Exam 3: Sources of Comparative Advantage

The Leontief Paradox suggested that,in contrast to the predictions of the factor-endowment theory,U.S.exports were less capital-intensive than U.S.import-competing goods.

According to the product life cycle theory,the last stage of a product's trade cycle is when it becomes an import-competing good.

The theory of overlapping demands asserts that trade in manufactured goods is stronger the less similar the demand structures of two countries.

A firm is said to enjoy economies of scale over the range of output for which the long-run average cost is:

The factor endowment theory states that comparative advantage is explained

Intra-industry trade would occur if computers manufactured in the United States by IBM are exported to Japan while the United States imports computers manufactured by Hitachi of Japan.

A product will be internationally traded as long as the pretrade price differential between the trading partners is:

In industries where the final product is much less weighty or bulky than the materials from which it is made,firms tend to locate production near resource supplies.

Most developing countries have pollution-control laws and enforcement policies that are more stringent than those of the major industrial countries.

Intra-industry trade can be explained in part by:

The Leontief paradox questioned the validity of the theory of:

Boeing aircraft company was able to cover its production costs of the first "jumbo jet" in the 1970s because Boeing could market it to several foreign airlines in addition to domestic airlines.This illustrates:

The Leontief paradox provided:

Ricardo's theory of comparative advantage is a static theory that does not consider changes in international competitiveness over the long run.

Figure 3.1 China - US Trade Possibilities -Considering Figure 3.1,what are the terms of trade represented?

Figure 3.1 China - US Trade Possibilities -Considering Figure 3.1 which of the following would be true?

The Heckscher-Ohlin theory contends that over a period of years a country that initially is an exporter of a product will become an importer of that product.

That the division of labor is limited by the size of the market best applies to which explanation of trade?

Although the theory of comparative advantage explains trade in manufactured goods,it has no explanatory value for trade in business services.

The specific-factors theory analyzes the income distribution effects of trade in the short run when resources are immobile among industries.