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.Management Sciences
Category: Sources of Comparative Advantage
According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will ?
A. Devote excessive amounts of resources to agricultural production
B. Devote insufficient amounts of resources to agricultural production
C. Export products that are land-intensive
D. Import products that are land-intensive
If tastes are identical between countries, then comparative advantage is determined by ?
A. supply condition only
B. demand conditions only
C. supply and demand conditions
D. can’t tell without more information
By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?
A. The prices of trade goods to be lower than when there are no transportation costs
B. specialization to stop when the production costs of the trading partners equalize
C. The volume of trade to be less than when there are no transportation costs
D. The gains from trade to be greater than when there are no transportation costs
The product cycle theory of trade is essentially a ?
A. static, short run trade theory
B. dynamic long run trade theory
C. zero-sum theory of trade
D. negative-sum theory of trade
The factor endowment theory was pioneered by ?
A. Adam smith
B. David Ricardo
C. Wassily Leontief
D. Eli Heckscher and Bertil Ohlin
In his empirical tests, Wassily Leontief used an input-output table to ?
A. calculate the capital and labor required to produce $1 million of U.S exports and imports
B. calculate the labor productivity of America workers relative to foreign workers
C. calculate the capital productivity of American capital relative to foreign capital
D. All of the above
Declining costs per unit of output results from international trade especially if ?
A. International trade affords producers monopoly power
B. National governments levy imports tariffs and quotas
C. Producing goods entails increasing costs
D. Economies of scale exist for producers
The trade model of the Swedish economies Heckscher and Ohlin maintains that ?
A. Absolute advantage determines the distribution of the gains from trade
B. Comparative advantage determines the distribution of the gains from trade
C. The division of labor is limited by the size of the world market
D. A country exports goods for which its resource endowments are most suited
By reducing the volume of trade transportation costs tend to ?
A. stop the process of product price equalization and factor price equalization before they are complete:
B. ensure that the process of product price equalization and factor price equalization are complete
C. eliminate all of the feasible gains from international trade
D. maximize all of the feasible gains from international trade
Interindustry trade can be explained by all of the following except ?
A. high transportation costs as a proportion of product value
B. different growing seasons of the year for agricultural products
C. product differentiation for good such as automobiles
D. high per capita incomes in exporting countries
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