Exam 3: Sources of Comparative Advantage

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.

The factor-endowment theory asserts that with specialization and trade there tends to occur an equalization in the relative resource prices of trading partners.

Intraindustry 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.

With economies of scale and decreasing unit costs,a country has the incentive to:

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

According to Staffan Linder,trade between two countries tends to be most pronounced when the countries:

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

Fears about the downward pressure that cheap foreign workers place on U.S.wages have led U.S.labor unions to lobby for import restrictions such as tariffs and quotas.

Intraindustry trade can be explained in part by:

The factor endowment theory states that comparative advantage is explained

The Heckscher-Ohlin theory asserts that relative differences in labor productivity underlie comparative advantage.

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

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

What is the focus of the product life cycle theory,and where is it applicable?

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

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

Proponents of ____ maintain that government should enact policies that encourage the development of emerging,"sunrise" industries.

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?

Which of the following would least likely apply to the product life cycle theory?

The imposition of pollution-control regulations on domestic steel manufacturers leads to decreases in production costs and an improvement in the steel manufacturers' competitiveness.