TRUE or FALSE. If the statement is correct write TRUE on your answer sheet. If the statement incorrect write FALSE on your answer sheet. EXPLAIN WHY YOUR ANSWER IS TRUE OR FALSE. 1. If the production possibilities frontier of country A in simple Ricardian model is shown by Y=600−0.75X and the international price is (Px/Py)w=−0.8, country A will fully specialize in product X. 2. If the relative price in country A is Px/Py=−8.5 and the relative price in country B is Px/Py=−5.5, while the international terms of trade is Px/Py=−6.85, a smaller portion of the gains from trade will accrue to country A. 3. The shape of the production possibilities frontier in a production function with specific factor is concave from the origin is due to an increasing marginal productivity of mobile productive factor which is mixed with another fixed factor input. 4. In a two country model, if the relative price in country A is Px/Py=−3.0 and the relative price in country B is Px/Py= −2.50, the international terms of trade may settle at (Px/Py)w =−1.0.