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Unformatted text preview: pply the market.
A few firms supply much of the market.
Increasing returns to scale exist and are external to the firm, not internal to the firm. 5 FBE 462
Sample Midterm #1 18.
(d) 2.17. The opening up of free trade brings gains to:
Producers in import-competing industries.
Producers in export industries.
Workers in import-competing industries. 19.
5.26. Assume the standard trade model with two countries (Alpha and Beta), two goods
(Food and Drink), and two factors of production (land and labor). Further assume that Alpha is
relatively labor-abundant and Drink is relatively labor-intensive.
The pre-trade relative wage rate (relative to land rents) in Alpha is _____ than the relative wage
rate in Beta.
Relative wages are the same in the two countries.
There is not enough information to answer. 20. 6.5.
(d) Intra-Industry Trade:
Is compatible with the Heckscher-Ohlin trade theory.
Is rarely observed in the world...
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