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1. Which of the following suggests that a nation will export the commodity in the production of which a great deal of its
relatively abundant and cheap factor is used?
a.
The Linder theory
b.
The product life cycle theory
c.
The MacDougall theory
d.
The Heckscher-Ohlin theory
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
2. According to Staffan Linder, trade between two countries tends to be most pronounced when the countries:
a.
Find their tastes and preferences to be quite harmonious
b.
Experience economies of large-scale production over large output levels
c.
Face dissimilar relative abundances of the factors of production
d.
Find their per capita income levels to be approximately the same
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Overlapping Demands as a Basis for Trade
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
3. Which of the following is a long-run theory, emphasizing changes in the trading position of a nation over a number of
years?
a.
b.
c.
d.
ANSWER:
c
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POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
4. The Leontief paradox questioned the validity of the theory of:
a.
Comparative advantage
b.
Factor endowments
c.
Overlapping demands
d.
Absolute advantage
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Skill as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
5. Which of the following would least likely apply to the product life cycle theory?
a.
Calculators and computers
b.
Coal and crude oil
c.
Home movie cameras
d.
Office machinery
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
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TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
7/1/2016 6:07 AM
6. Classical trade theory emphasized which of the following as an underlying explanation of the basis for trade?
a.
Productivities of labor inputs
b.
Tastes and preferences among nations
c.
Changes in technologies over time
d.
Quantities of economic resources
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
7. Concerning the influence that transportation costs have on the location of industry, which of the following industries
has generally attempted to locate production facilities close to resource supplies?
a.
Autos
b.
Steel
c.
Soft drinks
d.
Valuable electronics goods
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
8. Assume that Country A, in the absence of trade, finds itself relatively abundant in labor and relatively scarce in land.
The factor endowment theory reasons that with free trade, the internal distribution of national income in Country A will
change in favor of:
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a.
Labor
b.
Land
c.
Both labor and land
d.
Neither labor nor land
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
9. When considering the effects of transportation costs, the conclusions of our trade model must be modified. This is
because transportation costs result in:
a.
Lower trade volume, higher import prices, smaller gains from trade
b.
Lower trade volume, lower import prices, smaller gains from trade
c.
Higher trade volume, higher import prices, smaller gains from trade
d.
Higher trade volume, lower import prices, greater gains from trade
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Transportation Costs and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
10. Chinese manufacturers face rising wages because of:
a.
China’s one-child policy
b.
land policies
c.
bureaucratic delay in being declared an urban dweller
d.
all of these
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
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QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
11. Assume the cost of transporting autos from Japan to Canada exceeds the pretrade price difference for autos between
Japan and Canada. Trade in autos is:
a.
Impossible
b.
Possible
c.
Highly profitable
d.
Moderately profitable
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Transportation Costs and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
12. Eli Heckscher and Bertil Ohlin are associated with the theory of comparative advantage that stresses differences in:
a.
Income levels among countries
b.
Tastes and preferences among countries
c.
Resource endowments among countries
d.
Labor productivities among countries
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
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Page 6
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
13. Hong Kong is relatively abundant in labor, while Canada is relatively abundant in capital. In both countries the
production of shirts is relatively more labor intensive than the production of computers. According to the factor
endowment theory, Hong Kong will have a(n):
a.
Absolute advantage in the production of shirts and computers
b.
Absolute advantage in the production of computers
c.
Comparative advantage in the production of shirts
d.
Comparative advantage in the production of computers
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
14. If Japanese workers receive lower wages in the production of autos than do American workers:
a.
Japan will have a comparative advantage in the production of autos
b.
Japan will have an absolute advantage in the production of autos
c.
Production costs will be lower in Japan than in the U.S.
d.
Production costs could be lower in the U.S. if American labor productivity is higher than the Japanese
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
15. Which trade theory suggests that a newly produced good, once exported, could ultimately end up being imported as
the technology is transferred to lower- cost nations?
a.
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Page 7
b.
c.
d.
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
16. A firm is said to enjoy economies of scale over the range of output for which the long-run average cost is:
a.
Increasing
b.
Constant
c.
Decreasing
d.
None of the above
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
17. A product will be internationally traded as long as the pretrade price differential between the trading partners is:
a.
Greater than the cost of transporting it between them
b.
Equal to the cost of transporting it between them
c.
Less than the cost of transporting it between them
d.
None of the above
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
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Page 8
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Transportation Costs and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
18. Which of the following suggests that by widening the market’s size, international trade can permit longer production
runs for manufacturers, which leads to increasing efficiency?
a.
Economies of scale
b.
Diseconomies of scale
c.
Comparative cost theory
d.
Absolute cost theory
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
19. The Leontief paradox:
a.
Was applied to the product life cycle theory
b.
Suggested that the U.S. exports labor-intensive goods
c.
Found that national income differences underlie world trade patterns
d.
Implied that diseconomies of scale occur at low output levels
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Skill as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
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Page 9
DATE MODIFIED:
6/22/2016 3:18 PM
20. Which of the following best applies to the theory of overlapping demands?
a.
Manufactured goods
b.
Services
c.
Primary products
d.
None of the above
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Overlapping Demands as a Basis for Trade
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
21. The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries’:
a.
Economies of large-scale production
b.
Relative abundance of various resources
c.
Relative costs of labor
d.
Research and development
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
22. Boeing aircraft company was able to cover its production costs of the first “jumbo jet” in the 1970s 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 consumers to domestic producers 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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ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
23. Which trade theory contends that a country that initially develops and exports a new product may eventually become
an importer of it and may no longer manufacture the product?
a.
Theory of factor endowments
b.
Theory of overlapping demands
c.
Economies of scale theory
d.
Product life cycle theory
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
24. The theory of overlapping demands 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
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
Copyright Cengage Learning. Powered by Cognero.
Page 11
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Overlapping Demands as a Basis for Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
25. The trade model of the Swedish economists 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
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
26. According to the factor endowment model, 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
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
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Page 12
27. For the United States, empirical studies indicate that over the past two decades the cost of international transportation
relative to the value of U.S. imports has:
a.
Increased
b.
Decreased
c.
Not changed
d.
None of the above
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Transportation Costs and Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
28. Should international transportation costs decrease, the effect on international trade would include:
a.
An increase in the volume of trade
b.
A smaller gain from trade
c.
A decline in the income of home producers
d.
A decrease in the level of specialization in production.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Transportation Costs and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
29. 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
ANSWER:
c
POINTS:
1
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Page 13
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
30. A larger variety of products results from international trade especially if:
a.
International trade affords producers monopoly power
b.
National governments levy import tariffs and quotas
c.
Producing goods entails increasing costs
d.
Economies of scale exist for producers
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
31. With economies of scale and decreasing unit costs, a country has the incentive to:
a.
Specialize completely in the product of its comparative advantage
b.
Specialize partially in the product of its comparative advantage
c.
Specialize completely in the product of its comparative disadvantage
d.
Specialize partially in the product of its comparative disadvantage
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Economies of Scale and Comparative Advantage
Copyright Cengage Learning. Powered by Cognero.
Page 14
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
32. Proponents of ____ maintain that government should enact policies that encourage the development of emerging,
“sunrise” industries.
a.
Product life cycle policy
b.
Static comparative advantage policy
c.
Intra-industry trade policy
d.
Industrial policy
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Government Regulatory Policies and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
33. Legislation requiring domestic manufacturers to install pollution abatement equipment tends to promote:
a.
Higher production costs and an increase in output
b.
Higher production costs and a decrease in output
c.
Lower production costs and an increase in output
d.
Lower production costs and a decrease in output
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Government Regulatory Policies and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
34. Stringent governmental regulations (e.g., air quality standards) imposed on domestic steel manufacturers tend to:
a.
Enhance their competitiveness in the international market
b.
Detract from their competitiveness in the international market
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Page 15
c.
Increase the profitability and productivity of domestic manufacturers
d.
Reduce the market share of foreign firms selling steel in the domestic market
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Government Regulatory Policies and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
35. Among the determinants underlying a country’s international competitiveness in business services (e.g., construction)
are:
a.
The potential scale economies afforded by a market’s size
b.
Abundance of equipment including data processing facilities and computers
c.
Skills and capabilities of employees and their wage rates
d.
All of the above
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Dynamic Comparative Advantage: Industrial Policy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
36. The simultaneous import and export of computers by Germany is an example of:
a.
Intra-industry trade
b.
Inter-industry trade
c.
Perfect competition
d.
Imperfect competition
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
Copyright Cengage Learning. Powered by Cognero.
Page 16
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Intra-industry Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
37. Linder’s theory of overlapping demand provides an explanation of:
a.
Product life cycle theory
b.
Factor endowment model
c.
Economies of large-scale production
d.
Intra-industry trade
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Overlapping Demands as a Basis for Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
38. Intra-industry trade can be explained in part by:
a.
Adam Smith’s principle of absolute advantage
b.
Perfect competition in product markets
c.
Diseconomies of large scale production
d.
Transportation costs between and within nations
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Intra-industry Trade
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
Copyright Cengage Learning. Powered by Cognero.
Page 17
39. The Leontief paradox provided:
a.
Support for the principle of absolute advantage
b.
Support for the factor endowment model
c.
Evidence against the factor endowment model
d.
Evidence against the principle of absolute advantage
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Skill as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
40. Which trade theory suggests that comparative advantage tends to shift from one nation to another as a product
matures?
a.
Interindustry trade theory
b.
Intraindustry trade theory
c.
Product life cycle theory
d.
Overlapping demand theory
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
41. Which trade theory is tantamount to a short-run version of the factor price equalization theory?
a.
Specific factors theory
b.
Product life cycle theory
c.
Economies of scale theory
d.
Overlapping demand theory
ANSWER:
a
POINTS:
1
Copyright Cengage Learning. Powered by Cognero.
Page 18
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
42. According to the specific factors trade theory:
a.
Owners of factors specific to export industries suffer from trade, while owners of factors specific to import-
competing industries gain
b.
Owners of factors specific to export industries gain from trade, while owners of factors specific to import-
competing industries suffer
c.
Both owners of factors specific to export industries and owners of factors specific to import-competing
industries gain from trade
d.
Both owners of factors specific to export industries and owners of factors specific to import-competing
industries suffer from trade
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
43. From 2000-2010, which nation lost thousands of jobs to China, whose average wages were half of those of this
country?
a.
Japan
b.
Canada
c.
Germany
d.
Mexico
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
Copyright Cengage Learning. Powered by Cognero.
Page 19
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Is International Trade a Substitute for Migration?
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
44. Boeing Inc. has criticized The Airbus Company’s competitiveness on the grounds that Airbus benefits from:
a.
Import tariffs protecting Airbus in the European market
b.
Import quotas protecting Airbus in the European market
c.
Lenient environmental standards of European governments
d.
Production subsidies supplied by European governments
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
WTO Rules Illegal Government Subsidies Support Boeing and Airbus
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
45. To justify the subsidies it has received from European governments, The Airbus Company has used all of the
following arguments except:
a.
Its subsidies have prevented U.S. aircraft firms from holding a world-wide monopoly
b.
U.S. aircraft firms have benefited from military-sponsored programs of the U.S. government
c.
Airbus’ subsidies were totally repaid as the firm realized profits on its aircraft sales
d.
Without subsidies to Airbus, Europe would be dependent on the United States as a supplier of aircraft
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
WTO Rules Illegal Government Subsidies Support Boeing and Airbus
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
Copyright Cengage Learning. Powered by Cognero.
Page 20
46. Expanding trade or technological improvements
a.
Increases the demand for skilled workers in the U.S.
b.
Decreases the demand for unskilled workers in the U.S.
c.
Increases the demand for unskilled workers in the U.S.
d.
Both a and b.
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Skill as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
47. Economists agree that wages of unskilled workers are being held down by
a.
International trade
b.
Technology improvements
c.
Lack of education
d.
A combination of a, b, and c
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Skill as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
48. The factor endowment theory states that comparative advantage is explained
a.
Exclusively by differences in relative supply conditions
b.
Exclusively by differences in relative national demand conditions
c.
Both supply and demand conditions
d.
None of the above
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate