factors of production equally.
- C.
  
  When exports of a product rise, specific factors gain less and mobile factors gain more; when imports rise, specific factors gain more and mobile factors gain less.
- D.
  
  When exports of a product rise, specific factors gain more than mobile factors; when imports rise, specific factors lose more than mobile factors
19.

In what way do the conclusions of the Ricardian and the specific-factors models differ?
- A.
  
  In the specific-factors model, all resources (labor, land, capital) are better off with free trade. In the Ricardian model, only labor is better off with free trade.
- B.
  
  In the Ricardian model, a country is better off with free trade. In the specific-factors model, some of a country's resources will be worse off with free trade.
- C.
  
  In the Ricardian model, some of a country's resources will be worse off with free trade. In the specific-factors model, some of a country's resources will be better off with free trade.
- D.
  
  In the Ricardian model, labor will be worse off with free trade. In the specific-factors model, labor will be better off with free trade.
20.

Suppose that due to a drought, the price of agricultural goods rises. If land is specific to agriculture, capital is specific to manufacturing, and labor is mobile between sectors, which of the following is true?
- A.
  
  The percentage change in labor income is less than zero.
- B.
  
  The percentage change in labor income is greater than the percentage change in the relative price of agricultural goods.
- C.
  
  The percentage change in labor income is greater than the percentage change in the relative price of manufacturing goods.
- D.
  
  The percentage change in labor income is less than the percentage change in the relative price of agricultural goods.