Question 1

Describe how Mexico's development strategy changed from the 1950s to today and how that changed the production location decisions of firms.

Accepted Answer

From the 1950s throughout the 1970s Mexico's development policy emphasized the domestic market and firms found that it was less profitable to export.Domestic production was protected from competition and goods sold abroad were not.This caused firms to locate near Mexico City or of the few other major urban areas.This caused Mexico City to become one of the largest cities in the world and resulted in a very high proportion of the population becoming concentrated in urban centers.By removing many of the tariffs and other protections that had kept domestic firms from facing foreign competition,the policy makers shifted to a more neutral stance with respect toward production for foreign or domestic markets,creating a more level playing field for export production.Under the new rules,the largest profitable market is the U.S.rather than Mexico City.Given internal economies of scale and transportation costs,location as close as possible to the U.S.was logical and the northern border cities began to grow rapidly,years before NAFTA.

Question 2

Which of the following is TRUE about monopolistic competition?

Accepted Answer

A) One firm serves as the entire industry. 
B) A small number of firms serve the entire market. 
C) It is competition among many firms producing similar but differentiated products. 
D) The pattern of production and trade is difficult to predict. 
E) It enjoys no economies of scale. 
A) One firm serves as the entire industry. 
B) A small number of firms serve the entire market. 
C) It is competition among many firms producing similar but differentiated products. 
D) The pattern of production and trade is difficult to predict. 
E) It enjoys no economies of scale. C

Question 3

If the United States and Canada trade hydro-powered electricity for Hollywood films,what type of trade does this represent?

Accepted Answer

Interindustry

Question 4

Intraindustry trade is characterized by what two features of the industry and market?

Accepted Answer

A) Diseconomies of scale and homogeneous products 
B) Non-tariff barriers and large-scale foreign investment 
C) Quota auctions and low effective rates of protection 
D) Economies of scale and differentiated products 
E) Government subsidies and industrial policy 
A) Diseconomies of scale and homogeneous products 
B) Non-tariff barriers and large-scale foreign investment 
C) Quota auctions and low effective rates of protection 
D) Economies of scale and differentiated products 
E) Government subsidies and industrial policy

Question 5

If the United States and Mexico trade Budweiser for Modelo beer,what type of trade does this represent?

Accepted Answer

The answer of If the United States and Mexico trade...

Question 6

Comparative advantage cannot account for a significant portion of world trade.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT a problem in the implementation of industrial policies?

Accepted Answer

A) Choosing the industry to target 
B) Knowing the optimum amount of resources to provide the targeted industry 
C) The encouragement of rent seeking by firms in other industries 
D) The benefits are partly captured by foreign firms. 
E) All of the above are problems. 
A) Choosing the industry to target 
B) Knowing the optimum amount of resources to provide the targeted industry 
C) The encouragement of rent seeking by firms in other industries 
D) The benefits are partly captured by foreign firms. 
E) All of the above are problems.

Question 8

Which of the following is FALSE about intraindustry trade?

Accepted Answer

A) Economies of scale allow firms to enjoy lower average costs. 
B) It creates gains from trade. 
C) It is due to comparative advantage. 
D) It may involve heightened competition and lower prices for consumers. 
E) It increases consumer choice. 
A) Economies of scale allow firms to enjoy lower average costs. 
B) It creates gains from trade. 
C) It is due to comparative advantage. 
D) It may involve heightened competition and lower prices for consumers. 
E) It increases consumer choice.

Question 9

Interindustry trade is not based on comparative advantage since it consists of the export and import of similar countries and mostly between countries that have similar productivity,technology,and factor endowments.

Accepted Answer

A) True 
 B)False

Question 10

If social returns to the production of a good are greater than private returns,then we can conclude that relative to the social optimum,the good will be

Accepted Answer

A) over produced and under priced. 
B) under produced and over priced. 
C) over produced and over priced. 
D) under produced and under priced. 
E) None of the above. 
A) over produced and under priced. 
B) under produced and over priced. 
C) over produced and over priced. 
D) under produced and under priced. 
E) None of the above.

Question 11

A substantial amount of trade between industrialized countries is intraindustry or intrafirm trade rather than interindustry trade.

Accepted Answer

A) True 
 B)False

Question 12

Intraindustry trade is characterized by what two features?

Accepted Answer

Economies

Question 13

Comparative advantage has mixed results when it comes to predicting a country's trade patterns.Which of the following is FALSE?

Accepted Answer

A) There are many potential products an economy might export that use the same comparative advantage. 
B) A large share of international trade is not based on comparative advantage. 
C) Comparative advantage has proven completely incapable of predicting trade. 
D) Comparative advantage is a dynamic concept,which means that the spread of technology,improvement in skills,and learning-by-doing may alter a country's comparative advantage over time. 
A) There are many potential products an economy might export that use the same comparative advantage. 
B) A large share of international trade is not based on comparative advantage. 
C) Comparative advantage has proven completely incapable of predicting trade. 
D) Comparative advantage is a dynamic concept,which means that the spread of technology,improvement in skills,and learning-by-doing may alter a country's comparative advantage over time.

Question 14

If countries have similar factor endowments and productivities,their trade is likely to be interindustry.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale?

Accepted Answer

A) Job creation at domestic firms entering international trade 
B) Lower prices for the domestic consumers of the product now being traded 
C) Increased sales and lower per unit costs for the firm doing the exporting 
D) Higher prices for the exported product 
A) Job creation at domestic firms entering international trade 
B) Lower prices for the domestic consumers of the product now being traded 
C) Increased sales and lower per unit costs for the firm doing the exporting 
D) Higher prices for the exported product

Question 16

If countries have similar factors of production and similar productivities,most of their trade is likely to be intraindustry.

Accepted Answer

A) True 
 B)False

Question 17

Interindustry trade refers to

Accepted Answer

A) international trade of products made within the same industry. 
B) domestic trade of products made within the same industry. 
C) international trade of products made across different industries. 
D) the exchange of similar items that are differentiated. 
E) None of the above. 
A) international trade of products made within the same industry. 
B) domestic trade of products made within the same industry. 
C) international trade of products made across different industries. 
D) the exchange of similar items that are differentiated. 
E) None of the above.

Question 18

How can regional concentration of firms in an industry lead to external economies of scale? Give examples of these types of industrial clusters in the United States.Are they always beneficial?

Accepted Answer

When an industry is highly concentrated

Question 19

Which of the following is an example of intraindustry trade?

Accepted Answer

A) Trading peanut oil for tractors 
B) Trading crude oil for automobiles 
C) Trading Nokia smartphone for Apple iPhones 
D) Trading jeans for cotton 
A) Trading peanut oil for tractors 
B) Trading crude oil for automobiles 
C) Trading Nokia smartphone for Apple iPhones 
D) Trading jeans for cotton

Question 20

Suppose that the United States decided to subsidize a major competitive effort by the semiconductor industry to bring to market the next generation computer chip.Under the current rules of the WTO and GATT,the U.S.effort is

Accepted Answer

A) allowed as long as the subsidies are a small percent of the total cost. 
B) allowed as long as the subsidies do not involve a direct payment to the industry. 
C) not allowed. 
D) neither allowed nor disallowed. 
E) allowed as long as the subsidies do not succeed in creating a new product. 
A) allowed as long as the subsidies are a small percent of the total cost. 
B) allowed as long as the subsidies do not involve a direct payment to the industry. 
C) not allowed. 
D) neither allowed nor disallowed. 
E) allowed as long as the subsidies do not succeed in creating a new product.

Describe how Mexico's development strategy changed from the 1950s to today and how that changed the production location decisions of firms.

Which of the following is TRUE about monopolistic competition?

If the United States and Canada trade hydro-powered electricity for Hollywood films,what type of trade does this represent?

Intraindustry trade is characterized by what two features of the industry and market?

If the United States and Mexico trade Budweiser for Modelo beer,what type of trade does this represent?

Comparative advantage cannot account for a significant portion of world trade.

Which of the following is NOT a problem in the implementation of industrial policies?

Which of the following is FALSE about intraindustry trade?

Interindustry trade is not based on comparative advantage since it consists of the export and import of similar countries and mostly between countries that have similar productivity,technology,and factor endowments.

If social returns to the production of a good are greater than private returns,then we can conclude that relative to the social optimum,the good will be

A substantial amount of trade between industrialized countries is intraindustry or intrafirm trade rather than interindustry trade.

Intraindustry trade is characterized by what two features?

Comparative advantage has mixed results when it comes to predicting a country's trade patterns.Which of the following is FALSE?

If countries have similar factor endowments and productivities,their trade is likely to be interindustry.

Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale?

If countries have similar factors of production and similar productivities,most of their trade is likely to be intraindustry.

Interindustry trade refers to

How can regional concentration of firms in an industry lead to external economies of scale? Give examples of these types of industrial clusters in the United States.Are they always beneficial?

Which of the following is an example of intraindustry trade?

Suppose that the United States decided to subsidize a major competitive effort by the semiconductor industry to bring to market the next generation computer chip.Under the current rules of the WTO and GATT,the U.S.effort is

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

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Exam 5: Beyond Comparative Advantage

Describe how Mexico's development strategy changed from the 1950s to today and how that changed the production location decisions of firms.

Which of the following is TRUE about monopolistic competition?

If the United States and Canada trade hydro-powered electricity for Hollywood films,what type of trade does this represent?

Intraindustry trade is characterized by what two features of the industry and market?

If the United States and Mexico trade Budweiser for Modelo beer,what type of trade does this represent?

Comparative advantage cannot account for a significant portion of world trade.

Which of the following is NOT a problem in the implementation of industrial policies?

Which of the following is FALSE about intraindustry trade?

Interindustry trade is not based on comparative advantage since it consists of the export and import of similar countries and mostly between countries that have similar productivity,technology,and factor endowments.

If social returns to the production of a good are greater than private returns,then we can conclude that relative to the social optimum,the good will be

A substantial amount of trade between industrialized countries is intraindustry or intrafirm trade rather than interindustry trade.

Intraindustry trade is characterized by what two features?

Comparative advantage has mixed results when it comes to predicting a country's trade patterns.Which of the following is FALSE?

If countries have similar factor endowments and productivities,their trade is likely to be interindustry.

Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale?

If countries have similar factors of production and similar productivities,most of their trade is likely to be intraindustry.

Interindustry trade refers to

How can regional concentration of firms in an industry lead to external economies of scale? Give examples of these types of industrial clusters in the United States.Are they always beneficial?

Which of the following is an example of intraindustry trade?

Suppose that the United States decided to subsidize a major competitive effort by the semiconductor industry to bring to market the next generation computer chip.Under the current rules of the WTO and GATT,the U.S.effort is

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters