Question 1

A competitive firm is one:

Accepted Answer

A)  that has a large advertising budget. 
B)  that has monopoly power. 
C)  that has no effect on the market price. 
D)  that can raise prices to increase profits. 
E)  that never lowers prices. 
A)  that has a large advertising budget. 
B)  that has monopoly power. 
C)  that has no effect on the market price. 
D)  that can raise prices to increase profits. 
E)  that never lowers prices.

Question 2

Intra-industry trade occurs only in vertically differentiated products.

Accepted Answer

A) True 
 B)False

Question 3

What is the relationship between product differentiation and intra-industry trade?

Accepted Answer

Product differentiation and intra-indust

Question 4

If the IIT index for a product category is .93 then there is very little intra-industry trade occurring in this product category.

Accepted Answer

A) True 
 B)False

Question 5

Vertically differentiated products are products where:

Accepted Answer

A)  the prices are similar but the products differ slightly in some perceived manner. 
B)  both the physical characteristics and the prices of the products differ. 
C)  the physical characteristics of the product are identical but the prices differ. 
D)  the physical characteristics and the prices are identical. 
E)  trade rarely occurs. 
A)  the prices are similar but the products differ slightly in some perceived manner. 
B)  both the physical characteristics and the prices of the products differ. 
C)  the physical characteristics of the product are identical but the prices differ. 
D)  the physical characteristics and the prices are identical. 
E)  trade rarely occurs.

Question 6

The basic idea that certain countries specialize in producing new products based on technological innovation while other countries specialize in producing already well-established products is called:

Accepted Answer

A)  economies of scale. 
B)  primary and secondary markets. 
C)  product cycle. 
D)  production cost theory. 
E)  diseconomies of scale. 
A)  economies of scale. 
B)  primary and secondary markets. 
C)  product cycle. 
D)  production cost theory. 
E)  diseconomies of scale.

Question 7

Intra-industry trade:

Accepted Answer

A)  occurs when a country simultaneously exports and imports the same product. 
B)  cannot be adequately explained using the factor-proportions theory of international trade. 
C)  is measured using the intra-industry trade index. 
D)  All of the above 
E)  None of the above 
A)  occurs when a country simultaneously exports and imports the same product. 
B)  cannot be adequately explained using the factor-proportions theory of international trade. 
C)  is measured using the intra-industry trade index. 
D)  All of the above 
E)  None of the above

Question 8

Intra-industry trade (IIT):

Accepted Answer

A)  is nothing but a trivial data problem. 
B)  can be analyzed in exactly the same way we analyzed interindustry trade. 
C)  has nothing to do with trade in differentiated products. 
D)  can be related to the existence of overlapping demands. 
E)  does not occur between developed and developing countries. 
A)  is nothing but a trivial data problem. 
B)  can be analyzed in exactly the same way we analyzed interindustry trade. 
C)  has nothing to do with trade in differentiated products. 
D)  can be related to the existence of overlapping demands. 
E)  does not occur between developed and developing countries.

Question 9

Economies of scale:

Accepted Answer

A)  contribute to the existence of intra-industry trade. 
B)  refers to the tendency for per unit costs to rise with the level of output. 
C)  do not contribute to the existence of intra-industry trade in differentiated products. 
D)  never occur in the production of homogeneous products. 
E)  are unrelated to intra-industry trade. 
A)  contribute to the existence of intra-industry trade. 
B)  refers to the tendency for per unit costs to rise with the level of output. 
C)  do not contribute to the existence of intra-industry trade in differentiated products. 
D)  never occur in the production of homogeneous products. 
E)  are unrelated to intra-industry trade.

Question 10

With monopolistic competition, price is not always equal to marginal cost.

Accepted Answer

A) True 
 B)False

Question 11

A relatively large amount of intra-industry trade would be associated with:

Accepted Answer

A)  an index of intra-industry trade close to zero. 
B)  an index of intra-industry trade of .20. 
C)  a large amount of imports in a product category with few exports in the same product category. 
D)  an index of intra-industry trade close to 1.0. 
E)  an index of intra-industry trade of 2.0. 
A)  an index of intra-industry trade close to zero. 
B)  an index of intra-industry trade of .20. 
C)  a large amount of imports in a product category with few exports in the same product category. 
D)  an index of intra-industry trade close to 1.0. 
E)  an index of intra-industry trade of 2.0.

Question 12

Horizontally differentiated products are products where:

Accepted Answer

A)  the prices are similar but the products differ slightly in some perceived manner. 
B)  both the physical characteristics and the prices of the products differ. 
C)  the physical characteristics of the product are identical but product prices differ. 
D)  the physical characteristics and product prices are identical. 
E)  price is the most important characteristic. 
A)  the prices are similar but the products differ slightly in some perceived manner. 
B)  both the physical characteristics and the prices of the products differ. 
C)  the physical characteristics of the product are identical but product prices differ. 
D)  the physical characteristics and product prices are identical. 
E)  price is the most important characteristic.

Question 13

Intra-industry trade is the situation where a country is both importing and exporting in the same industry.

Accepted Answer

A) True 
 B)False

Question 14

Country A imports $50 in shirts and exports $50 in shirts. Its intra-industry trade index for shirts is:

Accepted Answer

A)  0. 
B)  1. 
C)  .50. 
D)  $100. 
E)  None of the above 
A)  0. 
B)  1. 
C)  .50. 
D)  $100. 
E)  None of the above

Question 15

The product cycle model states that new products will be produced throughout its economic life in the country that introduces the production of the product.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that a country's imports of computer chips are $1 billion and its exports of computer chips are $800 million. Calculate the intra-industry trade index for this country. Explain what the results of your calculation mean.

Accepted Answer

The intra-industry trade index is a meas

Question 17

Which of the following factors could potentially cause intra-industry trade?

Accepted Answer

A)  the existence of significant economies of scale 
B)  R&D being an important input into the production process 
C)  the operation of the sunspot cycle 
D)  both A and B 
E)  both B and C 
A)  the existence of significant economies of scale 
B)  R&D being an important input into the production process 
C)  the operation of the sunspot cycle 
D)  both A and B 
E)  both B and C

Question 18

Economies of scale:

Accepted Answer

A)  are known as decreasing costs or increasing returns to scale. 
B)  are internal to the firm if the expansion of the size of the firm itself is the basis from the decline in its average costs. 
C)  are external to the firm when a firm's average costs fall as the output of the entire industry rises. 
D)  are unrelated to intra-industry trade. 
E)  All of the above 
A)  are known as decreasing costs or increasing returns to scale. 
B)  are internal to the firm if the expansion of the size of the firm itself is the basis from the decline in its average costs. 
C)  are external to the firm when a firm's average costs fall as the output of the entire industry rises. 
D)  are unrelated to intra-industry trade. 
E)  All of the above

Question 19

Interindustry trade occurs when a country simultaneously exports and imports the same good.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  external economies of scale. 
B)  internal economies of scale. 
C)  expansionist economies of scale. 
D)  industry economies of scale. 
E)  zero economies of scale. 
A)  external economies of scale. 
B)  internal economies of scale. 
C)  expansionist economies of scale. 
D)  industry economies of scale. 
E)  zero economies of scale.

A competitive firm is one:

Intra-industry trade occurs only in vertically differentiated products.

What is the relationship between product differentiation and intra-industry trade?

If the IIT index for a product category is .93 then there is very little intra-industry trade occurring in this product category.

Vertically differentiated products are products where:

The basic idea that certain countries specialize in producing new products based on technological innovation while other countries specialize in producing already well-established products is called:

Intra-industry trade:

Intra-industry trade (IIT):

Economies of scale:

With monopolistic competition, price is not always equal to marginal cost.

A relatively large amount of intra-industry trade would be associated with:

Horizontally differentiated products are products where:

Intra-industry trade is the situation where a country is both importing and exporting in the same industry.

Country A imports $50 in shirts and exports $50 in shirts. Its intra-industry trade index for shirts is:

The product cycle model states that new products will be produced throughout its economic life in the country that introduces the production of the product.

Suppose that a country's imports of computer chips are $1 billion and its exports of computer chips are $800 million. Calculate the intra-industry trade index for this country. Explain what the results of your calculation mean.

Which of the following factors could potentially cause intra-industry trade?

Economies of scale:

Interindustry trade occurs when a country simultaneously exports and imports the same good.

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

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 competitive firm is one:

Intra-industry trade occurs only in vertically differentiated products.

What is the relationship between product differentiation and intra-industry trade?

If the IIT index for a product category is .93 then there is very little intra-industry trade occurring in this product category.

Vertically differentiated products are products where:

The basic idea that certain countries specialize in producing new products based on technological innovation while other countries specialize in producing already well-established products is called:

Intra-industry trade:

Intra-industry trade (IIT):

Economies of scale:

With monopolistic competition, price is not always equal to marginal cost.

A relatively large amount of intra-industry trade would be associated with:

Horizontally differentiated products are products where:

Intra-industry trade is the situation where a country is both importing and exporting in the same industry.

Country A imports $50 in shirts and exports $50 in shirts. Its intra-industry trade index for shirts is:

The product cycle model states that new products will be produced throughout its economic life in the country that introduces the production of the product.

Suppose that a country's imports of computer chips are $1 billion and its exports of computer chips are $800 million. Calculate the intra-industry trade index for this country. Explain what the results of your calculation mean.

Which of the following factors could potentially cause intra-industry trade?

Economies of scale:

Interindustry trade occurs when a country simultaneously exports and imports the same good.

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

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