Ch6_1 - Name: ___________________________________ Date:...

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Unformatted text preview: Name: ___________________________________ Date: ______________ 1. When research and development costs are spread out over more consumers, this is an example of what? 2. Why would you expect firms with high research and development costs to be more interested in free trade? 3. To analyze intra-industry trade, we must bring in imperfect competition, and we change our assumptions about our trade models to allow: A) price-conscious consumers. B) short-run unemployment. C) differentiated products. D) perfect competition. 4. Products traded between two nations that are very similar and very close substitutes, but that may be of different quality or prices, are called: A) differentiated complements. B) differentiated substitutes. C) differentiated products. D) perfect substitute products. 5. The cross trade of very similar products exported and imported by trading partners seems to contradict which model(s)? A) Ricardian B) Heckscher-Ohlin C) specific-factors D) All of the answer choices are correct. 6. A differentiated product is one that: A) is slightly different from the competitor's product, although is a close substitute. B) is very different. C) is traded within firms and is not for sale in retail markets. D) has a shelf life of less than 1 year. Page 1 7. Differentiated is another word for: A) identical. B) homogeneous. C) heterogeneous. D) None of the answer choices are correct. 8. When a firm raises the price of a differentiated product in an imperfectly competitive market: A) It will see lower sales but will not lose all its sales. B) It will lose all its sales to competitor firms. C) It will actually get new customers from other firms. D) It will see an increase in revenues. 9. Which of the following features is characteristic of monopolistic competition? A) many small producers B) homogenous products C) differentiated products D) No individual producer has any influence on the market price. 10. Increasing returns to scale occur when a firm's: A) average costs of production increase as its output increases. B) average costs of production decrease as its output increases. C) average fixed costs increase as its output increases. D) marginal costs increase as its output increases. 11. A feature of imperfect competition is ___ ______ , which means that as the firm expands its production, average costs of production fall. Therefore, the firm can __ _____ its costs of production by selling internationally. A) economies of scale; decrease B) economies of scale; increase C) increasing returns to scale; decrease D) specialization; increase 12. The term for very similar products being exported and imported by trading partners is: A) reciprocal trade. B) imperfect competition....
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Ch6_1 - Name: ___________________________________ Date:...

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