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Page 40
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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: Remember
DATE CREATED:
6/22/2016 3:18 PM
DATE MODIFIED:
6/22/2016 3:18 PM
97. When transportation costs are added to our trade model, the low-cost exporting country produces less, consumes more,
and exports less than that which occurs in the absence of transportation costs.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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
98. When transportation costs are added to our trade model, the degree of specialization in production between two
countries increases as do the gains from trade.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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
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Page 41
99. In the absence of transportation costs, free trade results in the equalization of the prices of traded goods, as well as
resource prices, in the trading nations.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
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
100. In industries where the final product is much less weighty or bulky than the materials from which it is made, firms
tend to locate production near resource supplies.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
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
101. Industrial processes that add weight or bulk to a commodity are likely to be located near the resource market to
minimize transportation costs.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
Copyright Cengage Learning. Powered by Cognero.
Page 42
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
102. A product will be traded only if the cost of transporting it between nations is less than the pretrade difference
between their relative product prices.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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
103. Generally speaking, transportation costs are more important than production costs as a source of comparative
advantage.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
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
104. According to the product life cycle model, comparative advantage shifts from cheap-labor countries to high-
technology countries after a manufactured good becomes standardized.
a.
True
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Page 43
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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
105. The product-life-cycle model contends that when a new product is introduced to the home market, it generally
requires low-skilled labor to produce it.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
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
106. Does factor price equalization occur in the real world?
ANSWER:
In the real world, differences in factor prices tend to exist. Different technologies, imperfect
markets, transportation costs, and trade barriers may prevent factor prices from equalizing
among nations.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
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
107. What is the focus of the product life cycle theory, and where is it applicable?
ANSWER:
The product life cycle theory focuses on the role of technological innovation as a key
determinant of trade patterns. It applies to manufactured goods.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
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
108. Explain how immigration and trade may worsen wage inequality, and how college education may mitigate against
that.
ANSWER:
Trade tends to increase the demand for skilled workers relative to unskilled workers, thus
worsening wage inequality. Immigration of unskilled workers decreases the supply of skilled
workers relative to unskilled workers, thus worsening wage inequality. Alternatively, college
education increases the supply of skilled workers relative to unskilled workers, thus reducing
wage inequality.
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Essay
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
109. How does Staffan Linder explain world trade patterns?
ANSWER:
Linder offers two explanations of world trade patterns. Trade in primary products conforms
well to the factor-endowment theory. However, trade in manufactured goods is best explained
by overlapping demand structures among nations. For manufactured goods, the basis for trade
is stronger when the structure of demand in two nations is more similar, due to similar per-
capita incomes.
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Essay
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Page 45
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
110. According to the Heckscher-Ohlin Theory, ______ constitutes the major source of comparative advantage
a.
research and development
b.
innovation
c.
endowments of factors of production
d.
acquired advantages in labor productivity
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:01 AM
DATE MODIFIED:
7/4/2016 7:03 AM
111. The Heckscher-Ohlin theory rules out the basis for trade of the David Ricardo model by assuming that ______ is
(are) the same for all countries.
a.
expenditures on advertising and sales promotion
b.
transportation costs
c.
technology
d.
levels of personal income
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:07 AM
DATE MODIFIED:
7/4/2016 7:10 AM
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Page 46
112. If tastes and preferences are identical for two trading nations, then comparative advantage is the result of
a.
technological conditions of the two nations
b.
income levels of the two nations
c.
demand conditions of the two nations
d.
supply conditions of the two nations
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Supply and demand
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:12 AM
DATE MODIFIED:
7/4/2016 7:18 AM
113. If jetliners are a capital-intensive product for the United States, then in terms of the Heckscher-Ohlin theory the
United States should be
a.
a labor abundant country
b.
a land abundant country
c.
a capital abundant country
d.
an energy abundant country
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:19 AM
DATE MODIFIED:
7/4/2016 7:21 AM
114. Which of the following trade theories predicts that countries with similar preferences and technologies, but dissimilar
factor endowments, will have a pronounced basis for trade with each other
a.
Linder theory
b.
Stolper-Samuelson theory
c.
Raymond Vernon theory
d.
Heckscher-Ohlin theory
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
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Page 47
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:22 AM
DATE MODIFIED:
7/4/2016 7:24 AM
115. Assume that the United States is scarce in labor and abundant in capital. According to the Heckscher-Ohlin theory,
which of the following would occur for the United States once trade opens
a.
the price of capital should rise and the price of labor should fall
b.
the price of capital should fall the price of labor should rise
c.
the price of capital and labor should fall
d.
the price of capital and labor should rise
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/4/2016 7:25 AM
DATE MODIFIED:
7/4/2016 7:28 AM
116. Assume that the United States is scarce in labor and abundant in capital. According to the factor price equalization
theory, free trade policies would tend to be be opposed by ______ in the United States.
a.
labor
b.
capital
c.
both labor and capital
d.
neither labor nor capital
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/4/2016 7:28 AM
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Page 48
DATE MODIFIED:
7/4/2016 7:31 AM
117. In terms of the factor-endowment model of Heckscher and Ohlin
a.
the abundant factor gains from trade
b.
the scarce factor gains from trade
c.
those disadvantaged by trade outnumber those advantaged by trade
d.
everyone necessarily benefits from trade
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:32 AM
DATE MODIFIED:
7/4/2016 7:33 AM
118. In the factor-endowment model, the production possibility curve is assumed to be bowed outward. This is the result
of
a.
economies of large-scale production
b.
constant opportunity cost
c.
all factors of production are perfectly substitutable for each other
d.
different factor endowments and different factor intensities in the production of the two products
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:34 AM
DATE MODIFIED:
7/4/2016 7:36 AM
119. Most theories dealing with the principle of comparative advantage explain the patterns of international trade to be
caused by differences in
a.
income levels
b.
interest rates
c.
demand conditions
d.
supply conditions
ANSWER:
d
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Page 49
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:37 AM
DATE MODIFIED:
7/4/2016 7:43 AM
120. The Linder theory assets that, for manufactured goods, countries with ______ will trade intensively with each
other.
a.
similar demand conditions
b.
unlike demand conditions
c.
similar supply conditions
d.
unlike supply conditions
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Overlapping Demands as a Basis for Trade
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:44 AM
DATE MODIFIED:
7/4/2016 7:46 AM
121. According to the product life cycle theory, comparative advantage
a.
always remains in the country where the product is first introduced to the market
b.
increases as government tariffs and quotas are imposed on imports
c.
may shift from the home country to a foreign country as the product matures
d.
is the result of lower wages in the home country than in other countries
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:46 AM
Copyright Cengage Learning. Powered by Cognero.
Page 50
DATE MODIFIED:
7/4/2016 7:48 AM
122. The simultaneous export and import of automobiles by Canada is an example of
a.
complete specialization
b.
partial specialization
c.
intrai-ndustry trade
d.
interindustry trade
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Intra-industry Trade
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:49 AM
DATE MODIFIED:
7/4/2016 7:51 AM
123. According to the product life cycle theory, trade between countries takes place because of
a.
diseconomies of large scale production
b.
differences in per-capita income levels
c.
the occurrence of monopolies and oligopolies
d.
changing patterns of comparative advantage
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:51 AM
DATE MODIFIED:
7/4/2016 7:53 AM
124. When transportation costs are included in a trade model
a.
a country’s gains from trade decreases
b.
a country’s gains from trade increases
c.
a country’s volume of trade increases
d.
a country’s terms of trade improve
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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Page 51
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Transportation Costs and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 7:54 AM
DATE MODIFIED:
7/4/2016 7:56 AM
125. Wage inequality in the United States has been associated with
a.
technological change
b.
international trade
c.
immigration
d.
all of the above
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Labor markets
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:57 AM
DATE MODIFIED:
7/5/2016 2:46 AM
126. Critics maintain that labor unions can stifle international competitiveness for a business firm when they
a.
set wages and benefits above those in a competitive market
b.
impose restrictive work rules that reduce labor productivity and innovation
c.
emphasize seniority over merit in promotion and pay
d.
all of the above
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Labor markets
TOPICS:
Government Regulatory Policies and Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 7:59 AM
DATE MODIFIED:
7/5/2016 2:47 AM
127. Regarding governmental subsidies applied to commercial jetliners, during 2010-2011 the World Trade Organization
ruled that
a.
only Airbus has received illegal subsidies
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Page 52
b.
only Boeing has received illegal subsidies
c.
both Airbus and Boeing have received illegal subsidies
d.
neither Airbus nor Boeing have received illegal subsidies
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: The role of government
TOPICS:
World Trade Organization Rules That Illegal Government Subsidies Support Boeing and
Airbus
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:01 AM
DATE MODIFIED:
7/4/2016 8:04 AM
128. When industry output increases, a firm would realize an external economy of scale exists when
a.
its average total cost curve shifts downward
b.
its average total cost curve shifts upward
c.
it slides downward along its existing average total cost curve
d.
it slides upward along its existing average total cost curve
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Markets, market failure, a – DISC: Markets, market failure, and
externalities
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:25 AM
DATE MODIFIED:
7/4/2016 8:28 AM
129. As industry output increases, suppose that new knowledge about production technology spreads among firms in
the area through direct contacts among firms or as workers transfer from firm to firm. This would be an example of
a.
internal economy of scale
b.
external economy of scale
c.
internal diseconomy of scale
d.
external diseconomy of scale
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
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STATE STANDARDS:
United States – PA – DISC: Markets, market failure, a – DISC: Markets, market failure, and
externalities
TOPICS:
Economies of Scale and Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:28 AM
DATE MODIFIED:
7/4/2016 8:30 AM
130. Although some people may be harmed by international trade, the Heckscher-Ohlin theory asserts that free trade will
promote the standard of living for the nation as a whole.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 8:30 AM
DATE MODIFIED:
7/4/2016 8:37 AM
131. Assume that labor is relatively scarce in the United States. According to the factor price equalization theory, America
labor may opt for trade barriers once trade opens up.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/4/2016 8:38 AM
DATE MODIFIED:
7/4/2016 8:39 AM
132. Both the Ricardo model of comparative advantage and the Heckscher-Ohlin theory assert that trade patterns are
largely the result of differences in endowments of factors of production.
a.
True
b.
False
ANSWER:
False
POINTS:
1
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Page 54
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – Understanding and Applying Econo – Understanding and Applying
Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 8:40 AM
DATE MODIFIED:
7/4/2016 8:42 AM
133. Brazil is labor abundant relative to Germany if the ratio of labor to capital in Brazil is higher than that in Germany.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Labor markets
TOPICS:
Is the Factor-Endowment Theory a Good Predictor of Trade Patterns?
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
7/4/2016 8:42 AM
DATE MODIFIED:
7/4/2016 8:43 AM
134. The Heckscher-Ohlin model assumes that tastes and preferences, and also factor endownments, are identical for
trading nations.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 8:44 AM
DATE MODIFIED:
7/4/2016 8:46 AM
135. In his test of the Heckscher-Ohlin model, W. Leontief found that, although the United States was perceived as being
capital abundant relative to the rest of the world, U.S. exports were less capital intensive than import-competing goods.
a.
True
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Page 55
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – Understanding and Applying Econo – Understanding and Applying
Economic Models
TOPICS:
Is the Factor-Endowment Theory a Good Predictor of Trade Patterns?
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:47 AM
DATE MODIFIED:
7/4/2016 8:48 AM
136. The Heckscher-Ohlin theory asserts that trade should occur with different factor endowments. This theory is most
accurate when explaining trade patterns between industrialized countries and developing countries.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Is the Factor-Endowment Theory a Good Predictor of Trade Patterns?
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:49 AM
DATE MODIFIED:
7/4/2016 8:50 AM
137. The imposition of government regulations (clean environment, workplace safety, product safety) on domestic steel
companies tends to result in lower production cost and improved competitiveness.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: The role of government
TOPICS:
Government Regulatory Policies and Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 8:51 AM
DATE MODIFIED:
7/4/2016 8:52 AM
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Page 56
138. The magnification effect suggests that the change in the price of a resource is smaller than the change in the price of
the good that uses the resource relatively intensively.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: The Study of economics, an – DISC: The Study of economics, and
definitions in economics
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:53 AM
DATE MODIFIED:
7/4/2016 8:55 AM
139. According to the specific-factors theory, resources that are specific to import-competing industries tend to lose as a
result of trade, while resources specific to export industries tend to gain as a result of trade.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 8:55 AM
DATE MODIFIED:
7/4/2016 8:56 AM
140. Industrial policy implies using governmental subsidies as a tool to provide domestic firms an edge over foreign
competitors in domestic and foreign markets.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Monetary and fiscal policy
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Page 57
TOPICS:
Dynamic Comparative Advantage: Industrial Policy
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 8:57 AM
DATE MODIFIED:
7/4/2016 8:59 AM
141. The existence of transportation costs tends to result in increasing gains that a country receives from trade.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
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:
7/4/2016 8:59 AM
DATE MODIFIED:
7/4/2016 9:01 AM
142. The product life cycle theory predicts that patterns of comparative advantage change over time. A country which
initially exports a product to other countries eventually becomes a net importer of the product.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Understanding and Applying – DISC: Understanding and
Applying Economic Models
TOPICS:
Technology as a Source of Comparative Advantage: The Product Cycle Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/4/2016 9:01 AM
DATE MODIFIED:
7/4/2016 9:03 AM
143. A change in factor endowments tends to have a similar impact on a production possibility curve as a change in
technology.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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Page 58
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Supply and demand
TOPICS:
Factor Endowments as a Source of Comparative Advantage
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/4/2016 9:06 AM
DATE MODIFIED:
7/4/2016 9:07 AM