S04-Modern - Econ 340 Winter Term 2011 Study Questions Alan...

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Econ 340 Alan Deardorff Winter Term 2011 Modern Theories Study Questions Page 1 of 6 Study Questions Lecture 4 Modern Theories and Additional Effects of Trade Part 1: Multiple Choice Select the best answer of those given. 1. Which of the following is not a possible cause of a country having a comparative advantage in a particular good? a. Low demand for the good. b. Relative abundance of the factor of production used intensively in producing the good. c. A superior technology for producing the good. d. An unusually large number of firms producing the good. e. Relative scarcity of the factor of production that is not used intensively in producing the good. 2. Which of the following is not normally regarded as a factor of production? a. Human Capital b. Land c. Money d. Labor e. Capital 3. The presence of increasing returns to scale in an industry tends to a. Make that industry perfectly competitive. b. Discourage producers from exporting. c. Give a comparative advantage in that industry to large countries. d. Cause price in that industry to rise with output. e. Reduce industry costs the larger is the number of firms competing.
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Econ 340 Alan Deardorff Winter Term 2011 Modern Theories Study Questions Page 2 of 6 4. According to the factor proportions model, countries have comparative advantage in the good that a. Employs a relatively large amount of their scarce factor. b. Employs a relatively large amount of the factor that they have relatively more of than other countries. c. Uses intensively their scarce factor. d. Requires proportionately more of every factor than the goods they import. e.
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S04-Modern - Econ 340 Winter Term 2011 Study Questions Alan...

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