Question 1

Which of the following statements is not true with regard to the product-cycle theory?

Accepted Answer

A)  It depends on differences in technological changes over time among countries 
B)  It depends on the opening and the closing of technological gaps among countries 
C)  It postulates that industrial countries export more advanced products to less advanced countries 
D)  It corresponds with the predictions of the Hecksher-Ohlin theorem. 
A)  It depends on differences in technological changes over time among countries 
B)  It depends on the opening and the closing of technological gaps among countries 
C)  It postulates that industrial countries export more advanced products to less advanced countries 
D)  It corresponds with the predictions of the Hecksher-Ohlin theorem. D

Question 2

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 C

Question 3

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

Accepted Answer

In general,as countries develop,the share of intra-industry trade increases between countries of similar levels of economic development.This is because such countries both produce and exchange differentiated goods.Trade in these goods is based on the development of many varieties of goods rather than on comparative advantage.Case Study 6-5 shows the change in intra-industry trade shares for a variety of countries; in general shares of intra-industry trade have increased for nearly all of the (mostly developed)countries in the study.(Further discussion could include patterns of trade will countries at different levels of development.)

Question 4

Which of the following is an example of intra-industry trade?

Accepted Answer

A)  Japan and the United States both import and export cars. 
B)  The United States sends high technology goods to China and imports textiles and clothing. 
C)  The United States produces lettuce in the summer and imports lettuce from Chile in the winter. 
D)  The United States ships wheat to Africa. 
A)  Japan and the United States both import and export cars. 
B)  The United States sends high technology goods to China and imports textiles and clothing. 
C)  The United States produces lettuce in the summer and imports lettuce from Chile in the winter. 
D)  The United States ships wheat to Africa.

Question 5

Define and explain economies of scale.

Accepted Answer

Economies of scale is falling

Question 6

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 7

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 8

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

Question 9

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 10

When a nation has increasing returns to scale,the shape of its production possibility frontier is

Accepted Answer

A)  linear 
B)  concave to the origin 
C)  convex to the origin 
D)  discontinuous 
A)  linear 
B)  concave to the origin 
C)  convex to the origin 
D)  discontinuous

Question 11

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

Accepted Answer

Intra-industry trade is trade with in th

Question 12

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 13

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.

Question 14

A developed and developing nation 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 15

Discuss the stages of the product cycle model.

Accepted Answer

Stage 1 the product is produced and cons

Question 16

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 17

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 18

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 19

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 20

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.

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

Which of the following statements is not true with regard to the product-cycle theory?

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

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

Which of the following is an example of intra-industry trade?

Define and explain economies of scale.

Two developed nations are most likely to engage in

Offshoring refers to

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

Trade based on technological gaps is closely related to:

When a nation has increasing returns to scale,the shape of its production possibility frontier is

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

Outsourcing refers to

External economies refers to

A developed and developing nation are most likely to engage in

Discuss the stages of the product cycle model.

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

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

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

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

With intra-industry trade,the gains from trade

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 Heckscherohlin Theory

Economic Growth and International Trade

Trade Restrictions: Tariffs

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 Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

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 Answers to Selected Problems on Web

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