【正文】 is the relative quality of the two goods. C. a line whose slope is the relative quantity of the two goods. D. a line whose slope is the relative price of the two goods. E. None of the above. 5. If the price of the capital intensive product rises more than does the price of the land intensive product, then A. demand will shift away from the capitalintensive product, and its production will decrease. B. demand will shift away from the capitalintensive product, and its production will decrease relative to that of the land intensive product. C. the production of the capitalintensive product will indeed decrease, but not for the reasons mentioned in A or B. 16 D. the countries exporting the capitalintensive good will lose its parative advantage. E. None of the above. 6. If the price of the capital intensive product rises, wages will A. rise but by less than the price of the capitalintensive product. B. rise by more than the rise in the price of the capitalintensive product. C. remain proportionally equal to the price of the capitalintensive product. D. fall, since higher prices cause less demand. E. None of the above. 7. If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade were to open up between these two countries, A. the relative price of the capitalintensive product would rise in Australia. B. the world price of the landintensive product would be higher than it had been in Belgium. C. the world price of the land intensive product would be higher than it had been in Australia. D. the relative price of the land intensive product would rise in Belgium. E. None of the above. 8. If Australia has more land per worker, and Belgium has more capital per worker, then if trade were to open up between these two countries, A. Australia would export the landintensive product. B. Belgium would import the capitalintensive product. C. Both countries would export some of each product. D. trade would not continue since Belgium is a smaller country. E. None of the above. 9. If Australia has more land per worker, and Belgium has more capital per worker, then if trade were to open up between these two countries, A. the real ine of capital owners in Australia would rise. B. the real ine of labor in Australia would clearly rise. C. the real ine of labor in Belgium would clearly rise. D. the real ine of landowners in Belgium would fall. E. the real ines of capital owners in both countries would rise. 10. If trade opens up between the two formerly autarkic countries, Australia and Belgium, then A. the real ine of Australia and of Belgium will increase. B. the real ine of Australia but not of Belgium will increase. C. the real ine of neither country will increase. D. the real ine of both countries may increase. E. the real ine of both countries will increase. 17 11. The marginal product of labor in manufacturing slopes downward because of A. diseconomies to scale. B. discontinuities in the production function. C. diminishing returns. D. gross substitution with the food sector. E. None of the above. 12. In the Specific Factors model, each of the two sectors A. employs the same factors used by the other. B. employs different factors than those employed in the other. C. employs a fixed coefficient production function. D. shares one factor of production with the other sector. E. None of the above. 13. The Specific Factors model assumes A. imperfections in the labor market. B. imperfections in the land market. C. imperfections in the capital market. D. imperfections in the entrepreneurship market. E. None of the above. 14. At the production point the production possibility frontier is tangent to a line whose slope is A. the price of manufactures. B. the relative wage. C. he real wage. D. the relative price of manufactures. E. None of the above. 15. If the price of manufactures and the price of food increase by 25%, then A. the economy moves down its aggregate supply curve. B. the economy moves back along its aggregate demand curve. C. the relative quantities of manufactures and food remain unchanged. D. the relative quantities of products change by 25%. E. None of the above. 16. If the price of manufactures rises, then A. the price of food also rises. B. the quantity of food produced falls. C. the quantity of both manufactures and food falls. D. the purchasing power of labor in terms of food falls. E. None of the above. 17. In the model described in this chapter, if the price of manufactures rises, then 18 A. the real ine of capital rises. B. the real ine of land rises. C. the purchasing power of landowners rises. D. the production of both products falls. E. None of the above. 18. If the price of food rises , then the ine of capital owners will fall because A. capital owners consume only food. B. the real wage in terms of manufactures rises. C. they must pay higher wages to maintain subsistence levels. D. food is an element of anic capital for capitalists. E. None of the above. 19. If additional land were to be brought into cultivation in the Specific Factor model, the output of manufactures would fall because of A. lower marginal productivity of labor in this sector. B. lower marginal productivity of labor in food production. C. higher marginal productivity of labor in manufacture sector. D. lower labor input in manufacture sector. E. None of the above. 20. If Japan is relatively capital rich and the United States is relatively land rich, then trade between these two, formerly autarkic countries will A. lead to perfect specialization with Japan alone producing manufactures. B. create a world relative price of food that is lower than that of the . C. l