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reased the price of good X and decrease the volume of imports of good X c. increase the price of good X and increase the volume of imports of good X d. increase the price of good X and decrease the volume of imports of good X 10. The HO model extends the classical trade model by: a. explaining the basis for parative advantage b. examining the effect of trade on factor prices c. both a and b d. neither a nor b 11. Which is not an assumption of the HO model? a. the same technology in both nations b. constant returns to scale c. plete specialization d. equal tastes in both nations 12. With equal technology nations will have equal K/L in production if: a. factor prices are the same b. tastes are the same c. PPFs are the same d. all of the above 13. We say that modity Y is Kintensive with respect to X when: a. more K is used in the production of Y than X b. less L is used in the production of Y than X c. a lower L/K ratio is used in the production of Y than X d. a higher K/L is used in the production of X than Y 14. When w/r falls, L/K a. falls in the production of both modities b. rises in the production of both modities c. can rise or fall d. is not affected 15. A nation is said to have a relative abundance of K if it has a: a. greater absolute amount of K b. smaller absolute amount of L c. higher L/K ratio d. lower r/w 16. A difference in relative modity prices between nations can be based on a difference in: a. technology b. factor endowments c. tastes d. all of the above 17. In the HO model, international trade is based mostly on a difference in: a. technology b. factor endowments c. economies of scale d. tastes 18. According to the HO model, trade reduces international differences in: a. relative but not absolute factor prices b. absolute but not relative factor prices c. both relative and absolute factor prices d. neither relative nor absolute factor prices 19. According to the HO model, international trade will: a. reduce international differences in per capita ines b. increases interna