Exam 3: Sources of Comparative Advantage

The Leontief paradox provided

The Heckscher-Ohlin theory asserts that relative differences in labor productivity underlie comparative advantage.

A firm is said to enjoy economies of scale over the range of output for which the long-run average cost is

Assume the cost of transporting autos from Japan to Canada exceeds the pretrade price difference for autos between Japan and Canada.Trade in autos is

As industry output increases, suppose that new knowledge about production technology spreads among firms in the area through direct contacts among firms or as workers transfer from firm to firm.Which concept does this example demonstrate?

Owners of resources specific to export industries tend to lose from international trade, while owners of factors specific to import-competing industries tend to gain.

According to the product life cycle theory, trade between countries is caused by

For textile production, the U.S.capital/labor ratio is 0.5 and China's capital/labor ratio is 0.02.This means that

Which of the following is NOT a claim made by industrial-policy critics?

Which theory considers the income distribution effects of trade in the short run?

Which statement is true about automation of American factories?

According to the factor-endowment theory, which factor is the ultimate determinant of comparative advantage?

The factor-endowment theory highlights the relative abundance of a nation's resources as the key factor underlying comparative advantage.

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.

Intra-industry trade can be explained in part by

The imposition of pollution-control regulations on domestic steel manufacturers leads to decreases in production costs and an improvement in the steel manufacturers' competitiveness.

According to the Heckscher-Ohlin Theory, ______ is (are) the major determinant(s) of comparative advantage.

The magnification effect suggests that the change in the price of a resource is smaller than the change in the price of the good that uses the resource relatively intensively.

According to the theory of overlapping demands, trade in manufactured goods would be greater among two wealthy countries than among a wealthy country and a poor country.

The Heckscher-Ohlin model assumes that tastes and preferences, and also factor endowments, are identical for trading nations.