1) The Heckscher-Ohlin theorem states that a country will have comparative advantage in the good whose production in relatively intensive in the with which the country is relatively abundant ? a. tastes b. technology c. factor/resource d. opportunity cost
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2) By reducing the volume of trade transportation costs tend to ? a. stop the process of product price equalization and factor price equalization before they are complete: b. ensure that the process of product price equalization and factor price equalization are complete c. eliminate all of the feasible gains from international trade d. maximize all of the feasible gains from international trade
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3) The analyzes the income distribution effects of trade in the short run when resources are immobile among industries ? a. Stolpher-Samuelson theory b. factor endowment theory c. specific factors theory d. overlapping demand theory
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4) The comparative advantage model of Ricardo was based on ? a. intraindustry specialization and trade b. interindustry specialization and trade c. demand conditions underlying specialization and trade d. income conditions underlying specialization and trade
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5) According to the Heckscher-Ohlin model the source of comparative advantage is a country’s ? a. technology b. advertising c. factor endowments d. both (a) and (c)
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6) Difference in environmental standards or other government regulations among nations ? a. have no impact on patterns of international trade b. have tended to make U.S steel companies more competitive internationally c. can affect production costs and thus alter comparative advantages and trade patterns d. have been eliminated by the nations participating in NAFTA
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7) Intra-industry trade theory ? a. Explains why the United States might export autos and import clothing b. Explains why the United States might export and import differentiated versions of the same product such as different types of autos c. Assumes that transport costs are very low or do not exist d. ignores seasonal considerations for agricultural goods
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8) Should international transportation costs decrease the effect on international trade would include a (an) ? a. increase in the volume of trade b. Smaller gain from trade c. Decline in the income of home producers d. Decrease in the level of specialization in production
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9) According to the trade theory of Staffan Linder trade tends to be most pronounced in manufactured goods when trading countries have ? a. similar endowments of natural resources b. similar levels of technology c. similar per-capita incomes d. similar wage levels
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10) According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will ? a. Devote excessive amounts of resources to agricultural production b. Devote insufficient amounts of resources to agricultural production c. Export products that are land-intensive d. Import products that are land-intensive
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11) The theory of overlapping demand predicts that trade in manufactured goods is unimportant for countries with very different ? a. Tastes and preferences b. Expectations of future interest rate levels c. Per-capita income levels d. Labor productivities
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12) Boeing aircraft company was able to over its production costs of the first – jumbo jetll in the seventies because Boeing could market it to several foreign airlines in addition to domestic airlines. This illustrates ? a. How economies of scale make possible a larger variety of products in international trade b. A transfer of wealth from domestic consumer to domestic producer as the result of trade c. How a natural monopoly is forced to behave more competitively with international trade d. How a natural monopoly is forced to behave less competitively with international trade
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13) The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries ? a. Economies of large-scale production b. Relative abundance of various resources c. Relative costs of labor d. Research and development expenditures
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