ECO 305 Week 3 Quiz – Strayer
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Quiz 2 Chapter 3 and 4
CHAPTER 3
SOURCES OF COMPARATIVE ADVANTAGE
MULTIPLE CHOICE
1. Which
of the following suggests that a nation will export the commodity in the
production of which a great deal of its relatively abundant and cheap factor is
used?
a. The Linder theory
b. The product life cycle theory
c. The MacDougall theory
d. The Heckscher-Ohlin theory
2. According
to Staffan Linder, trade between two countries tends to be most pronounced when
the countries:
a. Find their tastes and preferences to be
quite harmonious
b. Experience economies of large-scale
production over large output levels
c. Face dissimilar relative abundances of
the factors of production
d. Find their per capita income levels to
be approximately the same
3. Which
of the following is a long-run theory, emphasizing changes in the trading
position of a nation over a number of years?
a. Theory of factor endowments
b. Comparative advantage theory
c. Theory of the product cycle
d. Overlapping demand theory
4. The
Leontief paradox questioned the validity of the theory of:
a. Comparative advantage
b. Factor endowments
c. Overlapping demands
d. Absolute advantage
5. Which
of the following would least likely apply to the product life cycle theory?
a. Calculators and computers
b. Coal and crude oil
c. Home movie cameras
d. Office machinery
6. Classical
trade theory emphasized which of the following as an underlying explanation of
the basis for trade?
a. Productivities of labor inputs
b. Tastes and preferences among nations
c. Changes in technologies over time
d. Quantities of economic resources
7. Concerning
the influence that transportation costs have on the location of industry, which
of the following industries has generally attempted to locate production
facilities close to resource supplies?
a. Autos
b. Steel
c. Soft drinks
d. Valuable electronics goods
8. 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:
a. Labor
b. Land
c. Both labor and land
d. Neither labor nor land
9. When
considering the effects of transportation costs, the conclusions of our trade
model must be modified. This is because transportation costs result in:
a. Lower trade volume, higher import
prices, smaller gains from trade
b. Lower trade volume, lower import
prices, smaller gains from trade
c. Higher trade volume, higher import
prices, smaller gains from trade
d. Higher trade volume, lower import
prices, greater gains from trade
10. Most
economists maintain that the major factor underlying wage stagnation in the
United States in the 1990s has been:
a. Import competition
b. Technological change
c. Rising real value of the minimum wage
d. Increasing union membership
11. Assume
the cost of transporting autos from Japan to Canada exceeds the pretrade price
difference for autos between Japan and Canada. Trade in autos is:
a. Impossible
b. Possible
c. Highly profitable
d. Moderately profitable
12. Eli
Heckscher and Bertil Ohlin are associated with the theory of comparative
advantage that stresses differences in:
a. Income levels among countries
b. Tastes and preferences among countries
c. Resource endowments among countries
d. Labor productivities among countries
13. Hong
Kong is relatively abundant in labor, while Canada is relatively abundant in
capital. In both countries the production of shirts is relatively more labor
intensive than the production of computers. According to the factor endowment
theory, Hong Kong will have a(n):
a. Absolute advantage in the production of
shirts and computers
b. Absolute advantage in the production of
computers
c. Comparative advantage in the production
of shirts
d. Comparative advantage in the production
of computers
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