Exam 3: Sources of Comparative Advantage

A product will be internationally traded as long as the pretrade price differential between the trading partners is

According to Staffan Linder, the factor-endowment theory is useful in explaining trade patterns in manufactured goods, but not primary products.

From 2000-2010, which nation lost thousands of jobs to China, whose average wages were half of those of this country?

The product lifecycle theory contends that when a new product is introduced to the home market, it generally requires low-skilled labor to produce it.

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)

The theory of overlapping demands argues that consumer demand within nations is strongly determined by

A change in factor endowments tends to have a similar impact on a production possibilities frontier as a change in technology.

Should international transportation costs decrease, the effect on international trade would include

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

Relative to Kenya, Japan has relatively higher economies of large-scale production, an abundance of resources, higher labor costs, and more research and development.The Heckscher-Ohlin theory explains Japan's comparative advantage over Kenya as the result of differences in countries'

Which of the following is NOT an assumption of the factor-endowment theory?

How does Staffan Linder explain world trade patterns?

Explain the impact of factor price equalization on factor prices between nations

Labor unions in the United States were generally pro-free trade in the 1950s and 1960s.They became concerned about free trade when

The existence of transportation costs tends to result in increasing gains that a country receives from trade.

The Leontief Paradox was the first major challenge to the product-life-cycle theory of trade.

Brazil is labor abundant relative to Germany if the ratio of labor to capital in Brazil is higher than that in Germany.

Industrial policy seeks to direct resources to declining industries in which productivity is low, linkages to the rest of the economy are weak, and future competitiveness is remote.

The factor-endowment theory asserts that specialization and trade tends to encourage an equalization in the relative resource prices of trading partners.

Figure 1. An Example of China-U.S. Trade Possibilities -Considering Figure 1, which of the following would be true?