Question 1

A large amount of international trade:

Accepted Answer

A)  involves differentiated products. 
B)  is intra-industry trade. 
C)  is based on imperfect competition. 
D)  All of the above 
E)  None of the above 
A)  involves differentiated products. 
B)  is intra-industry trade. 
C)  is based on imperfect competition. 
D)  All of the above 
E)  None of the above D

Question 2

If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intra-industry trade would be:

Accepted Answer

A)  0.25. 
B)  0.75. 
C)  0.50. 
D)  1.00. 
E)  1.50. 
A)  0.25. 
B)  0.75. 
C)  0.50. 
D)  1.00. 
E)  1.50. C

Question 3

Intra-industry trade is not an effective method of reducing the monopoly power of domestic firms.

Accepted Answer

A) True 
 B)False  False

Question 4

A decline in average costs caused by the expansion of a firm is a form of:

Accepted Answer

A)  external economies of scale. 
B)  internal economies of scale. 
C)  expansionist economies of scale. 
D)  fixed economies of scale. 
E)  final economies of scale. 
A)  external economies of scale. 
B)  internal economies of scale. 
C)  expansionist economies of scale. 
D)  fixed economies of scale. 
E)  final economies of scale.

Question 5

Economies of scale in differentiated products can lead to IIT.

Accepted Answer

A) True 
 B)False

Question 6

The minority taste for a particular version of a product in a country has nothing to do with intra-industry trade.

Accepted Answer

A) True 
 B)False

Question 7

The difference between a Rolls Royce and a Chevrolet is an example of vertical product differentiation.

Accepted Answer

A) True 
 B)False

Question 8

If the intra-industry trade index is close to one for a particular industry this means that there is a lot of intra-industry trade in that industry.

Accepted Answer

A) True 
 B)False

Question 9

Firms in imperfectly competitive markets:

Accepted Answer

A)  are not able to influence the price of the product. 
B)  can influence the price of the product by changing the quantity offered for sale. 
C)  are not able to differentiate the products within the industry. 
D)  have alliances with foreign countries to avoid double taxation. 
E)  have absolutely no market power. 
A)  are not able to influence the price of the product. 
B)  can influence the price of the product by changing the quantity offered for sale. 
C)  are not able to differentiate the products within the industry. 
D)  have alliances with foreign countries to avoid double taxation. 
E)  have absolutely no market power.

Question 10

The simultaneous export and import of beer by the U.S. is an example of:

Accepted Answer

A)  interindustry trade. 
B)  perfect competition. 
C)  constant returns to scale. 
D)  intra-industry trade. 
E)  comparative advantage trade. 
A)  interindustry trade. 
B)  perfect competition. 
C)  constant returns to scale. 
D)  intra-industry trade. 
E)  comparative advantage trade.

Question 11

Interindustry trade cannot be explained by the factor-proportions theory.

Accepted Answer

A) True 
 B)False

Question 12

Intra-industry trade can be defined as trade between countries in very dissimilar goods, e.g., steel and wheat.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would be an example of intra-industry trade based on overlapping demands?

Accepted Answer

A)  bourbon 
B)  beer 
C)  Volvos 
D)  movies 
E)  all of the above 
A)  bourbon 
B)  beer 
C)  Volvos 
D)  movies 
E)  all of the above

Question 14

In a high-income country which of the following statements is true with respect to the product cycle?

Accepted Answer

A)  The country would tend to export low-priced versions of goods. 
B)  The country would tend to import high-priced versions of goods. 
C)  R&D for high-priced versions of goods would be done in low-income countries where labor is cheaper. 
D)  The country would tend to import low-priced versions and export high- priced versions of goods. 
E)  It is unrelated to economies of scale. 
A)  The country would tend to export low-priced versions of goods. 
B)  The country would tend to import high-priced versions of goods. 
C)  R&D for high-priced versions of goods would be done in low-income countries where labor is cheaper. 
D)  The country would tend to import low-priced versions and export high- priced versions of goods. 
E)  It is unrelated to economies of scale.

Question 15

A problem associated with measuring intra-industry trade is:

Accepted Answer

A)  the industry or product groups are well defined. 
B)  the industries do not have the data to measure trade. 
C)  the trade is two-way trade. 
D)  the products are not counted as exports or imports. 
E)  entrepot trade. 
A)  the industry or product groups are well defined. 
B)  the industries do not have the data to measure trade. 
C)  the trade is two-way trade. 
D)  the products are not counted as exports or imports. 
E)  entrepot trade.

Question 16

According to Linder, a country would tend to export goods to countries with very different per capita incomes.

Accepted Answer

A) True 
 B)False

Question 17

If a country is importing 20 units of a product and exporting 10 units, then the IIT index would be approximately:

Accepted Answer

A)  0.0. 
B)  1.0. 
C)  0.67. 
D)  0.1. 
E)  2.48. 
A)  0.0. 
B)  1.0. 
C)  0.67. 
D)  0.1. 
E)  2.48.

Question 18

Interindustry trade is the situation where a country is both importing and exporting the same product.

Accepted Answer

A) True 
 B)False

Question 19

The essential characteristic of a competitive firm is that:

Accepted Answer

A)  it is a price maker. 
B)  it is a price taker. 
C)  the market demand for the product does not exist. 
D)  firms produce differentiated products. 
E)  it is the only producer. 
A)  it is a price maker. 
B)  it is a price taker. 
C)  the market demand for the product does not exist. 
D)  firms produce differentiated products. 
E)  it is the only producer.

Question 20

Intra-industry trade can be explained in part by economies of scale.

Accepted Answer

A) True 
 B)False

A large amount of international trade:

If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intra-industry trade would be:

Intra-industry trade is not an effective method of reducing the monopoly power of domestic firms.

A decline in average costs caused by the expansion of a firm is a form of:

Economies of scale in differentiated products can lead to IIT.

The minority taste for a particular version of a product in a country has nothing to do with intra-industry trade.

The difference between a Rolls Royce and a Chevrolet is an example of vertical product differentiation.

If the intra-industry trade index is close to one for a particular industry this means that there is a lot of intra-industry trade in that industry.

Firms in imperfectly competitive markets:

The simultaneous export and import of beer by the U.S. is an example of:

Interindustry trade cannot be explained by the factor-proportions theory.

Intra-industry trade can be defined as trade between countries in very dissimilar goods, e.g., steel and wheat.

Which of the following would be an example of intra-industry trade based on overlapping demands?

In a high-income country which of the following statements is true with respect to the product cycle?

A problem associated with measuring intra-industry trade is:

According to Linder, a country would tend to export goods to countries with very different per capita incomes.

If a country is importing 20 units of a product and exporting 10 units, then the IIT index would be approximately:

Interindustry trade is the situation where a country is both importing and exporting the same product.

The essential characteristic of a competitive firm is that:

Intra-industry trade can be explained in part by economies of scale.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters

Exam 5: Intra-Industry Trade

A large amount of international trade:

If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intra-industry trade would be:

Intra-industry trade is not an effective method of reducing the monopoly power of domestic firms.

A decline in average costs caused by the expansion of a firm is a form of:

Economies of scale in differentiated products can lead to IIT.

The minority taste for a particular version of a product in a country has nothing to do with intra-industry trade.

The difference between a Rolls Royce and a Chevrolet is an example of vertical product differentiation.

If the intra-industry trade index is close to one for a particular industry this means that there is a lot of intra-industry trade in that industry.

Firms in imperfectly competitive markets:

The simultaneous export and import of beer by the U.S. is an example of:

Interindustry trade cannot be explained by the factor-proportions theory.

Intra-industry trade can be defined as trade between countries in very dissimilar goods, e.g., steel and wheat.

Which of the following would be an example of intra-industry trade based on overlapping demands?

In a high-income country which of the following statements is true with respect to the product cycle?

A problem associated with measuring intra-industry trade is:

According to Linder, a country would tend to export goods to countries with very different per capita incomes.

If a country is importing 20 units of a product and exporting 10 units, then the IIT index would be approximately:

Interindustry trade is the situation where a country is both importing and exporting the same product.

The essential characteristic of a competitive firm is that:

Intra-industry trade can be explained in part by economies of scale.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters