In the HO model, the production possibility frontier is bowed out due to the assumption of A) identical tastes. B) different factor intensities in the production of the two goods. C) increasing returns to scale. D) Two of the above. ANSWER B
Date: September 10th, 2020
If a firm that uses a production process that yields economies of scale charges a price equal to ________, then profit will be ________. A) marginal cost; negative B) marginal revenue; maximized C) marginal cost; maximized D) marginal revenue; positive E) marginal cost; positive ANSWER A
Date: September 10th, 2020
Imperfectly competitive firms have a demand curve that ________ and a marginal revenue curve that ________ and is ________ the demand curve. A) slopes downward; slopes downward; below B) is horizontal; is horizontal; the same as C) slopes downward; is horizontal; above D) is horizontal; slopes downward; below E) slopes downward; slopes downward; the same […]
Date: September 10th, 2020
The movement of production to affiliate firms outside of the country is known as outsourcing. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
Write an essay that compares and contrasts primary-export-led development policies with import-substitution policies. What will be an ideal response? ANSWER Primary-export-led development policies are aimed at encouraging the exports of natural comparative advantage primary products. The hope is that these exports will generate substantial linkage effects that will bring about general economic development. Potential […]
Date: September 10th, 2020
Given the information in the table above, if wages were to double in Home, then Home should A) export cloth. B) export widgets. C) export both and import nothing. D) export and import nothing. E) export widgets and import cloth. ANSWER A
Date: September 10th, 2020
Recent evidence regarding the exchange-rate pass-through effect in the U.S. reflects a declining trend. How can this be explained? What will be an ideal response? ANSWER There is evidence that the exchange-rate pass-through effect to import prices has been declining in developing economies, particularly for the U.S. One explanation offered for this trend is […]
Date: September 10th, 2020
Explain the elasticities and absorption approaches to the BOT. What is the most notable shortcoming of these approaches? What will be an ideal response? ANSWER The elasticities approach analyzes the effect of devaluation on the trade balance based on elasticities of supply and demand for foreign exchange and international trade. The absorption approach views […]
Date: September 10th, 2020
Briefly describe the factors that contributed to the U.S. Current Account deficits of the 1990s. What will be an ideal response? ANSWER Rapid U.S. economic growth raised income and import demand; economic growth was low or negative for U.S. trading partners, depressing export demand.
Date: September 10th, 2020
Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad. Indicate whether the statement is true or false ANSWER TRUE
Date: September 10th, 2020
