Exam 3: Sources of Comparative Advantage

Decreasing cost conditions lead to complete specialization in the production of the commodity of comparative advantage.

The Heckscher-Ohlin theory emphasizes the role that demand plays in the creation of comparative advantage.

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

The specific-factors theory analyzes the income distribution effects of trade in the short run when resources are immobile among industries.

The factor endowment theory states that comparative advantage is explained

Should international transportation costs $\underline { \text { decrease } }$ , the effect on international trade would include:

According to the theory of intraindustry trade, many manufactured goods undergo a trade cycle in which the home country initially is an exporter and eventually becomes an importer of a product.

The simultaneous import and export of computers by Germany is an example of:

The theory of overlapping demands applies best to trade in manufactured goods.

Because seasons in the Southern Hemisphere are opposite those in the Northern Hemisphere, one would expect intraindustry trade to occur in agricultural products.

Boeing aircraft company was able to cover its production costs of the first "jumbo jet" in the 1970s because Boeing could market it to several foreign airlines in addition to domestic airlines. This illustrates:

In explaining international trade, the product life cycle theory focuses on

A product will be traded only if the cost of transporting it between nations is less than the pretrade difference between their relative product prices.

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

Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no longer manufacture the product?

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.

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

The Leontief paradox questioned the validity of the theory of:

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

Does factor price equalization occur in the real world?