Question 1

With the product cycle model, comparative advantage may move from one country to another as the product matures.

Accepted Answer

A) True 
 B)False

Question 2

Vertical product differentiation only occurs in homogeneous products.

Accepted Answer

A) True 
 B)False

Question 3

Intra-industry trade in the world economy is not growing.

Accepted Answer

A) True 
 B)False

Question 4

The most commonly used measure of intra-industry trade is the foreign trade index.

Accepted Answer

A) True 
 B)False

Question 5

Intra-industry trade in homogeneous goods could occur because of cross-border trade in goods with a low value/weight ratio such as cement.

Accepted Answer

A) True 
 B)False

Question 6

Linder's hypothesis provides an explanation for:

Accepted Answer

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

Question 7

The product cycle has nothing to do with the occurrence of intra-industry trade.

Accepted Answer

A) True 
 B)False

Question 8

The intra-industry trade index can never be zero.

Accepted Answer

A) True 
 B)False

Question 9

Horizontal product differentiation is the situation where the prices and quality of competing products are similar.

Accepted Answer

A) True 
 B)False

Question 10

Linder's hypothesis that consumers prefer to choose from a variety of goods with slightly different characteristics:

Accepted Answer

A)  can explain intra-industry trade. 
B)  means that countries with different standards of living will tend to trade iron for pharmaceuticals. 
C)  is an explanation for factor-price equalization. 
D)  is an explanation for differences in the cost of production among countries. 
E)  has been empirically shown to be incorrect. 
A)  can explain intra-industry trade. 
B)  means that countries with different standards of living will tend to trade iron for pharmaceuticals. 
C)  is an explanation for factor-price equalization. 
D)  is an explanation for differences in the cost of production among countries. 
E)  has been empirically shown to be incorrect.

Question 11

Which of the following has not been known to lead to intra-industry trade?

Accepted Answer

A)  Overlapping demands 
B)  EOS 
C)  Vertical product differentiation 
D)  Transfer pricing 
E)  Vertical pricing. 
A)  Overlapping demands 
B)  EOS 
C)  Vertical product differentiation 
D)  Transfer pricing 
E)  Vertical pricing.

Question 12

When a firm has external economies of scale, a firms average costs rise as output of the industry expands.

Accepted Answer

A) True 
 B)False

Question 13

Explain the difference between horizontally and vertically differentiated products.

Accepted Answer

Horizontally differentiated products are

Question 14

Which of the following products would the product cycle most likely be applied to?

Accepted Answer

A)  computers 
B)  coffee 
C)  crude oil 
D)  seasonal fruits 
E)  mangoes. 
A)  computers 
B)  coffee 
C)  crude oil 
D)  seasonal fruits 
E)  mangoes.

Question 15

A critical distinction between imperfect competition and perfect competition is the number of individual firms in the marketplace.

Accepted Answer

A) True 
 B)False

Question 16

IIT is more important for developing countries than it is for developed countries.

Accepted Answer

A) True 
 B)False

Question 17

A high-income country is more likely to trade with:

Accepted Answer

A)  underdeveloped countries. 
B)  high-income countries. 
C)  high population countries. 
D)  developing countries. 
E)  Latin America. 
A)  underdeveloped countries. 
B)  high-income countries. 
C)  high population countries. 
D)  developing countries. 
E)  Latin America.

Question 18

The intra-industry trade index:

Accepted Answer

A)  ranges from 0 to 1. 
B)  is 0 when all trade in the industry or product group is intra-industry trade. 
C)  is 1 when all trade in the industry or product group is interindustry trade. 
D)  is calculated by subtracting total imports from total exports. 
E)  cannot be accurately calculated. 
A)  ranges from 0 to 1. 
B)  is 0 when all trade in the industry or product group is intra-industry trade. 
C)  is 1 when all trade in the industry or product group is interindustry trade. 
D)  is calculated by subtracting total imports from total exports. 
E)  cannot be accurately calculated.

Question 19

When there is balanced (exports equal imports) intra-industry trade in a certain product, the index of intra-industry trade is:

Accepted Answer

A)  0.00. 
B)  0.25. 
C)  0.50. 
D)  1.00. 
E)  2.00. 
A)  0.00. 
B)  0.25. 
C)  0.50. 
D)  1.00. 
E)  2.00.

Question 20

The growth of automobile trade among developed countries is an example of:

Accepted Answer

A)  intra-industry trade. 
B)  interindustry trade. 
C)  the factor-proportions theory. 
D)  the Leontief paradox. 
E)  FDI. 
A)  intra-industry trade. 
B)  interindustry trade. 
C)  the factor-proportions theory. 
D)  the Leontief paradox. 
E)  FDI.

With the product cycle model, comparative advantage may move from one country to another as the product matures.

Vertical product differentiation only occurs in homogeneous products.

Intra-industry trade in the world economy is not growing.

The most commonly used measure of intra-industry trade is the foreign trade index.

Intra-industry trade in homogeneous goods could occur because of cross-border trade in goods with a low value/weight ratio such as cement.

Linder's hypothesis provides an explanation for:

The product cycle has nothing to do with the occurrence of intra-industry trade.

The intra-industry trade index can never be zero.

Horizontal product differentiation is the situation where the prices and quality of competing products are similar.

Linder's hypothesis that consumers prefer to choose from a variety of goods with slightly different characteristics:

Which of the following has not been known to lead to intra-industry trade?

When a firm has external economies of scale, a firms average costs rise as output of the industry expands.

Explain the difference between horizontally and vertically differentiated products.

Which of the following products would the product cycle most likely be applied to?

A critical distinction between imperfect competition and perfect competition is the number of individual firms in the marketplace.

IIT is more important for developing countries than it is for developed countries.

A high-income country is more likely to trade with:

The intra-industry trade index:

When there is balanced (exports equal imports) intra-industry trade in a certain product, the index of intra-industry trade is:

The growth of automobile trade among developed countries is an example 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

With the product cycle model, comparative advantage may move from one country to another as the product matures.

Vertical product differentiation only occurs in homogeneous products.

Intra-industry trade in the world economy is not growing.

The most commonly used measure of intra-industry trade is the foreign trade index.

Intra-industry trade in homogeneous goods could occur because of cross-border trade in goods with a low value/weight ratio such as cement.

Linder's hypothesis provides an explanation for:

The product cycle has nothing to do with the occurrence of intra-industry trade.

The intra-industry trade index can never be zero.

Horizontal product differentiation is the situation where the prices and quality of competing products are similar.

Linder's hypothesis that consumers prefer to choose from a variety of goods with slightly different characteristics:

Which of the following has not been known to lead to intra-industry trade?

When a firm has external economies of scale, a firms average costs rise as output of the industry expands.

Explain the difference between horizontally and vertically differentiated products.

Which of the following products would the product cycle most likely be applied to?

A critical distinction between imperfect competition and perfect competition is the number of individual firms in the marketplace.

IIT is more important for developing countries than it is for developed countries.

A high-income country is more likely to trade with:

The intra-industry trade index:

When there is balanced (exports equal imports) intra-industry trade in a certain product, the index of intra-industry trade is:

The growth of automobile trade among developed countries is an example 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