Exam 3: Sources of Comparative Advantage

With economies of scale,specialization in a few products allows a manufacturer to benefit from longer production runs which lead to decreasing average cost.

Assume that Country A,in the absence of trade,finds itself relatively abundant in labor and relatively scarce in land.The factor endowment theory reasons that with free trade,the internal distribution of national income in Country A will change in favor of:

According to the factor-endowment theory,a nation will export that good for which a large amount of the relatively scarce resource is used.

The simultaneous import and export of computers by Germany is an example of:

The product-life-cycle model contends that when a new product is introduced to the home market,it generally requires low-skilled labor to produce it.

For the United States,empirical studies indicate that over the past two decades the cost of international transportation relative to the value of U.S.imports has:

Generally speaking,transportation costs are more important than production costs as a source of comparative advantage.

Stringent governmental regulations (e.g.,air quality standards)imposed on domestic steel manufacturers tend to: