(This question pertains to material in Appendix C.) Suppose that country A has only three categories of traded goods and that A's exports and imports in the three categories are as shown in the table below: $\begin{array} { l cc } & \text { exports } & \text { imports } \\ \text { good T } & \$ 30 & \$ 100 \\ \text { good W } & 60 & 20 \\ \text { good X } & 60 &80 \\\\ \text { total } & \$ 150 & \$ 200 \end{array}$ In this situation, country A's index of intra-industry trade would have a value of __________.

A) 0.3 B) 0.4 C) 0.6 D) 0.7 A) 0.3 B) 0.4 C) 0.6 D) 0.7 D

Exam 10: Post Heckscher-Ohlin Theories of Trade and Intra-Industry Trade

Suppose that you test the Linder hypothesis by comparing Germany's absolute difference in per capita income from each of its trading partners with the size of Germany's total trade with each respective partner. You find a strongly negative correlation. Do you thus conclude that the Linder hypothesis must necessarily offer a good explanation of Germany's trade? Why or why not?

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Question 1

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The strongly negative correlation between Germany's absolute difference in per capita income from its trading partners and the size of Germany's total trade with each partner does not necessarily mean that the Linder hypothesis offers a good explanation of Germany's trade. While the Linder hypothesis suggests that countries with similar income levels are more likely to trade with each other due to similar preferences and demand for goods, the negative correlation could be influenced by other factors such as trade policies, geographical proximity, or historical ties.

It is important to consider other variables and conduct further analysis before concluding that the Linder hypothesis is a good explanation for Germany's trade patterns. Additionally, the Linder hypothesis is just one of many theories that attempt to explain international trade patterns, and it is important to consider other theories and factors that may also influence Germany's trade relationships with its partners.

In the context of a country's international trade, a "gravity model" is usually employed to investigate, for the country,

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(This question pertains to material in Appendix C.) Suppose that country A has only three categories of traded goods and that A's exports and imports in the three categories are as shown in the table below: exports imports good T \ 30 \ 100 good W 60 20 good X 60 80 total \ 150 \ 200 In this situation, country A's index of intra-industry trade would have a value of __________.

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Question 3

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Suppose that data are assembled on (1) research and development expenditures as a fraction of industry costs across U.S. industries (ranked from highest to lowest), and (2) the export success of U.S. industries (ranked from highest to lowest). If the "product cycle theory" is useful as an explanation for the pattern of U.S. exports, then an analyst would expect that statistical association (rank correlation coefficient) between these two series of data would be

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Question 4

The situation where a country both exports and imports goods in the same product classification category is known as trade, and such a trade situation for countries in the real world is likely to be associated with country per capita income levels.

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Question 5

In the "imitation lag" hypothesis,

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Question 6

How might the imitation lag hypothesis be incorporated into the product cycle theory?

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Question 7

(This question pertains to material in Appendix A.) Explain why, when a country is engaged in international trade as a result of economies of scale, production may move to an endpoint of the PPF.

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Question 8

The Linder theory of trade suggests that

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Question 9

What features of the product cycle theory are at variance with the assumptions of the Heckscher-Ohlin model? Explain.

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Question 10

In the Krugman model with economies of scale and monopolistic competition (with L =Amount of labor hired by the firm, Q = quantity of output of the firm, W = wage rate for Labor, P = price of the firm's product, and a and b are constants), the equation that states The labor requirement of the firm is . In the model, the existence of zero Profits for the firm in long-run equilibrium can be stated as .

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Question 11

Present in detail the following two theories/models associated with "post-Heckscher-Ohlin" trade theory. In the case of each theory/model, be sure to indicate important characteristics of real-world international trade that the theory/model is attempting to explain. (a) the product cycle theory (b) the Krugman theory/model with economies of scale and monopolistic competition

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Question 12

In the "imitation lag hypothesis," the length of time that elapses between when a new Product is introduced by innovating firms in country I and when consumers in country II Decide that the new product is a good substitute for products in their current consumption Bundle is known as the __________.

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Question 13

In the Krugman model, when a country is opened to international trade, the total output of each firm and the real wage of workers in the country .

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Question 14

In the Krugman model of trade where there are economies of scale and monopolistic competition, which one of the following indicates the situation for the typical firm in the long run (where P = price of output, Q = quantity of output, W = the wage rate, and a and b are constants that are > 0)?

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Question 15

Empirical tests pertaining to the determinants of intra-industry trade at the country level tend to suggest that the amount of intra-industry trade

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Question 16

Which one of the following statements pertaining to Vernon's "product cycle theory" for Explaining U.S. trade is INCORRECT?

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Question 17

Suppose that two countries each have the exact convex-to-the-origin production-Possibilities frontier (PPF) as in Question #17 above (i.e., the countries have identical PPFs like the Question #17 PPF) and the two countries also have identical tastes. In this situation,

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Question 18

Which of the following findings would NOT be consistent with the product cycle theory?

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Question 19

Suppose someone stated that the Heckscher-Ohlin model is best-suited for explaining trade between developed countries and developing countries, while newer theories such as those of Linder and Krugman are best-suited for explaining trade among developed countries. Would you agree with this observation? Why or why not?

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Question 20

Showing 1 - 20 of 30

Exam 10: Post Heckscher-Ohlin Theories of Trade and Intra-Industry Trade

In the context of a country's international trade, a "gravity model" is usually employed to investigate, for the country,

The situation where a country both exports and imports goods in the same product classification category is known as __________ trade, and such a trade situation for countries in the real world is likely to be __________ associated with country per capita income levels.

In the "imitation lag" hypothesis,

How might the imitation lag hypothesis be incorporated into the product cycle theory?

(This question pertains to material in Appendix A.) Explain why, when a country is engaged in international trade as a result of economies of scale, production may move to an endpoint of the PPF.

The Linder theory of trade suggests that

What features of the product cycle theory are at variance with the assumptions of the Heckscher-Ohlin model? Explain.

In the "imitation lag hypothesis," the length of time that elapses between when a new Product is introduced by innovating firms in country I and when consumers in country II Decide that the new product is a good substitute for products in their current consumption Bundle is known as the __________.

In the Krugman model, when a country is opened to international trade, the total output of each firm __________ and the real wage of workers in the country __________.

In the Krugman model of trade where there are economies of scale and monopolistic competition, which one of the following indicates the situation for the typical firm in the long run (where P = price of output, Q = quantity of output, W = the wage rate, and a and b are constants that are > 0)?

Empirical tests pertaining to the determinants of intra-industry trade at the country level tend to suggest that the amount of intra-industry trade

Which one of the following statements pertaining to Vernon's "product cycle theory" for Explaining U.S. trade is INCORRECT?

Suppose that two countries each have the exact convex-to-the-origin production-Possibilities frontier (PPF) as in Question #17 above (i.e., the countries have identical PPFs like the Question #17 PPF) and the two countries also have identical tastes. In this situation,

Which of the following findings would NOT be consistent with the product cycle theory?

Early Trade Theories: Mercantilism and the Transition to the Classical World of David Ricardo

The Classical World of David Ricardo and Comparative Advantage

Extensions and Tests of the Classical Model of Trade

Introduction to Neoclassical Trade Theory: Tools to Be Employed

Gains From Trade in Neoclassical Theory

Offer Curves and the Terms of Trade

The Basis for Trade: Factor Endowments and the Heckscher-Ohlin Model

Empirical Tests of the Factor Endowments Approach

Economic Growth and International Trade

International Factor Movements

The Instruments of Trade Policy

The Impact of Trade Policies

Arguments for Interventionist Trade Policies

Political Economy and Us Trade Policy

Economic Integration

International Trade and the Developing Countries

The Balance-Of-Payments Accounts

The Foreign Exchange Market

International Financial Markets and Instruments: an Introduction

The Monetary and Portfolio Balance Approaches to External Balance

Price Adjustments and Balance-Of-Payments Disequilibrium

National Income and the Current Account

Economic Policy in the Open Economy Under Fixed Exchange Rates

Economic Policy in the Open Economy Under Flexible Exchange Rates

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

Fixed or Flexible Exchange Rates

The International Monetary System: Past, Present, and Future

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The situation where a country both exports and imports goods in the same product classification category is known as trade, and such a trade situation for countries in the real world is likely to be associated with country per capita income levels.

In the Krugman model, when a country is opened to international trade, the total output of each firm and the real wage of workers in the country .