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.Management Sciences
Category: Sources of Comparative Advantage
Dynamic comparative advantage theory ?
A. helps explain why some nations use industrial policy to support potentially competitive new firms
B. cannot explain strategic competition between firms such as Boeing and Airbus
C. Is another name for Ricardo’s comparative advantage theory?
D. None of the above
Should international transportation costs decrease the effect on international trade would include a (an) ?
A. increase in the volume of trade
B. Smaller gain from trade
C. Decline in the income of home producers
D. Decrease in the level of specialization in production
That the division of labor is limited by the size of the market best applies to which explanation of trade ?
A. Factor endowment theory
B. Product life cycle theory
C. Economies of scale theory
D. Overlapping demand theory
A product will be traded only if the pre-trade price difference between the two countries ?
A. is less than the cost of transporting it between them
B. is greater than the cost of transporting it between them equals the cost of transporting it between them
C. equals the cost of transporting it between them
D. more information in needed to answer this
The theory of overlapping demand predicts that trade in manufactured goods is unimportant for countries with very different ?
A. Tastes and preferences
B. Expectations of future interest rate levels
C. Per-capita income levels
D. Labor productivities
In his empirical test of comparative advantage Wassily Leontief found that ?
A. U.S exports are capital intensive relative to U.S imports
B. U.S imports are labor intensive relative to U.S exports
C. U.S exports are neither labor nor capital intensive
D. None of the above
According to the trade theory of Staffan Linder trade tends to be most pronounced in manufactured goods when trading countries have ?
A. similar endowments of natural resources
B. similar levels of technology
C. similar per-capita incomes
D. similar wage levels
According to the factor price equalization theorem, the ________ factor should oppose free. trade policies in any given country?
A. abundant
B. scarce
C. neither
D. can’t tell without more information
According to the Heckscher-Ohlin model the source of comparative advantage is a country’s ?
A. technology
B. advertising
C. factor endowments
D. both (a) and (c)
Boeing aircraft company was able to over its production costs of the first – jumbo jetll in the seventies because Boeing could market it to several foreign airlines in addition to domestic airlines. This illustrates ?
A. How economies of scale make possible a larger variety of products in international trade
B. A transfer of wealth from domestic consumer to domestic producer as the result of trade
C. How a natural monopoly is forced to behave more competitively with international trade
D. How a natural monopoly is forced to behave less competitively with international trade
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