Exercise 3_MCQ.docxVIP

CHAPTER 3—SOURCES OF COMPARATIVE ADVANTAGEMULTIPLE CHOICE1.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 theoryb.The product life cycle theoryc.The MacDougall theoryd.The Heckscher-Ohlin theoryANS:DPTS:12.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 harmoniousb.Experience economies of large-scale production over large output levelsc.Face dissimilar relative abundances of the factors of productiond.Find their per capita income levels to be approximately the sameANS:DPTS:13.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 endowmentsb.Comparative advantage theoryc.Theory of the product cycled.Overlapping demand theoryANS:CPTS:14.The Leontief paradox questioned the validity of the theory of:a.Comparative advantageb.Factor endowmentsc.Overlapping demandsd.Absolute advantageANS:BPTS:15.Which of the following would least likely apply to the product life cycle theory?a.Calculators and computersb.Coal and crude oilc.Home movie camerasd.Office machineryANS:BPTS:16.Classical trade theory emphasized which of the following as an underlying explanation of the basis for trade?a.Productivities of labor inputsb.Tastes and preferences among nationsc.Changes in technologies over timed.Quantities of economic resourcesANS:APTS:17.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.Autosb.Steelc.Soft drinksd.Valuable electronics goodsANS:BPTS:19.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 vo