Question 1

The share of transport costs will fall less heavily on the nation:

Accepted Answer

A) with the more elastic demand and supply of the traded commodity 
B) with the less elastic demand and supply of the traded commodity 
C) exporting agricultural products 
D) with the largest domestic market 
A) with the more elastic demand and supply of the traded commodity 
B) with the less elastic demand and supply of the traded commodity 
C) exporting agricultural products 
D) with the largest domestic market A

Question 2

Define and discuss the differences between intra-industry trade and inter-industry trade.

Accepted Answer

Intra-industry trade is trade with in the same industry.Intra-industry trade is usually driven by product differentiation and economies of scale.Inter-industry trade is trade across differing industries and is usually a results of comparative advantage based on differences in relative factors of production.

Question 3

External economies refers to

Accepted Answer

A) an increase in inputs that leads to a more than proportional increase in outputs. 
B) a reduction in the average cost of production as the firm expands. 
C) a reduction in firm's average cost of production as the industry expands. 
D) a reduction in the world cost of production as international trade increases. 
A) an increase in inputs that leads to a more than proportional increase in outputs. 
B) a reduction in the average cost of production as the firm expands. 
C) a reduction in firm's average cost of production as the industry expands. 
D) a reduction in the world cost of production as international trade increases. C

Question 4

How do differing environmental standards between countries affect international trade,and why can this create problems?

Accepted Answer

Since countries may have different level

Question 5

According to the Environmental Performance Index,the highest ranking country is

Accepted Answer

A) New Zealand. 
B) Switzerland. 
C) the United States. 
D) Germany. 
A) New Zealand. 
B) Switzerland. 
C) the United States. 
D) Germany.

Question 6

Carefully explain how and why the share of intra-industry trade has changed for countries.

Accepted Answer

In general,as countries develop,the shar

Question 7

If transportation costs are imposed on an exporting nation the ultimate burden of paying for those costs will fall on

Accepted Answer

A) only the exporting nation 
B) only the importing nation 
C) the cost will be split 50/50 between the importing and exporting nation 
D) the costs will be split between the importing and exporting nation based on their supply and demand elasticity 
A) only the exporting nation 
B) only the importing nation 
C) the cost will be split 50/50 between the importing and exporting nation 
D) the costs will be split between the importing and exporting nation based on their supply and demand elasticity

Question 8

Offshoring refers to

Accepted Answer

A) the purchase of parts and components from overseas to reduce production costs. 
B) a firm producing parts in its own plants abroad. 
C) importing final consumer goods instead of purchasing them domestically. 
D) technology transfer from one country to another. 
A) the purchase of parts and components from overseas to reduce production costs. 
B) a firm producing parts in its own plants abroad. 
C) importing final consumer goods instead of purchasing them domestically. 
D) technology transfer from one country to another.

Question 9

Define and explain economies of scale.

Accepted Answer

Economies of scale is falling

Question 10

Which of the following assumptions of the Heckscher-Ohlin theory,when relaxed,require new trade theories?

Accepted Answer

A) Economies of scale 
B) incomplete specialization 
C) similar tastes in both nations 
D) the existence of transportation costs 
A) Economies of scale 
B) incomplete specialization 
C) similar tastes in both nations 
D) the existence of transportation costs

Question 11

With intra-industry trade,the gains from trade

Accepted Answer

A) decrease. 
B) come from reductions in cost due to comparative advantage and exchange. 
C) come from increases in the variety of goods available. 
D) come from the reduction of tariffs and trade. 
A) decrease. 
B) come from reductions in cost due to comparative advantage and exchange. 
C) come from increases in the variety of goods available. 
D) come from the reduction of tariffs and trade.

Question 12

If a nation exports twice as much of a differentiated product that it imports,its intra-industry (T)index is equal to:

Accepted Answer

A) 1.00 
B) 0.75 
C) 0.50 
D) 0.25 
A) 1.00 
B) 0.75 
C) 0.50 
D) 0.25

Question 13

Outsourcing refers to

Accepted Answer

A) the purchase of parts and components from overseas to reduce production costs. 
B) a firm producing parts in its own plants abroad. 
C) importing final consumer goods instead of purchasing them domestically. 
D) technology transfer from one country to another. 
A) the purchase of parts and components from overseas to reduce production costs. 
B) a firm producing parts in its own plants abroad. 
C) importing final consumer goods instead of purchasing them domestically. 
D) technology transfer from one country to another.

Question 14

Relaxing the assumptions on which the Heckscher-Ohlin theory rests:

Accepted Answer

A) leads to rejection of the theory 
B) leaves the theory unaffected 
C) requires complementary trade theories 
D) cannot be done. 
A) leads to rejection of the theory 
B) leaves the theory unaffected 
C) requires complementary trade theories 
D) cannot be done.

Question 15

Intra-industry trade takes place:

Accepted Answer

A) because products are homogeneous 
B) in order to take advantage of economies of scale 
C) because perfect competition is the prevalent form of market organization 
D) because there is technological change. 
A) because products are homogeneous 
B) in order to take advantage of economies of scale 
C) because perfect competition is the prevalent form of market organization 
D) because there is technological change.

Question 16

Discuss the stages of the product cycle model.

Accepted Answer

Stage 1 the product is produced and cons

Question 17

Trade based on technological gaps is closely related to:

Accepted Answer

A) the H-O theory 
B) the product-cycle theory 
C) Linder's theory 
D) the factor price equalization theorem. 
A) the H-O theory 
B) the product-cycle theory 
C) Linder's theory 
D) the factor price equalization theorem.

Question 18

How is intra-industry trade measured?
Does the degree of intra-industry trade depend on how an industry is defined?

Accepted Answer

Intra-industry trade can be measure by t

Question 19

Two developed nations are most likely to engage in

Accepted Answer

A) inter-industry trade based on economies of scale 
B) intra-industry trade based on economies of scale 
C) inter-industry trade based on comparative advantage 
D) intra-industry trade based on comparative advantage 
A) inter-industry trade based on economies of scale 
B) intra-industry trade based on economies of scale 
C) inter-industry trade based on comparative advantage 
D) intra-industry trade based on comparative advantage

Question 20

The theory that a nation exports those products for which a large domestic market exists was advanced by:

Accepted Answer

A) Linder 
B) Vernon 
C) Leontief 
D) Ohlin 
A) Linder 
B) Vernon 
C) Leontief 
D) Ohlin

Exam 6: Economies of Scale, imperfect Competition, and International Trade

The share of transport costs will fall less heavily on the nation:

Define and discuss the differences between intra-industry trade and inter-industry trade.

External economies refers to

How do differing environmental standards between countries affect international trade,and why can this create problems?

According to the Environmental Performance Index,the highest ranking country is

Carefully explain how and why the share of intra-industry trade has changed for countries.

If transportation costs are imposed on an exporting nation the ultimate burden of paying for those costs will fall on

Offshoring refers to

Define and explain economies of scale.

Which of the following assumptions of the Heckscher-Ohlin theory,when relaxed,require new trade theories?

With intra-industry trade,the gains from trade

If a nation exports twice as much of a differentiated product that it imports,its intra-industry (T)index is equal to:

Outsourcing refers to

Relaxing the assumptions on which the Heckscher-Ohlin theory rests:

Intra-industry trade takes place:

Discuss the stages of the product cycle model.

Trade based on technological gaps is closely related to:

How is intra-industry trade measured? Does the degree of intra-industry trade depend on how an industry is defined?

Two developed nations are most likely to engage in

The theory that a nation exports those products for which a large domestic market exists was advanced by:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscher-Ohlin Theory

Economic Growth and International Trade

Economic Growth and International Trade

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange

The Income Adjustment Mechanism and Synthesis of Automatic

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past,present,and Future

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