1) If tastes are identical between countries, then comparative advantage is determined by ?
a. supply condition only
b. demand conditions only
c. supply and demand conditions
d. can’t tell without more information
2) Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of ?
a. research and development subsidies
b. loan guarantees
c. low interest rate loans
d. All of the above
3) The product cycle theory of trade is essentially a ?
a. static, short run trade theory
b. dynamic long run trade theory
c. zero-sum theory of trade
d. negative-sum theory of trade
4) The Heckscher-Ohl in model rules out the classical model’s basis for trade by assuming that _________ is (are) identical between countries?
a. factor endowments
b. factor intensities
d. opportunity costs
5) Declining costs per unit of output results from international trade especially if ?
a. International trade affords producers monopoly power
b. National governments levy imports tariffs and quotas
c. Producing goods entails increasing costs
d. Economies of scale exist for producers
6) Dynamic comparative advantage theory ?
a. helps explain why some nations use industrial policy to support potentially competitive new firms
b. cannot explain strategic competition between firms such as Boeing and Airbus
c. Is another name for Ricardo’s comparative advantage theory?
d. None of the above
7) That the division of labor is limited by the size of the market best applies to which explanation of trade ?
a. Factor endowment theory
b. Product life cycle theory
c. Economies of scale theory
d. Overlapping demand theory
8) _____ 1954 study of U.S trade patterns showed that U.S exports were labor-intensive compared with U.S imports, even though the United States was widely regarded as a relatively capital-abundant nation ?
a. Paul Samuelson’s
b. Wolfgang Stolpher’s
c. Staffan Linder’s
d. Wassily Leontief’s
9) For the United States empirical studies indicate that over the past two hundred years the cost of international transportation relative to the value of U.S imports has ?
c. Not changed
d. Any of the above
10) The trade model of the Swedish economies Heckscher and Ohlin maintains that ?
a. Absolute advantage determines the distribution of the gains from trade
b. Comparative advantage determines the distribution of the gains from trade
c. The division of labor is limited by the size of the world market
d. A country exports goods for which its resource endowments are most suited