Question 1

Dynamic comparative advantage refers to the creation of comparative advantage through the mobilization of skilled labor,technology,and capital.

Accepted Answer

A) True 
 B)False

Question 2

The factor-price-equalization theory is a short-run version of the specific-factors theory.

Accepted Answer

A) True 
 B)False

Question 3

Linder's theory of overlapping demand provides an explanation of:

Accepted Answer

A)   Product life cycle theory
B)   Factor endowment model
C)   Economies of large-scale production
D)   Intra-industry tradeE) B) and C)
F) A) and D)

Question 4

With decreasing costs,a country has an incentive to partially specialize in the product of its comparative advantage.

Accepted Answer

A) True 
 B)False

Question 5

The product-life-cycle theory applies best to trade in primary products in the short run.

Accepted Answer

A) True 
 B)False

Question 6

The Heckscher-Ohlin theory suggests that land-abundant nations will export land-intensive goods while labor-abundant nations will export labor-intensive goods.

Accepted Answer

A) True 
 B)False

Question 7

The Leontief paradox provided:

Accepted Answer

A)   Support for the principle of absolute advantage
B)   Support for the factor endowment model
C)   Evidence against the factor endowment model
D)   Evidence against the principle of absolute advantageE) C) and D)
F) A) and B)

Question 8

The Leontief paradox questioned the validity of the theory of:

Accepted Answer

A)   Comparative advantage
B)   Factor endowments
C)   Overlapping demands
D)   Absolute advantageE) A) and C)
F) None of the above

Question 9

That the division of labor is limited by the size of the market best applies to which explanation of trade?

Accepted Answer

A)   Factor endowment theory
B)   Product life cycle theory
C)   Economies of scale theory
D)   Overlapping demand theoryE) B) and D)
F) A) and B)

Question 10

Assume that labor is relatively scarce in the United States.According to the factor price equalization theory,America labor may opt for trade barriers once trade opens up.

Accepted Answer

A) True 
 B)False

Question 11

According to Staffan Linder,trade between two countries tends to be most pronounced when the countries:

Accepted Answer

A)   Find their tastes and preferences to be quite harmonious
B)   Experience economies of large-scale production over large output levels
C)   Face dissimilar relative abundances of the factors of production
D)   Find their per capita income levels to be approximately the sameE) All of the above
F) A) and B)

Question 12

For the United States,empirical studies indicate that over the past two decades the cost of international transportation relative to the value of U.S.imports has:

Accepted Answer

A)   Increased
B)   Decreased
C)   Not changed
D)   None of the aboveE) A) and B)
F) A) and C)

Question 13

Hong Kong is relatively abundant in labor,while Canada is relatively abundant in capital.In both countries the production of shirts is relatively more labor intensive than the production of computers.According to the factor endowment theory,Hong Kong will have a(n) :

Accepted Answer

A)   Absolute advantage in the production of shirts and computers
B)   Absolute advantage in the production of computers
C)   Comparative advantage in the production of shirts
D)   Comparative advantage in the production of computersE) B) and D)
F) B) and C)

Question 14

Economists agree that wages of unskilled workers are being held down by

Accepted Answer

A)   International trade
B)   Technology improvements
C)   Lack of education
D)   A combination of a,b,and cE) B) and C)
F) A) and B)

Question 15

According to the factor-price-equalization theory,international trade results in the relative differences in resource prices between nations being eliminated.

Accepted Answer

A) True 
 B)False

Question 16

The Heckscher-Ohlin theory asserts that trade should occur with different factor endowments.This theory is most accurate when explaining trade patterns between industrialized countries and developing countries.

Accepted Answer

A) True 
 B)False

Question 17

When transportation costs are added to our trade model,the low-cost exporting country produces less,consumes more,and exports less than that which occurs in the absence of transportation costs.

Accepted Answer

A) True 
 B)False

Question 18

Among the determinants underlying a country's international competitiveness in business services (e.g.,construction)  are:

Accepted Answer

A)   The potential scale economies afforded by a market's size
B)   Abundance of equipment including data processing facilities and computers
C)   Skills and capabilities of employees and their wage rates
D)   All of the aboveE) A) and B)
F) All of the above

Question 19

Fears about the downward pressure that cheap foreign workers place on U.S.wages have led U.S.labor unions to lobby for import restrictions such as tariffs and quotas.

Accepted Answer

A) True 
 B)False

Question 20

The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries':

Accepted Answer

A)   Economies of large-scale production
B)   Relative abundance of various resources
C)   Relative costs of labor
D)   Research and developmentE) All of the above
F) None of the above

Exam 3: Sources of Comparative Advantage

With decreasing costs,a country has an incentive to partially specialize in the product of its comparative advantage.

Correct AnswerverifiedShow Answer

The factor-price-equalization theory is a short-run version of the specific-factors theory.

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries':

Correct AnswerverifiedShow Answer

Hong Kong is relatively abundant in labor,while Canada is relatively abundant in capital.In both countries the production of shirts is relatively more labor intensive than the production of computers.According to the factor endowment theory,Hong Kong will have a(n) :

Correct AnswerverifiedShow Answer

When transportation costs are added to our trade model,the low-cost exporting country produces less,consumes more,and exports less than that which occurs in the absence of transportation costs.

Correct AnswerverifiedShow Answer

Economists agree that wages of unskilled workers are being held down by

Correct AnswerverifiedShow Answer

Dynamic comparative advantage refers to the creation of comparative advantage through the mobilization of skilled labor,technology,and capital.

Correct AnswerverifiedShow Answer

The Leontief paradox questioned the validity of the theory of:

Correct AnswerverifiedShow Answer

According to Staffan Linder,trade between two countries tends to be most pronounced when the countries:

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theory suggests that land-abundant nations will export land-intensive goods while labor-abundant nations will export labor-intensive goods.

Correct AnswerverifiedShow Answer

The product-life-cycle theory applies best to trade in primary products in the short run.

Correct AnswerverifiedShow Answer

That the division of labor is limited by the size of the market best applies to which explanation of trade?

Correct AnswerverifiedShow Answer

For the United States,empirical studies indicate that over the past two decades the cost of international transportation relative to the value of U.S.imports has:

Correct AnswerverifiedShow Answer

Linder's theory of overlapping demand provides an explanation of:

Correct AnswerverifiedShow Answer

According to the factor-price-equalization theory,international trade results in the relative differences in resource prices between nations being eliminated.

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theory asserts that trade should occur with different factor endowments.This theory is most accurate when explaining trade patterns between industrialized countries and developing countries.

Correct AnswerverifiedShow Answer

Among the determinants underlying a country's international competitiveness in business services (e.g.,construction) are:

Correct AnswerverifiedShow Answer

Fears about the downward pressure that cheap foreign workers place on U.S.wages have led U.S.labor unions to lobby for import restrictions such as tariffs and quotas.

Correct AnswerverifiedShow Answer

Assume that labor is relatively scarce in the United States.According to the factor price equalization theory,America labor may opt for trade barriers once trade opens up.

Correct AnswerverifiedShow Answer

The Leontief paradox provided:

Correct AnswerverifiedShow Answer

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