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A) B) C) D) 1. A long-run model of trade basic to the determination of how mobile factors of production affect national welfare and the returns to...

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1. A long-run model of trade basic to the determination of how mobile factors of production affect national welfare and the returns to the factors is known as: A) the specific-factors model. B) the Ricardian model. C) the Chicago model of trade. D) the Heckscher-Ohlin model. 2. The Hecksher-Ohlin model of international trade uses _____ and ______ to explain trade patterns. A) comparative; absolute advantage B) factor abundance; factor intensity C) factor availability; factor usability D) tariffs; quotas 3. The Heckscher-Ohlin model simplifies the analysis by assuming: A) There is unemployment of workers in the home country. B) There are a variety of levels of workers and types of capital. C) Land is an important factor of production. D) There are only two nations, with two possible goods and two factors of production. 4. In a capital-intensive industry, the capital/labor ratio will: A) rise as the wage/rental ratio falls. B) fall as the wage/rental ratio falls. C) rise as the country's capital stock rises. D) fall as the country's capital stock falls. 5. The Heckscher-Ohlin model assumes that factors of production can move freely ______ but cannot move _______. A) domestically; internationally B) after they are fully trained; before the training period is over C) internationally; domestically D) within unskilled occupations; into high-skill jobs 6. Which of the following industries is considered to be the most capital intensive? A) airplane manufacturing B) apparel manufacturing C) university teaching D) farming 7. The Heckscher-Ohlin model assumes that production techniques within a nation use the factors of production: A) at different intensities depending on changing technology and which nation you are discussing. B) at different intensities for each industry, so that one is more or less intensive in that factor than the other. C) at the same intensity for each industry—for example, the ratio of capital to labor is the same for every industry in the nation. D) in no definite pattern. Page 1
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8. Which of the following is not an assumption that the Heckscher-Ohlin model makes? A) The quantity of capital and labor in two nations is different for each nation—so we have different “endowments” of capital and labor. B) The quantity of capital and labor in two nations is relatively abundant in one nation and relatively scarce in the other. C) The quantity of capital and labor in two nations is fixed in the short run. D) Labor and capital move between countries. 9. The Heckscher-Ohlin Model assumes that: A) Factor endowments are same. B) Consumer tastes are the same across countries, C) The technologies used to produce the two goods are identical across the countries. D) Consumer tastes and technologies are the same across countries. Use the following to answer questions 10-13: Figure: Home and Foreign Autarky Equilibria 10. (Figure: Home and Foreign Autarky Equilibria) Which line above represents the “Home” relative price of computers in terms of shoes? A) A B) B C) C D) D 11. (Figure: Home and Foreign Autarky Equilibria) According to the shapes of the two PPFs, which nation has a comparative advantage in the production of computers? A) home B) foreign C) not enough information to tell 12. (Figure: Home and Foreign Autarky Equilibria) At which point will the Home nation find its “no-trade” equilibrium consumption and production point? A) A B) B C) C D) U 13. (Figure: Home and Foreign Autarky Equilibria) If shoes are a labor-intensive industry, which nation has more labor resources? A) home B) foreign C) not enough information to tell Page 2
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1. 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. 2. 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. 3. “Intra-industry trade” refers to: A) imports and exports within the same industry. B) imports and exports originating in different industries. C) international trade patterns predicted by the Heckscher-Ohlin model. D) Ricardian comparative advantage. 4. A firm's average costs will be falling whenever its: A) Marginal costs are positive. B) Marginal costs are negative. C) Marginal costs are less than average costs. D) Marginal costs are less than fixed costs. 5. Firm X's total fixed costs are $1,000. Its total variable costs of producing 100 units are $2,000, and its total variable costs of producing 200 units are $4,000. Firm X's average costs experiences which of the following as it increases output from 100 to 200 units? A) Average costs increase. B) Average costs decrease. C) Average costs remain constant. D) Average costs increase slightly. 6. In the long run, profits in a monopolistic competition market are zero because: A) of government regulations. B) of collusion. C) Firms are free to enter and exit the market. D) Firms produce a differentiated product. Page 1
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7. Mexico's gains from NAFTA have benefited mostly: A) unskilled workers. B) semi-skilled workers. C) higher-income workers. D) agricultural workers. 8. The Heckscher-Ohlin model can explain simultaneous U.S. exports of Budweiser beer to Canada and U.S. imports of Molson's beer from Canada. A) True B) False 9. A country can never import the commodities that it is exporting. A) True B) False 10. In the United States, NAFTA has benefited the economy because workers gained more than U.S. consumers. A) True B) False 11. The provision of a service or input component part that is assembled into a final good at another location is known as: A) barter. B) component trade. C) intermediate trade. D) outsourcing. 12. The main reason why firms consider outsourcing is to: A) decrease their labor costs. B) decrease their transportation costs. C) decrease their construction costs. D) decrease their “trade costs.” 13. To analyze outsourcing by firms, economists line up activities that a firm must undertake to produce a product in the rank order of the ratio of: A) low-cost to high-cost activities. B) high-skill labor to low-skill labor required for the activity. C) variable cost to fixed cost. D) manufacturing versus service activities. 14. Among the activities in the value chain, assembly is _________ labor and R&D is ____________ labor. A) skilled; unskilled B) unskilled; skilled C) skilled; skilled D) unskilled; unskilled Page 2
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Top Answer

D Option A is not right because Specific-factors model are short model, this model allows labor to move between industries... View the full answer

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