Quiz 3 - Final ECO 4451

1. Assume the cost of transporting autos from Japan to Canada exceeds the pre-trade price difference for autos between Japan and Canada. Trade in autos is

• possible ,but only with sufficiently high taxes.

  
  

• moderately profitable, but only for the smallest firms

  
  

• impossible without subsidies of some form

  
  

• highly profitable, but only for the largest firms.

  
  

1. Assume that Country A, in the absence of trade, finds itself relatively abundant in labor and relatively scarce in land. The factor endowment theory reasons that, with free trade, the internal distribution of national income in Country A will change in favor of

• labor.

  
  

• land.

  
  

• both labor and land.

  
  

• neither labor nor land.

  
  

1. External economies of scale can occur when

• there is a decrease in specialized workers.

  
  

• firms seek out consultants for technical knowledge.

  
  

• knowledge of production technology spreads through direct contacts.

  
  

• an industry's firms become more dispersed.

  
  

1. According to the factor-endowment theory, countries with an abundance of unskilled labor, like China, are likely to

• export goods like textiles and toys.

  
  

• have higher labor costs.

  
  

• export goods like aircraft and machinery.

  
  

• have an economic advantage.

  
  

1. Internal economies of scale provide the incentive for countries to

• specialize in a few products.

  
  

• manufacture a wider range of products.

  
  

• specialize in products that are in demand abroad.

  
  

• manufacture only a few units of products that are in demand.

  
  

1. The simultaneous import and export of computers by Germany is an example of

• imperfect competition.

  
  

• intra-industry trade.

  
  

• perfect competition.

  
  

• inter-industry trade.

  
  

1. Which of the following suggests that by widening the market's size, international trade can permit longer production runs for manufacturers, which leads to increasing efficiency?

• comparative cost theory

  
  

• diseconomies of scale

  
  

• absolute cost theory

  
  

• economies of scale

  
  

1. Pollution legislation requiring domestic manufacturers to install pollution abatement equipment tends to promote

• higher production costs and an increase in output.

  
  

• higher production costs and a decrease in output.

  
  

• lower production costs and an increase in output.

  
  

• lower production costs and a decrease in output.

  
  

1. Which theory considers the income distribution effects of trade in the short run?

• specific-factors theory

  
  

• factor-endowment theory

  
  

• product life cycle theory

  
  

• Stolper–Samuelson theorem

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1. In the United States, most low-skilled manufacturing jobs have been lost due to

• unfair tariffs.

  
  

• immigrants.

  
  

• international trade.

  
  

• robots and other automation technology.