QUESTION According to the Heckscher-Ohlin theory, the pattern of international trade is determined by differences in: A. labor productivity. B. diminishing returns. C. factor endowments. D. management practices. E. trade barriers. ANSWER C
Date: September 3rd, 2020
QUESTION Which of the following is true of the relationship between trade and economic growth? A. Countries open to international trade display higher growth rates than those that close their economies to trade. B. Within a group of developing countries, closed economies grow faster than open economies. C. The Leontief paradox notes that adopting an […]
Date: September 3rd, 2020
QUESTION U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance of capital in the country. What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called? A. A zero-sum game B. The Leontief paradox C. A positive-sum game D. Samuelson’s critique E. A first-mover advantage ANSWER B
Date: September 3rd, 2020
QUESTION Which of the following is most likely an explanation for the Leontief paradox observed in the case of the United States? A. The United States imports goods that heavily use skilled labor and innovative entrepreneurship. B. The United States has a special advantage in producing new products made with innovative technologies. C. The United […]
Date: September 3rd, 2020
QUESTION Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. United States is the world’s third largest supplier of machinery and exports heavy machinery to Australia. What explains the trade equation between Australia and the United States? A. Tariff barriers determine the […]
Date: September 3rd, 2020
QUESTION Which of the following predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce? A. Mercantilism B. The theory of absolute advantage C. The Heckscher-Ohlin theory D. The theory of comparative advantage E. Samuelson’s […]
Date: September 3rd, 2020
QUESTION Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by this form of trade between Cadmia and Rhodia? A. Product life-cycle theory B. Heckscher-Ohlin theory C. […]
Date: September 3rd, 2020
QUESTION On which of the following observations was Raymond Vernon’s product life-cycle theory based? A. The wealth and size of the U.S. market gave U.S. firms a strong incentive to develop new consumer products. B. The high cost of U.S. labor gave U.S. firms an incentive to develop cost-saving process innovations. C. The United States […]
Date: September 3rd, 2020
QUESTION Individual firms should invest substantial financial resources in trying to build a first-mover advantage, even if that means several years of losses before a new venture becomes profitable. Indicate whether the statement is true or false. ANSWER TRUE Individual firms should realize that it pays to invest substantial financial resources in trying to […]
Date: September 3rd, 2020
QUESTION Porter’s theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production. Indicate whether the statement is true or false. ANSWER TRUE Porter’s theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced […]
Date: September 3rd, 2020
