Exam 3: Sources of Comparative Advantage

Hong Kong is relatively abundant in labor,while Canada is relatively abundant in capital.In both countries the production of shirts is relatively more labor intensive than the production of computers.According to the factor endowment theory,Hong Kong will have a(n):

To justify the subsidies it has received from European governments,The Airbus Company has used all of the following arguments except:

In the absence of transportation costs,free trade results in the equalization of the prices of traded goods,as well as resource prices,in the trading nations.

Boeing Inc.has criticized The Airbus Company's competitiveness on the grounds that Airbus benefits from:

The factor-price-equalization theory is a short-run version of the specific-factors theory.

Should international transportation costs decrease,the effect on international trade would include:

Figure 3.1 China - US Trade Possibilities -Considering Figure 3.1 prior to trade both China's and the US production of textiles and aircraft is 19 and 9.Which of the following represents the pre-trade situation?

By widening the size of the domestic market,international trade permits companies to take advantage of longer production runs and increasing efficiencies such as mass production.

According to the factor endowment model,countries heavily endowed with land will:

The factor endowment theory assumes

The Leontief paradox:

Intra-industry trade can be explained by product differentiation,economies of scale,seasons of the year,and transportation costs.

Which trade theory suggests that a newly produced good,once exported,could ultimately end up being imported as the technology is transferred to lower- cost nations?

Does factor price equalization occur in the real world?

Empirical testing by Wassily Leontief gave support to the Heckscher-Ohlin theory of trade.

A larger variety of products results from international trade especially if:

Among the determinants underlying a country's international competitiveness in business services (e.g.,construction)are:

The product-life-cycle theory applies best to trade in primary products in the short run.

Which of the following suggests that a nation will export the commodity in the production of which a great deal of its relatively abundant and cheap factor is used?

Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no longer manufacture the product?