Exam 3: Sources of Comparative Advantage

Expanding trade or technological improvements

Intra-industry trade would occur if computers manufactured in the United States by IBM are exported to Japan while the United States imports computers manufactured by Hitachi of Japan.

The Heckscher-Ohlin theory contends that over a period of years a country that initially is an exporter of a product will become an importer of that product.

According to the specific factors trade theory:

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.This would be an example of

Although some people may be harmed by international trade,the Heckscher-Ohlin theory asserts that free trade will promote the standard of living for the nation as a whole.

Stringent governmental regulations (e.g.,air quality standards) imposed on domestic steel manufacturers tend to:

Industrial policy implies using governmental subsidies as a tool to provide domestic firms an edge over foreign competitors in domestic and foreign markets.

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.

Empirical studies conclude that U.S.environmental policies are a more important determinant of trade performance than capital,raw materials,labor skills,and wages.

Most developing countries have pollution-control laws and enforcement policies that are more stringent than those of the major industrial countries.

Which of the following would least likely apply to the product life cycle theory?

Which of the following is a long-run theory,emphasizing changes in the trading position of a nation over a number of years?

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

According to the factor endowment model,countries heavily endowed with land will:

In the absence of transportation costs,free trade results in the equalization of the prices of traded goods,as well as resource prices,in the trading nations.

Most theories dealing with the principle of comparative advantage explain the patterns of international trade to be caused by differences in

The theory of overlapping demands predicts that trade in manufactured goods is unimportant for countries with very different:

Figure 3.1China - US Trade Possibilities -Considering Figure 3.1 prior to trade both China's and the US production of textiles and aircraft is 19 and 9.Which of the following represents the pre-trade situation?

Which of the following suggests that a nation will export the commodity in the production of which a great deal of its relatively abundant and cheap factor is used?