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CHAPTER 3
SOURCES OF COMPARATIVE ADVANTAGE
MULTIPLE-CHOICE QUESTIONS
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 percapita 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
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
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 wi
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