Question 1

Which of the following does not help in explaining the inadequacies of the Heckscher-Ohlin model in explaining basis for international trade ?

Accepted Answer

A)  Economies of scale
B)  Product differentiation
C)  Technological differences and the existence of product cycles
D)  Leontief's ParadoxE) All of the above
F) C) and D) D

Question 2

A product will be internationally tradable as long as the pre-trade price differential between the trading partners is:

Accepted Answer

A)  equal to the transportation cost of the good
B)  greater than the transportation cost of the good
C)  less than the transportation cost of the good
D)  different than the transportation cost of the goodE) None of the above
F) C) and D)

Question 3

The Heckscher-Ohlin theory is often referred to as the factor-proportion theory.

Accepted Answer

A) True 
 B)False

Question 4

As a result of environmentalist efforts,for the past three decades polluting and dirty industry exports have expanded slower relative to clean industries and their exports.

Accepted Answer

A) True 
 B)False

Question 5

Labor unions in developed nations are usually against trade restrictions because it impedes their ability to acquire skilled workers that can assist in acquiring additional benefits and wage increases.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not an explanation for why high-income and labor-saving products are most likely to be introduced in rich nations?

Accepted Answer

A)  The opportunities for doing so are the greatest in rich nations
B)  Poor countries actually prefer products and services associated with being low-income
C)  The development of new products requires proximity to markets so as to benefit from consumer feedback in modifying the product
D)  There is a need to provide serviceE) A) and D)
F) All of the above

Question 7

In the real world,why doesn't factor-price completely equalize

Accepted Answer

A)  because in real world,there are no trade restrictions
B)  technology takes time to defuse and factor productivity remains different across countries.
C)  although labor is completely mobile it assumes the value in the country to which it moved and thus has no effect on the overall factor price of that country.
D)  due to differences in exchange ratesE) A) and D)
F) B) and C) B

Question 8

Which of the following is a part of the Heckscher-Ohlin model that states international trade will bring about equalization in the returns to homogeneous factors across nations?

Accepted Answer

A)  Factor-price equalization theorem
B)  Factor-proportions theory
C)  Factor-endowment theory
D)  Product cycle theoryE) C) and D)
F) All of the above

Question 9

Which of the following is not a possible source of bias for the Leontief paradox?

Accepted Answer

A)  Leontief only used a two-factor model
B)  Leontief did not consider factors such as natural resources
C)  Leontief only used physical capital in the measure of capital
D)  Leontief used Human Capital as an alternative to Physical capitalE) C) and D)
F) A) and C)

Question 10

Non-traded goods and services are those that are not traded because of international barriers to entry,such as exorbitant import tariffs.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following economists did not participate in a 1967 study that found a strong correlation between expenditures on research and development and export performance?

Accepted Answer

A)  Gruber
B)  Mehta
C)  Vernon
D)  HeckscherE) B) and C)
F) All of the above D

Question 12

Discuss the major points of the Heckscher-Ohlin theory,the objection to this theory posed by the Leontief paradox,and the counterargument to this objection.

Accepted Answer

The H-O theory focuses on the difference...

Question 13

Which of the following is not an element of the product cycle model?

Accepted Answer

A)  The implementation of measures to prevent price differences across markets
B)  Expansion of production for export
C)  The introduction of the product into the domestic market
D)  Standardization and beginning of production abroad through imitationE) A) and C)
F) All of the above

Question 14

The ______________ hypothesizes that a portion of international trade is based on the introduction of new products or processes.

Accepted Answer

A)  specific-factors model
B)  technological gap model
C)  product cycle model
D)  real business cycle modelE) None of the above
F) B) and C)

Question 15

Leontief's empirical findings agreed with the Heckscher-Ohlin trade model which predicts that,as the most capital abundant nation,the U.S.should import labor-intensive products.

Accepted Answer

A) True 
 B)False

Question 16

Assume a nation where labor is mobile between industries but capital is not.The specific-factors model states that trade leads to which of the following?

Accepted Answer

A)  A reduction in the return to capital used to produce the nation's export commodity
B)  A reduction in the return to capital used in the nation's import-competing industry
C)  An increase in the return to labor used in the production of both imports and exports.
D)  Ambiguous outcomes in the return to all capital.E) A) and D)
F) C) and D)

Question 17

Increasing returns to scale refer to the production situation where inputs or factors of production grow proportionately more than output.

Accepted Answer

A) True 
 B)False

Question 18

Show with a diagram how two countries with identical tastes but different factor endowments can benefit from trade.

Accepted Answer

In the following diagram it can be clear...

Question 19

Free international trade will continue to expand until the real wages for the same type of labor in the two nations and the real rate of interest for the same type of capital in the two nations are completely equalized.

Accepted Answer

A) True 
 B)False

Question 20

With ______________,inputs increase proportionately more than the increase in output.

Accepted Answer

A)  Increasing returns to scale
B)  Decreasing returns to scale
C)  Constant returns to scale
D)  International returns to scaleE) C) and D)
F) B) and C)

Exam 4: The Heckscher-Ohlin and Other Trade Theories

Which of the following does not help in explaining the inadequacies of the Heckscher-Ohlin model in explaining basis for international trade ?

Correct AnswerverifiedD

A product will be internationally tradable as long as the pre-trade price differential between the trading partners is:

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theory is often referred to as the factor-proportion theory.

Correct AnswerverifiedShow Answer

As a result of environmentalist efforts,for the past three decades polluting and dirty industry exports have expanded slower relative to clean industries and their exports.

Correct AnswerverifiedShow Answer

Labor unions in developed nations are usually against trade restrictions because it impedes their ability to acquire skilled workers that can assist in acquiring additional benefits and wage increases.

Correct AnswerverifiedShow Answer

Which of the following is not an explanation for why high-income and labor-saving products are most likely to be introduced in rich nations?

Correct AnswerverifiedShow Answer

In the real world,why doesn't factor-price completely equalize

Correct AnswerverifiedB

Which of the following is a part of the Heckscher-Ohlin model that states international trade will bring about equalization in the returns to homogeneous factors across nations?

Correct AnswerverifiedShow Answer

Which of the following is not a possible source of bias for the Leontief paradox?

Correct AnswerverifiedShow Answer

Non-traded goods and services are those that are not traded because of international barriers to entry,such as exorbitant import tariffs.

Correct AnswerverifiedShow Answer

Which of the following economists did not participate in a 1967 study that found a strong correlation between expenditures on research and development and export performance?

Correct AnswerverifiedD

Discuss the major points of the Heckscher-Ohlin theory,the objection to this theory posed by the Leontief paradox,and the counterargument to this objection.

Correct AnswerverifiedThe H-O theory focuses on the difference...View AnswerShow Answer

Which of the following is not an element of the product cycle model?

Correct AnswerverifiedShow Answer

The ______________ hypothesizes that a portion of international trade is based on the introduction of new products or processes.

Correct AnswerverifiedShow Answer

Leontief's empirical findings agreed with the Heckscher-Ohlin trade model which predicts that,as the most capital abundant nation,the U.S.should import labor-intensive products.

Correct AnswerverifiedShow Answer

Assume a nation where labor is mobile between industries but capital is not.The specific-factors model states that trade leads to which of the following?

Correct AnswerverifiedShow Answer

Increasing returns to scale refer to the production situation where inputs or factors of production grow proportionately more than output.

Correct AnswerverifiedShow Answer

Show with a diagram how two countries with identical tastes but different factor endowments can benefit from trade.

Correct AnswerverifiedIn the following diagram it can be clear...View AnswerShow Answer

Free international trade will continue to expand until the real wages for the same type of labor in the two nations and the real rate of interest for the same type of capital in the two nations are completely equalized.

Correct AnswerverifiedShow Answer

With ______________,inputs increase proportionately more than the increase in output.

Correct AnswerverifiedShow Answer

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D

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B

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D

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The H-O theory focuses on the difference...
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In the following diagram it can be clear...
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