Chapter 01 Globalization and the Multinational Firm

True / False Questions

The first two columns give the maximum daily amounts of beer and whiskey that Southern Ireland and Northern Ireland can produce when they completely specialize in one or other product. The last two columns give each country’s consumption without trade.

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1. Is Northern Ireland better off when it trades with Southern Ireland?
True False

2. Now suppose that Southern workers receive a raise to €2 per day. Will trade be possible at the exchange rate you found in the last question?
True False

3. Now suppose that Southern workers are paid €1 per day but the Northern workers receive a raise to £2 per day. Will trade be possible at the exchange rate you found in the question before the last question?
True False

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