Exam 3: Sources of Comparative Advantage

The Leontief paradox provided:

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.

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

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

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

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.

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.

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

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

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

The Leontief paradox questioned the validity of the theory of:

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.

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

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

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

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

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:

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

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):

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