国际经济学作业答案-第三章

Chapter3 LaborProductivityandComparativeAdvantage-TheRicardianModel

MultipleChoiceQuestions

Countriestradewitheachotherbecausetheyare andbecauseof 。(a） different,costs

（b) similar，scaleeconomies

(c)different，scaleeconomies

（d) similar,costs

（e) Noneoftheabove。Answer：C

Tradebetweentwocountriescanbenefitbothcountriesif

(a） eachcountryexportsthatgoodinwhichithasacomparativeadvantage。

(b)eachcountryenjoyssuperiortermsoftrade.

eachcountryhasamoreelasticdemandfortheimportedgoods。

eachcountryhasamoreelasticsupplyforthesuppliedgoods。

（e) Both（c)and(d）.Answer：A

TheRicardiantheoryofcomparativeadvantagestatesthatacountryhasacomparativeadvantageinwidgetsif

outputperworkerofwidgetsishigherinthatcountry。

（b） thatcountry’sexchangerateislow。

(c)wageratesinthatcountryarehigh。

(d） theoutputperworkerofwidgetsascomparedtotheoutputofsomeotherproductishigherinthatcountry.

(e)Both(b)and(c).Answer:D

4。Inordertoknowwhetheracountryhasacomparativeadvantageintheproductionofoneparticularproductweneedinformationonatleast unitlaborrequirements

one

two

three(d） four

（e） five

Chapter3

LaborProductivityandComparativeAdvantage—TheRicardianModel

PAGE

37

PAGE

38

Krugman/Obstfeld•SeventhEdition

Answer:D

5。Acountryengagingintradeaccordingtotheprinciplesofcomparativeadvantagegainsfromtradebecauseit

（a） isproducingexportsindirectlymoreefficientlythanitcouldalternatively.(b） isproducingimportsindirectlymoreefficientlythanitcoulddomestically。

(c)isproducingexportsusingfewerlaborunits.

isproducingimportsindirectlyusingfewerlaborunits.

Noneoftheabove.Answer：B

Giventhefollowinginformation:

UnitLaborRequirements

Cloth

Home 10

Foreign 60

Widgets

20

30

（a） Neithercountryhasacomparativeadvantage。

Homehasacomparativeadvantageincloth.

Foreignhasacomparativeadvantageincloth.

Homehasacomparativeadvantageinwidgets。

Homehasacomparativeadvantageinbothproducts.Answer:B

IfitisascertainedthatForeignusesprison—slavelabortoproduceitsexports，thenhomeshould

（a) exportcloth。

（b) exportwidgets.

exportbothandimportnothing.

（d) exportandimportnothing。

(e)Alloftheabove。Answer:A

IftheHomeeconomysufferedameltdown,andtheUnitLaborRequirementsineachoftheproductsquadrupled（thatis,doubledto30forclothand60forwidgets)thenhomeshould

exportcloth.

（b) exportwidgets.

(c） exportbothandimportnothing.

（d) exportandimportnothing。

（e) Alloftheabove.

Answer：A

9。IfwagesweretodoubleinHome，thenHomeshould:

(a）

(b）

(c）

exportcloth.exportwidgets.

exportbothandimportnothing.

(d）

(e）

exportandimportnothing。Alloftheabove。

Answer：A

10。Iftheworldequilibriumpriceofwidgetswere4Cloths,then

（a) bothcountriescouldbenefitfromtradewitheachother。

neithercountrycouldbenefitfromtradewitheachother.

（c) eachcountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.

neithercountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.

bothcountrieswillwanttospecializeincloth。Answer：A

11。Giventhefollowinginformation:

NumberofUnitsProducedbyoneUnitofLabor

Cloth

Widgets

Home

10

20

Foreign

60

30

(a）

(b）

（c）

(d）

(e）

Neithercountryhasacomparativeadvantage.Homehasacomparativeadvantageincloth.Foreignhasacomparativeadvantageincloth.Foreignhasacomparativeadvantageinwidgets。

Homehasacomparativeadvantageinbothproducts.

Answer:C

TheopportunitycostofclothintermsofwidgetsinForeignisifitisascertainedthatForeignusesprison-slavelabortoproduceitsexports，thenhomeshould

exportcloth.

（b） exportwidgets。

(c)exportbothandimportnothing.(d） exportandimportnothing。(e） Alloftheabove。

Answer:B

13。IfwagesweretodoubleinHome，thenHomeshould

（a） exportcloth。

exportwidgets.

exportbothandimportnothing.

exportandimportnothing.

（e） Alloftheabove.Answer:B

14. Iftheworldequilibriumpriceofwidgetswere4Cloths，then

（a） bothcountriescouldbenefitfromtradewitheachother.

(b）

（c)

（d）

（e)

neithercountrycouldbenefitfromtradewitheachother。

eachcountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage。neithercountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.bothcountrieswillwanttospecializeincloth。

Answer：A

15。Iftheworldequilibriumpriceofwidgetswere40cloths,then

bothcountriescouldbenefitfromtradewitheachother。

neithercountrycouldbenefitfromtradewitheachother。

eachcountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.

(d)neithercountrywillwanttoexportthegoodinwhichitenjoyscomparativeadvantage.

（e) bothcountrieswillwanttospecializeincloth.Answer:A

Inatwoproducttwocountryworld，internationaltradecanleadtoincreasesin(a） consumerwelfareonlyifoutputofbothproductsisincreased。

(b） outputofbothproductsandconsumerwelfareinbothcountries。

（c） totalproductionofbothproductsbutnotconsumerwelfareinbothcountries。

consumerwelfareinbothcountriesbutnottotalproductionofbothproducts。

NoneoftheaboveAnswer:B

Asaresultoftrade,specializationintheRicardianmodeltendstobe(a） completewithconstantcostsandwithincreasingcosts。

（b) completewithconstantcostsandincompletewithincreasingcosts.

(c)incompletewithconstantcostsandcompletewithincreasingcosts.

(d） incompletewithconstantcostsandincompletewithincreasingcosts.

(e)Noneoftheabove。Answer：B

Asaresultoftradebetweentwocountrieswhichareofcompletelydifferenteconomicsizes，specializationintheRicardian2X2modeltendstobe

（a） incompleteinbothcountries(b） completeinbothcountries

（c） completeinthesmallcountrybutincompleteinthelargecountry(d） completeinthelargecountrybutincompleteinthesmallcountry

（e） NoneoftheaboveAnswer:C

AnationengagingintradeaccordingtotheRicardianmodelwillfinditsconsumptionbundle

（a） insideitsproductionpossibilitiesfrontier.

（b) onitsproductionpossibilitiesfrontier.

（c) outsideitsproductionpossibilitiesfrontier.

(d）

（e)

insideitstrade-partner'sproductionpossibilitiesfrontier。onitstrade—partner’sproductionpossibilitiesfrontier.

Answer:C

20。IntheRicardianmodel,ifacountry’stradeisrestricted，thiswillcauseallexceptwhich？

（a)

（b)

(c）

(d）

（e）

Limitspecializationandthedivisionoflabor.Reducethevolumeoftradeandthegainsfromtrade

Causenationstoproduceinsidetheirproductionpossibilitiescurves

MayresultinacountryproducingsomeoftheproductofitscomparativedisadvantageNoneoftheabove.

Answer:C

IfaverysmallcountrytradeswithaverylargecountryaccordingtotheRicardianmodel,then

thesmallcountrywillsufferadecreaseineconomicwelfare.

(b） thelargecountrywillsufferadecreaseineconomicwelfare.

（c） thesmallcountryonlywillenjoygainsfromtrade.

(d)thelargecountrywillenjoygainsfromtrade.

（e） Noneoftheabove。Answer：C

IftheworldtermsoftradeforacountryaresomewherebetweenthedomesticcostratioofHandthatofF,then

(a） countryHbutnotcountryFwillgainfromtrade。(b） countryHandcountryFwillbothgainfromtrade。(c） neithercountryHnorFwillgainfromtrade.

(d)onlythecountrywhosegovernmentsubsidizesitsexportswillgain.

（e) Noneoftheabove.Answer：B

IftheworldtermsoftradeequalthoseofcountryF，then

（a)

（b)

(c）

（d）

(e）

countryHbutnotcountryFwillgainfromtrade.countryHandcountryFwillbothgainfromtrade。neithercountryHnorFwillgainfromtrade.

onlythecountrywhosegovernmentsubsidizesitsexportswillgain.Noneoftheabove.

Answer:A

Iftheworldtermsoftradeequalthoseofcountry,Fthen(a） countryHbutnotcountryFwillgainfromtrade.

(b)countryHandcountryFwillbothgainfromtrade。

（c) neithercountryHnorFwillgainfromtrade。

(d） onlythecountrywhosegovernmentsubsidizesitsexportswillgain.

（e） Noneoftheabove。Answer：E

25。Ifaproductionpossibilitiesfrontierisbowedout（concavetotheorigin），thenproductionoccursunderconditionsof

(a） constantopportunitycosts。(b） increasingopportunitycosts。

（c） decreasingopportunitycosts.(d） infiniteopportunitycosts.

（e) Noneoftheabove。Answer：B

Iftheproductionpossibilitiesfrontierofonethetradepartners（“CountryA")isbowedout

（concavetotheorigin），thenincreasedspecializationinproductionbythatcountrywill(a） Increasetheeconomicwelfareofbothcountries。

（b） IncreasetheeconomicwelfareofonlyCountryA。

（c) DecreasetheeconomicwelfareofCountryA。

(d)DecreasetheeconomicwelfareofCountryB.

（e） Noneoftheabove.Answer:A

Iftwocountrieshaveidenticalproductionpossibilityfronti，ersthentradebetweenthemisnotlikelyif(a） theirsupplycurvesareidentical。

(b） theircostfunctionsareidentical.

theirdemandconditionsidentical。

theirincomesareidentical.(e）Noneoftheabove。Answer:E

Iftwocountrieshaveidenticalproductionpossibilityfronti，ersthentradebetweenthemisnotlikelyif

(a）

（b）

（c)

（d）

(e）

theirsupplycurvesareidentical。theircostfunctionsareidentical.theirdemandfunctionsdiffer。theirincomesareidentical。Noneoftheabove。

Answer:C

Theearlieststatementoftheprincipleofcomparativeadvantageisassociatedwith

DavidHume.

DavidRicardo。

（c) AdamSmith。

（d) EliHeckscher.

BertilOhlin.

Answer：B

Ifonecountry'swagelevelisveryhighrelativetotheother’s（therelativewageexceedingtherelativeproductivityratios），theniftheybothusethesamecurrency

neithercountryhasacomparativeadvantage.

(b） onlythelowwagecountryhasacomparativeadvantage.(c） onlythehighwagecountryhasacomparativeadvantage。

(d)consumerswillstillfindtradeworthwhilefromtheirperspective.(e） Noneoftheabove.

Answer：E

Ifonecountry’swagelevelisveryhighrelativetotheother’s(therelativewageexceedingtherelativeproductivityratios），then

(a)itisnotpossiblethatproducersineachwillfindexportmarketsprofitable.

itisnotpossiblethatconsumersinbothcountrieswillenhancetheirrespectivewelfaresthroughimports.

(c） itisnotpossiblethatbothcountrieswillfindgainsfromtrade.

(d)itispossiblethatbothwillenjoytheconventionalgainsfromtrade。

（e) Noneoftheabove.Answer：D

32。Ifonecountry’swagelevelisveryhighrelativetotheother’s(therelativewageexceedingtherelativeproductivityratios）thenitisprobablethat

(a） freetradewillimprovebothcountries’welfare

(b)freetradewillresultinnotradetakingplace

（c) freetradewillresultineachcountryexportingthegoodinwhichitenjoyscomparativeadvantage

（d） freetradewillresultineachcountryexportingthegoodinwhichitsuffersthegreatestcomparativedisadvantage.

（e) Noneoftheabove.Answer：B

33。TheRicardian2X2modelisbasedonallofthefollowingexceptonlytwonationsandtwoproducts。

(a)nodiminishingreturns。

（b) laboristheonlyfactorofproduction.(c） productqualityvariesamongnations。

（d） Noneoftheabove。Answer:D

Ricardo’soriginaltheoryofcomparativeadvantageseemedoflimitedreal—worldvaluebecauseitwasfoundedonthelabortheoryofvalue.

（a) capitaltheoryofvalue.

（b) landtheoryofvalue。

(c） entrepreneurtheoryofvalue.

(d） Noneoftheabove。Answer:A

35。AccordingtoRicardo,acountrywillhaveacomparativeadvantageintheproductinwhichits

laborproductivityisrelativelylow。

（b) laborproductivityisrelativelyhigh.

(c)labormobilityisrelativelylow.

(d） labormobilityisrelativelyhigh.

(e)Noneoftheabove.

Answer:B

36。Inatwo—country,two-productworld,thestatement“GermanyenjoysacomparativeadvantageoverFranceinautosrelativetoships”isequivalentto

FrancehavingacomparativeadvantageoverGermanyinships.

（b) FrancehavingacomparativedisadvantagecomparedtoGermanyinautosandships.

（c) GermanyhavingacomparativeadvantageoverFranceinautosandships。

（d） FrancehavingnocomparativeadvantageoverGermany.

（e) Noneoftheabove.Answer：A

37。AssumethatlaboristheonlyfactorofproductionandthatwagesintheUnitedStatesequal

＄20perhourwhilewagesinJapanare$10perhour.ProductioncostswouldbelowerintheUnitedStatesascomparedtoJapanif

（a) U。S.laborproductivityequaled40unitsperhourandJapan’s15unitsperhour。

U。S.productivityequaled30unitsperhourwhereasJapan’swas20.

（c） U。S.laborproductivityequaled20andJapan’s30.

(d） U。S。laborproductivityequaled15andJapan's25unitsperhour.

（e) Noneoftheabove.Answer：A

38。IftheUnitedStates’sproductionpossibilityfrontierwasflattertothewidgetaxis，whereasGermany’swasflattertothebutteraxis,weknowthat

(a)theUnitedStateshasnocomparativeadvantage

(b） Germanyhasacomparativeadvantageinbutter。

（c） theU.S.hasacomparativeadvantageinbutter。

（d) Notenoughinformationisgiven。

(e)Noneoftheabove.

Answer：B

39。SupposetheUnitedState’sproductionpossibilityfrontierwasflattertothewidgetaxis，whereasGermany’swasflattertothebutteraxis。WenowlearnthattheGermanmarksharplydepreciatesagainsttheU.S.dollar。Wenowknowthat

(a)theUnitedStateshasnocomparativeadvantage

Germanyhasacomparativeadvantageinbutter。

theUnitedStateshasacomparativeadvantageinbutter.

Notenoughinformationisgiven.

(e） Noneoftheabove.Answer：B

SupposetheUnitedState'sproductionpossibilityfrontierwasflattertothewidgetaxis,whereasGermany’swasflattertothebutteraxis.WenowlearnthattheGermanwagedoubles，butU.S.wagesdonotchangeatall。Wenowknowthat

theUnitedStateshasnocomparativeadvantage。

Germanyhasacomparativeadvantageinbutter.

（c) theUnitedStateshasacomparativeadvantageinbutter。

（d） Notenoughinformationisgiven.

Noneoftheabove.

Answer:B

41。Whichofthefollowingstatementsistrue

(a） Freetradeisbeneficialonlyifyourcountryisstrongenoughtostanduptoforeigncompetition

（b） Freetradeisbeneficialonlyifyourcompetitordoesnotpayunreasonablylowwages

(c)Freetradeisbeneficialonlyifbothcountrieshaveaccesstothesametechnology.(d） Alloftheabove

(e） NoneoftheaboveAnswer：E

42. TheGainsfromTradeassociatedwiththeprincipleofComparativeAdvantagedependson(a） Thetradepartnersmustdifferintechnologyortastes.

(b)Therecanbenomoregoodstradedthanthenumberoftradepartners。

（c) Theremaybenomoretradepartnersthangoodstraded.

（d） Alloftheabove

（e) NoneoftheaboveAnswer:A

43。IftransportationcostsareespeciallyhighforWidgetsinaRicardian2X2modelinwhichCountryAenjoysacomparativeadvantage，then

（a） CountryBmustalsoenjoyacomparativeadvantageinWidgets

(b)CountryBmayendupexportingWidgets

(c） CountryAmayswitchtohavingacomparativeadvantageintheothergood。

Alloftheabove

NoneoftheaboveAnswerE

44。MahatmaGhandiexhortedhisfollowersinIndiatopromoteeconomicwelfarebydecreasingimports.Thisapproach

(a)Makesnosense

（b） Makesnoeconomicsense

(c） IsconsistentwiththetheRicardianmodelofcomparativeadvantage.(d） IsnotconsistentwiththeRicardianmodelofcomparativeadvantage.

（e) Noneoftheabove

Answer:D

TheCountryofRhozundiaisblessedwithrichcopperdeposits.ThecostofCopperproduced

（relativetothecostofWidgetsproduced)isthereforeverylow。Fromthisinformationweknowthat

（a) RhozundiahasacomparativeadvantageinCopper

（b） RhozundiashouldexportCopperandimportWidgets

RhozundiashouldexportWidgetsandexportCopper

Both(a）and（b)aretrue(e）Noneoftheabove。Answer:E

Weknowthatinantiquity,Chinaexportedsilkbecauseno—oneinanyothercountryknewhowtoproducethisproduct.Fromthisinformationwelearnthat

(a） ChinaenjoyedacomparativeadvantageinSilk

（b) Chinaenjoyedanabsoluteadvantage，butnotacomparativeadvantageinsilk.(c） Nocomparativeadvantageexistsbecausetechnologywasnotdiffused

Chinashouldhaveexportedsilkeventhoughithadnocomparativeadvantage

Noneoftheabove.Answer:A

47。IftwocountriesengageinFreeTradefollowingtheprinciplesofcomparativeadvantage,then

（a) Neitherrelativepricesnorrelativemarginalcosts（marginalratesoftransformation—MRTs)inonecountrywillequalthoseintheothercountry。

BothrelativepricesandMRTswillbecomeequalinbothcountries

RelativepricesbutnotMRTswillbecomeequalinbothcountries

（d) MRTsbutnotrelativepriceswillbecomeequalinbothcountries

（e) Noneoftheabove.Answer：C

48。Letusdefinetherealwageasthepurchasingpowerofonehouroflabor.IntheRicardian2X2model，

iftwocountriesunderautarkyengageintradethen

（a) Therealwagewillnotbeaffectedsincethisisafinancialvariable.

（b） Therealwagewillincreaseonlyifacountryattainsfullspecialization

（c) Therealwagewillincreaseinonecountryonlyifitdecreasesintheother

（d） Therealwagewillriseinbothcountries.

Noneoftheabove.

Answer:D

IftwocountriesinAutarky（notengagedininternationaltrade)begintradingwithotherinamannerconsistentwiththeRicardianmodelofcomparativeadvantage，then

（a) Theamountoflaborrequiredtoproduceoneunitofimportswilldecreaseinbothcountries。

（b) Theamountoflaborrequiredtoproduceoneunitofbothproductswilldecreaseinbothcountries.

（c) Theamountoflaborrequiredtoproduceoneunitofimportswilldecreaseonlyintherelativelylaborabundantcountry

（d） Theamountoflaborrequiredtoproduceoneunitofimportswilldecreaseonlyintherelativelycapitalabundantcountry.

(e） Noneoftheabove.Answer:A

EssayQuestions

1。ManycountriesinSub-SaharanAfricahaveverylowlaborproductivitiesinmanysectors，inmanufacturingandagriculture。Theyoftendespairofeventryingtoattempttobuildtheirindustriesunlessitisdoneinanautarkiccontext,behindprotectionistwallsbecausetheydonotbelievetheycancompetewithmoreproductiveindustriesabroad。DiscussthisissueinthecontextoftheRicardianmodelofcomparativeadvantage。

Answer:TheRicardianmodelofcomparativeadvantagearguesthateverycountrymusthaveacomparativeadvantageinsomeproduct(assumingtherearemoreproductsthancountries）。However,theRicardianmodelisnotagrowthmodel，andcannotbeusedtoidentifygrowthnodesorlinkages。

2。In1975，wagelevelsinSouthKoreawereroughly5%ofthoseintheUnitedStates.ItisobviousthatiftheUnitedStateshadallowedKoreangoodstobefreelyimportedintotheUnitedStatesatthattime，thiswouldhavecauseddevastationtothestandardoflivingintheUnitedStates，becausenoproducerinthiscountrycouldpossiblycompetewithsuchlowwages。DiscussthisassertioninthecontextoftheRicardianmodelofcomparativeadvantage.

Answer： Regardlessofrelativewagelevels，theUnitedStateswouldbeabletoprovideitspopulacewithahigherstandardoflivingthanwouldbepossiblewithouttrade.Also，lowwagestendtobeassociatedwithlowproductivities。

3。TheevidencecitedinthechapterusingtheexamplesoftheEastAsiaNewIndustrializingCountriessuggeststhatasinternationalproductivitiesconverge，sodointernationalwagelevels。WhydoyousupposethishappenedfortheEastAsianNICs？Inlightofyouranswer，whatdoyouthinkislikelytohappentotherelativewages(relativetothoseintheUnitedStates）ofChinainthecomingdecade?Explainyourreasoning.

Answer： FollowingthelogicoftheRicardianmodelofcomparativeadvantage，theEastAsiancountriesplayedtotheirrespectivecomparativeadvantages。Thisallowedtheworlddemandtoprovideexcessdemandsfortheirrelativelyabundantlabor，whichinturntendedtoraisethesewages。IfChinafollowsthesamepattern，theirwageslevelsshouldalsobeexpectedovertimetoconvergetothoseintheirindustrializedcountrymarkets。

4。Whenweexaminethe2Good2CountryversionoftheRicardianmodelofcomparativeadvantage，wenotethatcomparativeadvantageistotallydeterminedbyphysicalproductivityratios.Changesinwageratesineithercountrycannotaffectthesephysicallydeterminedcomparativeadvantages，andhencecannotaffect，whichproductwillbeexportedbywhichcountry.However，whenmorethan

2goodsareaddedtothemodel(stillwith2countries），changesinwageratesinoneortheothercountrycaninfactdeterminewhichgoodorgoodseachofthecountrieswillexport.Howcanyouexplainthisanomaly?

Answer： Thisisnotreallyananomaly.Aslongasonlytwogoodsexist，thenaslongastradetakesplace，eachcountrymusthaveacomparativeadvantageinoneofthem（ornone)。However,iftherearemoregoodsthancountries,thenthephysicalproductivitydefinitionofcomparativeadvantagebecomesambiguous。Changesinrelativewagerateswillshifttheinternationalcompetitivenessalongthe“chainofcomparativeadvantage。”

AnexaminationoftheRicardianmodelofcomparativeadvantageyieldstheclearresultthattradeis(potentially)beneficialforeachofthetwotradingpartnerssinceitallowsforanexpandedconsumptionchoiceforeach.However，fortheworldasawholetheexpansionofproductionofoneproductmustinvolveadecreaseintheavailabilityoftheother,sothatitisnotclearthattradeisbetterfortheworldasawholeascomparedtoaninitialsituationofnon-trade(butefficientproductionineachcountry）。Arethereinfactgainsfromtradefortheworldasawhole？Explain.

Answer： Ifweweretocombinetheproductionpossibilityfrontiersofthetwocountriestocreateasingleworldproductionpossibilityfrontier，thenitistruethatanychangeinproductionpoints（fromautarkytospecializationwithtrade）wouldinvolveatradeoffofonegoodforanotherfromtheworld’sperspective.Inotherwords,thenewsolutioncannotpossiblyinvolvetheproductionofmoreofbothgoods.However，sinceweknowthateachcountryisbetteroffatthenewsolution，itmustbetruethattheoriginalpointswerenotonthetradecontractcurvebetweenthetwocountries,anditwasinfactpossibletomakesomepeoplebetteroffwithoutmakingothersworseoff,sothatthenewsolutiondoesindeedrepresentawelfareimprovementfromtheworld’sperspective.

ItisgenerallyclaimedthatamovementfromautarkytofreetradeconsistentwithRicardiancomparativeadvantageincreasestheeconomicwelfareofeachofthetradepartners.However,itmaybedemonstratedthatundercertaincircumstances,noteveryoneineachcountryismadebetteroff。Illustratesuchacase。

Answers： (a） Ifinter—generational，oreconomicgrowthconsiderationsaretakenintoaccount，thenacountrymayendupspecializinginagoodthathasnoorfewgrowthlinkageswiththerestoftheeconomy（e。g。an“enclave”sector）.

（b）Ifsomeoftheresidentsofacountryhavetastesbiasedtowardtheirexportable,thentheymaysufferduetothetrade-affectedincreaseinthemarketpriceoftheexportablegood.

Itisgenerallyclaimedthatstatetrading,orcentrallycontrolledtradingwilltendtoreachalowereconomicwelfarethanwouldbereachedbyallowingmarketforcestodeterminetradeflowdirectionsandtermsoftrade.Illustrateacounter—exampletothisproposition.

Answer:Ingeneral，ifwebeginwithanysuboptimaldistortion,thetheoryofthesecondbesttellsusthatanadditional“distortion”maymoveacountryinthecorrectdirectionofawelfareimprovement.Forexample,Ifacountryhasanovervaluedexchangerate(thatis,itscurrencyisoverpricedintheforeignexchangemarkets），itispossiblethatitwillfinditselfinanautarkicequilibrium（thatis，itmight“overpriceitselfoutoftheinternationalmarket”)。Insuchacaseitiseasytodemonstratethatifthegovernmentexportsthegoodsinwhichthecountryenjoyscomparativeadvantage，andimportstheother（bypassingmarketpricesandmechanisms），thecountry’seconomicwelfarewillimprove.

TheRicardianpropositionthatinternationaltradewillbenefitanycountry（“gainsfromtrade"）aslongastheworldtermsoftra