Exam 3: Sources of Comparative Advantage

The theory of overlapping demands contends that international trade in manufactured products is strongest among nations with similar income levels.

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

Which of the following suggests that by widening the market's size, international trade can permit longer production runs for manufacturers, which leads to increasing efficiency?

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

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

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.

According to the factor-endowment theory, international specialization and trade cause a nation's cheap resource to become cheaper and a nation's expensive resource to become more expensive.

By widening the size of the domestic market, international trade permits companies to take advantage of longer production runs and increasing efficiencies such as mass production.

How does Staffan Linder explain world trade patterns?

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

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

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

Which trade theory is tantamount to a short-run version of the factor price equalization theory?

The theory of overlapping demands predicts that trade in manufactured goods is $\underline { \text { unimportant } }$ for countries with very different:

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

In industries where the final product is much less weighty or bulky than the materials from which it is made, firms tend to locate production near resource supplies.

Which trade theory suggests that a newly produced good, once exported, could ultimately end up being imported as the technology is transferred to lower- cost nations?

The Leontief paradox provided:

Figure 3.1 China - 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?

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