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Part Ⅰ. Fill in the blank with suitable content.
themes recur throughout the study of international economics. These arethe gains from trade ,
the pattern of trade , protectionism the balance of payments, exchange rate determination,
international policy coordination, international capital market.
2. Countries engage in international trade for two basic reasons :comparative advantage
and economics of scale.
3. A country has a comparative advantage in producing a good ifthe opportunity cost
of producing that good in terms of other goods is lower in that country than it is in other countries.
* *
4. Labor is the only one factor of production. a LC 、 aLW and aLC 、 aLW are the unit labor
requirement in cheese and wine at Home and Foreign, respectively. If aLC/aLWaLC*/aLW* ,
Home has a comparative advantage in cheese.p / p is the relative price of cheese, when
C W
aLC/aLW Pc/PwaLC*/aLW* Home and Foreign specialize in producing cheese and
wine , respectively.
* *
5. Labor is the only one factor of production. a LC 、 aLW and aLC 、 aLW are the unit labor
requirement in cheese and wine at Home and Foreign, respectively.L and L* are Home ’s and
* *
Foreign ’s labor force. Ifa / a p / p a / a , the world relative supply of cheese equals
LC LW C W LC LW
( )
L/aLC /(L*/aLW*) . Home’s gains from indirectly producing wine can be shown as
(1/aLC)(Pc/Pw) -1/aLW
M M M F F F M F
6. In spe
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