Deck 6: Economies of Scale, Imperfect Competition, and International Trade

Question 1

Trade based on technological gaps is closely related to:

A)the H-O theory
B)the product-cycle theory
C)Linder's theory
D)all of the above

Answer 1

B

Question 2

The Heckscher-Ohlin and new trade theories explains most of the trade:

A)among advanced countries
B)between developed and developing countries
C)in industrial goods
D)all of the above

Answer 2

D

Question 3

A great deal of international trade:

A)is intra-industry trade
B)involves differentiated products
C)is based on monopolistic competition
D)all of the above

Answer 3

D

Question 4

Transport costs can be analyzed:

A)with demand and supply curves
B)production frontiers
C)offer curves
D)all of the above

Question 5

The theory that a nation exports those products for which a large domestic market exists was advanced by:

A)Linder
B)Vernon
C)Leontief
D)Ohlin

Question 6

Which of the following assumptions of the Heckscher-Ohlin theory,when relaxed, require new trade theories?

A)Economies of scale
B)incomplete specialization
C)similar tastes in both nations
D)the existence of transportation costs

Question 7

Relaxing the assumptions on which the Heckscher-Ohlin theory rests:

A)leads to rejection of the theory
B)leaves the theory unaffected
C)requires complementary trade theories
D)any of the above.

Question 8

If a nation exports twice as much of a differentiated product that it imports,its intra- industry (T)index is equal to:

A)1.00
B)0.75
C)0.50
D)0.25

Question 9

Intra-industry trade takes place:

A)because products are homogeneous
B)in order to take advantage of economies of scale
C)because perfect competition is the prevalent form of market organization
D)all of the above

Question 10

The share of transport costs will fall less heavily on the nation:

A)with the more elastic demand and supply of the traded commodity
B)with the less elastic demand and supply of the traded commodity
C)exporting agricultural products
D)with the largest domestic market

Question 11

Which of the following statements is true with regard to the product-cycle theory?

A)It depends on differences in technological changes over time among countries
B)it depends on the opening and the closing of technological gaps among countries
C)it postulates that industrial countries export more advanced products to less advanced countries
D)all of the above

Question 12

Which of the following assumptions of the Heckscher-Ohlin theory,when relaxed,leave the theory unaffected?

A)Two nations,two commodities,and two factors
B)both nations use the same technology
C)the same commodity is L-intensive in both nations
D)all of the above

Question 13

International trade can be based on economies of scale even if both nations have identical:

A)factor endowments
B)tastes
C)technology
D)all of the above