Question 1

Explain how immigration and trade may worsen wage inequality, and how college education may mitigate against that.

Accepted Answer

The answer of Explain how immigration and trade may worsen...

Question 2

Assume that the United States is relatively scarce in labor and relatively abundant in capital.According to the Heckscher-Ohlin theory, which of the following will occur in the United States in the presence of trade?

Accepted Answer

A)  The price of capital will rise and the price of labor will fall. 
B)  The price of capital will fall and the price of labor will rise. 
C)  The price of both capital and labor will fall. 
D)  The price of both capital and labor will rise.

Question 3

External economies of scale can occur when

Accepted Answer

A)  an industry's firms become more dispersed. 
B)  there is a decrease in specialized workers. 
C)  firms seek out consultants for technical knowledge. 
D)  knowledge of production technology spreads through direct contacts.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Regarding governmental subsidies applied to commercial jetliners, the World Trade Organization ruled that during 2010-2012

Accepted Answer

A)  only Airbus had received illegal subsidies. 
B)  only Boeing had received illegal subsidies. 
C)  both Airbus and Boeing had received illegal subsidies. 
D)  neither Airbus nor Boeing had received illegal subsidies.

Question 6

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

Accepted Answer

A)  intra-industry trade. 
B)  inter-industry trade. 
C)  perfect competition. 
D)  imperfect competition.

Question 7

External economies of scale exist when an industry's outputs increase and

Accepted Answer

A)  a firm's long run average cost curve shifts downward. 
B)  a firm's long run average cost curve shifts upward. 
C)  a firm's long run average cost curve stays the same. 
D)  a firm's long run average cost curve hits zero.

Question 8

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

Accepted Answer

A)  increase the competitiveness of domestic steel manufacturers in the international market. 
B)  reduce the competitiveness of domestic steel manufacturers in the international market. 
C)  increase the profitability and productivity of domestic steel manufacturers. 
D)  reduce the market share of foreign firms selling steel in the domestic market.

Question 9

In his test of the Heckscher-Ohlin model, W.Leontief found that, although the United States was perceived as being capital abundant relative to the rest of the world, U.S.exports were less capital intensive than import-competing goods.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Chinese manufacturers face rising wages because of

Accepted Answer

A)  China's one-child policy. 
B)  increased migration to the cities. 
C)  reductions in Chinese interest rates. 
D)  restrictions on Chinese labor unions.

Question 13

Eli Heckscher and Bertil Ohlin are associated with the theory of comparative advantage that stresses differences in

Accepted Answer

A)  income levels among countries. 
B)  tastes and preferences among countries. 
C)  resource endowments among countries. 
D)  labor productivities among countries.

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

In the United States, most low-skilled manufacturing jobs have been lost due to

Accepted Answer

A)  unfair tariffs. 
B)  international trade. 
C)  immigrants. 
D)  robots and other automation technology.

Question 16

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

Accepted Answer

A)  product life cycle policy 
B)  static comparative advantage policy 
C)  intra-industry trade policy 
D)  industrial policy

Question 17

Explain how the Airbus-Boeing subsidies are justified by both firms.

Accepted Answer

The answer of Explain how the Airbus-Boeing subsidies are justified...

Question 18

Figure 1. An Example of China-U.S. Trade Possibilities 
-Considering Figure 1, what are the terms of trade represented?

Accepted Answer

A)  The terms of trade are 1½ aircraft per textile. 
B)  The terms of trade are 1½ textiles per aircraft. 
C)  The terms of trade are 1 textile per aircraft. 
D)  The terms of trade are 2/3 textile per aircraft.

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

The increased use of robots, combined with rising labor costs in China, has led some U.S.businesses to return to manufacturing in the United States.

Accepted Answer

A) True 
 B)False

Exam 3: Sources of Comparative Advantage

Explain how immigration and trade may worsen wage inequality, and how college education may mitigate against that.

Assume that the United States is relatively scarce in labor and relatively abundant in capital.According to the Heckscher-Ohlin theory, which of the following will occur in the United States in the presence of trade?

External economies of scale can occur when

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

Regarding governmental subsidies applied to commercial jetliners, the World Trade Organization ruled that during 2010-2012

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

External economies of scale exist when an industry's outputs increase and

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

In his test of the Heckscher-Ohlin model, W.Leontief found that, although the United States was perceived as being capital abundant relative to the rest of the world, U.S.exports were less capital intensive than import-competing goods.

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

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

Chinese manufacturers face rising wages because of

Eli Heckscher and Bertil Ohlin are associated with the theory of comparative advantage that stresses differences in

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.

In the United States, most low-skilled manufacturing jobs have been lost due to

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

Explain how the Airbus-Boeing subsidies are justified by both firms.

Figure 1. An Example of China-U.S. Trade Possibilities -Considering Figure 1, what are the terms of trade represented?

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.

The increased use of robots, combined with rising labor costs in China, has led some U.S.businesses to return to manufacturing in the United States.