Question 1

In the Heckscher-Ohlin model,what assumption is made about opportunity costs?

Accepted Answer

Opportunity costs in

Question 2

The demand for labor is said to be a derived demand because it comes from the demand for goods that labor produces. Suppose that strawberries are a labor-intensive good.An increase in the price of strawberries will ________ the demand for strawberries,which will ________ the demand for strawberry pickers.

Accepted Answer

A) increase, increase 
B) increase, decrease 
C) decrease, increase 
D) decrease, decrease 
A) increase, increase 
B) increase, decrease 
C) decrease, increase 
D) decrease, decrease

Question 3

Which of the following would NOT be associated with the LATE PHASE of the product cycle?

Accepted Answer

A) Consumption in high income countries begins to exceed production. 
B) Increasing share of output is moving to developing countries where abundant low skilled and semi-skilled labor keep production costs low. 
C) Consumption continues to grow in low income countries. 
D) There is experimentation and improvement in design and manufacturing. 
A) Consumption in high income countries begins to exceed production. 
B) Increasing share of output is moving to developing countries where abundant low skilled and semi-skilled labor keep production costs low. 
C) Consumption continues to grow in low income countries. 
D) There is experimentation and improvement in design and manufacturing.

Question 4

The opportunity cost of producing in low-income,developing countries rises over the product cycle,according to theory.

Accepted Answer

A) True 
 B)False

Question 5

The L in OLI theory stands for loyalty,and this factor makes it more difficult for firms to substitute foreign operations for domestic as they fear a loss of sales due to negative publicity.

Accepted Answer

A) True 
 B)False

Question 6

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad.

Accepted Answer

A) True 
 B)False

Question 7

Empirical tests of the HO model have had mixed results.One explanation for this is that

Accepted Answer

A) the Ricardian model is more detailed. 
B) it is difficult to measure factor endowments. 
C) it does not explain the effects of trade on income. 
D) it assumes that countries have different technologies. 
A) the Ricardian model is more detailed. 
B) it is difficult to measure factor endowments. 
C) it does not explain the effects of trade on income. 
D) it assumes that countries have different technologies.

Question 8

Using the specific factors model,assume that strawberry production requires the specific factor of land,tractor production requires the specific factor of capital,and labor is variable.If the United States is capital abundant compared to Mexico,and Mexico is land abundant compared to the United States,then in the short run with trade,which of the following is true?

Accepted Answer

A) Mexican wages will rise more than the increase in the price of tractors in Mexico. 
B) U)S. wages will rise less than the fall in the price of tractors in the United States. 
C) The owners of capital in the United States will see a larger increase in their incomes in percentage terms than the increase in the price of tractors. 
D) The owners of land in Mexico will see a smaller increase in their incomes in percentage terms than the increase in the price of strawberries. 
A) Mexican wages will rise more than the increase in the price of tractors in Mexico. 
B) U)S. wages will rise less than the fall in the price of tractors in the United States. 
C) The owners of capital in the United States will see a larger increase in their incomes in percentage terms than the increase in the price of tractors. 
D) The owners of land in Mexico will see a smaller increase in their incomes in percentage terms than the increase in the price of strawberries.

Question 9

Most economists attribute the growing income inequality in the United States to

Accepted Answer

A) trade. 
B) macroeconomic policies. 
C) technological change. 
D) changing values. 
E) taxes. 
A) trade. 
B) macroeconomic policies. 
C) technological change. 
D) changing values. 
E) taxes.

Question 10

The graph above shows the PPC for a country that can produce oil or televisions.
The straight line is the trade line and CPC if production is at Point A.
Is this country producing the optimal mix of oil and televisions to maximize its income? Carefully explain how you know.

Accepted Answer

No,the country is not producing the opti

Question 11

The Stolper-Samuelson Theorem predicts

Accepted Answer

A) the level of productivity in export industries. 
B) which factors are abundant. 
C) the income distribution effects of trade. 
D) which goods will be exported. 
A) the level of productivity in export industries. 
B) which factors are abundant. 
C) the income distribution effects of trade. 
D) which goods will be exported.

Question 12

The graph above shows the PPC for a country that can produce oil,which is labor intensive,or televisions,which are capital intensive.
The country is currently producing at point A and not trading with the rest of the world.With trade,the world price can be represented by slope of the straight line through Point A.
Which of the following is a true statement?

Accepted Answer

A) When this country produces the optimal amount with trade, workers in this country will be better off. 
B) When this country produces the optimal amount with trade, capital in this country will be better off. 
C) When this country produces the optimal amount with trade, both factors of production will be better off. 
D) When this country produces the optimal amount with trade, the income of factors of production will not change. 
A) When this country produces the optimal amount with trade, workers in this country will be better off. 
B) When this country produces the optimal amount with trade, capital in this country will be better off. 
C) When this country produces the optimal amount with trade, both factors of production will be better off. 
D) When this country produces the optimal amount with trade, the income of factors of production will not change.

Question 13

The O in OLI theory stands for ownership,and the asset owned can be tangible or intangible.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be associated with the early phase of the product cycle?

Accepted Answer

A) Large amounts of production in low-income, developing countries 
B) A standardized product with an assembly-line style production process 
C) Sophisticated marketing and customer feedback mechanisms 
D) More consumption in low-income, developing countries 
A) Large amounts of production in low-income, developing countries 
B) A standardized product with an assembly-line style production process 
C) Sophisticated marketing and customer feedback mechanisms 
D) More consumption in low-income, developing countries

Question 15

Carefully explain the relationship between the number of jobs in a country and international trade.

Accepted Answer

International trade has little effect on

Question 16

The Heckscher-Ohlin Theorem predicts

Accepted Answer

A) who benefits and who loses from trade. 
B) which factors are abundant. 
C) the income distribution effects of trade. 
D) which goods will be exported. 
A) who benefits and who loses from trade. 
B) which factors are abundant. 
C) the income distribution effects of trade. 
D) which goods will be exported.

Question 17

International trade is the major cause of rising income inequality in the United States.

Accepted Answer

A) True 
 B)False

Question 18

After trade opens,the short run impact on the income of the variable factor will be

Accepted Answer

A) a decrease. 
B) an increase. 
C) zero. 
D) indeterminate, depending on the consumption pattern of the owners of the variable factor. 
A) a decrease. 
B) an increase. 
C) zero. 
D) indeterminate, depending on the consumption pattern of the owners of the variable factor.

Question 19

If a country is currently producing at a production point such that the trade line has a slope that is flatter than the slope of the PPC at the same point,then

Accepted Answer

A) the country can get greater gains from trade if it moves production away from the good on the vertical axis. 
B) the country can get greater gains from trade if it moves production toward the good on the vertical axis. 
C) the country cannot improve on its gains from trade. 
D) There are no gains from trade in this example. 
A) the country can get greater gains from trade if it moves production away from the good on the vertical axis. 
B) the country can get greater gains from trade if it moves production toward the good on the vertical axis. 
C) the country cannot improve on its gains from trade. 
D) There are no gains from trade in this example.

Question 20

Suppose that Brazil is capital abundant and Chile is natural resource abundant.If timber is natural resource intensive and computers are capital intensive,then according to the Heckscher-Ohlin Theorem,Chile should export goods that

Accepted Answer

A) intensively use labor input. 
B) intensively use capital input. 
C) intensively use natural resources. 
D) use capital and labor in about equal proportions. 
A) intensively use labor input. 
B) intensively use capital input. 
C) intensively use natural resources. 
D) use capital and labor in about equal proportions.

In the Heckscher-Ohlin model,what assumption is made about opportunity costs?

The demand for labor is said to be a derived demand because it comes from the demand for goods that labor produces. Suppose that strawberries are a labor-intensive good.An increase in the price of strawberries will the demand for strawberries,which will the demand for strawberry pickers.

Which of the following would NOT be associated with the LATE PHASE of the product cycle?

The opportunity cost of producing in low-income,developing countries rises over the product cycle,according to theory.

The L in OLI theory stands for loyalty,and this factor makes it more difficult for firms to substitute foreign operations for domestic as they fear a loss of sales due to negative publicity.

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad.

Empirical tests of the HO model have had mixed results.One explanation for this is that

Most economists attribute the growing income inequality in the United States to

The graph above shows the PPC for a country that can produce oil or televisions. The straight line is the trade line and CPC if production is at Point A. Is this country producing the optimal mix of oil and televisions to maximize its income? Carefully explain how you know.

The Stolper-Samuelson Theorem predicts

The O in OLI theory stands for ownership,and the asset owned can be tangible or intangible.

Which of the following would be associated with the early phase of the product cycle?

Carefully explain the relationship between the number of jobs in a country and international trade.

The Heckscher-Ohlin Theorem predicts

International trade is the major cause of rising income inequality in the United States.

After trade opens,the short run impact on the income of the variable factor will be

If a country is currently producing at a production point such that the trade line has a slope that is flatter than the slope of the PPC at the same point,then

Suppose that Brazil is capital abundant and Chile is natural resource abundant.If timber is natural resource intensive and computers are capital intensive,then according to the Heckscher-Ohlin Theorem,Chile should export goods that

The United States in a Global Economy

International Economic Institutions Since World War II

Comparative Advantage and the Gains From Trade

Beyond Comparative Advantage

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

China and India in the World Economy

Filters

Exam 4: Comparative Advantage and Factor Endowments

In the Heckscher-Ohlin model,what assumption is made about opportunity costs?

Which of the following would NOT be associated with the LATE PHASE of the product cycle?

The opportunity cost of producing in low-income,developing countries rises over the product cycle,according to theory.

The L in OLI theory stands for loyalty,and this factor makes it more difficult for firms to substitute foreign operations for domestic as they fear a loss of sales due to negative publicity.

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad.

Empirical tests of the HO model have had mixed results.One explanation for this is that

Most economists attribute the growing income inequality in the United States to

The graph above shows the PPC for a country that can produce oil or televisions. The straight line is the trade line and CPC if production is at Point A. Is this country producing the optimal mix of oil and televisions to maximize its income? Carefully explain how you know.

The Stolper-Samuelson Theorem predicts

The O in OLI theory stands for ownership,and the asset owned can be tangible or intangible.

Which of the following would be associated with the early phase of the product cycle?

Carefully explain the relationship between the number of jobs in a country and international trade.

The Heckscher-Ohlin Theorem predicts

International trade is the major cause of rising income inequality in the United States.

After trade opens,the short run impact on the income of the variable factor will be

If a country is currently producing at a production point such that the trade line has a slope that is flatter than the slope of the PPC at the same point,then

Suppose that Brazil is capital abundant and Chile is natural resource abundant.If timber is natural resource intensive and computers are capital intensive,then according to the Heckscher-Ohlin Theorem,Chile should export goods that

The United States in a Global Economy

International Economic Institutions Since World War II

Comparative Advantage and the Gains From Trade

Beyond Comparative Advantage

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

China and India in the World Economy

Filters