Int Econ

Which model best explains the cross-trade of very similar products exported and imported by trading partners?

) monopolistic competition

h-Which of the following is(are) factors affecting the constant (B) in gravity equation estimates?

) tariffs and quotas of the two countries or regions

8. What is the name of the MOST recent round of WTO negotiations?

) the Doha round

(Figure: Home's Import-Competing Industry) What is this nation's "welfare" after trade?

) triangle AEC + triangle EFG

42. (Figure: A Firm's Production With and Without Offshoring I) In a "no-offshoring" equilibrium, how many units of R&D production will there be?

80

Which of the following is a possible reason for a country to impose a tariff?.

A tariff is a source of revenue for the government.

h-(Figure: Costs and Demand for a Monopolistic Competitor) What price should the firm charge?

A) $15

In the long run, immigration will lead to a rightward shift in the receiving country's production possibilities frontier. This shift will:

A) favor the labor-intensive good

To study labor migration using the specific-factors model, we assume ________ and ________ cannot move within the domestic economy, but we allow ________ to move

A) land; capital; labor

20. (Figure: Costs and Demand for a Monopolistic Competitor) The profit-maximizing amount of output produced will be:

B) 32.

In the short run, as immigration occurs and more labor is employed, what will happen to the marginal products of land and capital (fixed resources) in the destination country?

B) Both will rise

When the supply of labor increases, according to the specific-factors model, which of the following is likely to happen?

B) The wages for workers will decline.

In the long run, immigration will shift the sending country's production possibilities frontier inward. This shift will cause:

B) a larger decline in the potential output of the labor-intensive good.

If capital is specific to manufacturing and land is specific to agriculture, then migration of labor from low-income to high-income countries will cause the wage to:

B) fall in the high-income country and the wage to rise in the low-income country

According to the long-run (Heckscher-Ohlin) model, when FDI takes place, the investment capital generally moves from:

B) high-wage nations to low-wage nations.

h-- Studies of NAFTA have concluded that free trade caused ______ in the variety of U.S. imports from Mexico.

B) increases

The specific-factors model predicts that, after immigration, the equilibrium wage in both industries in the destination nation:

B) will fall.

(Figure: Home Market I) The government revenue due to the tariff is:

C) $48.

h-Which of the following is NOT an assumption for monopolistic competition?

C) Firms are price takers

To analyze intra-industry trade, we change our assumptions about our trade models to allow:

C) differentiated products.

In the Heckscher-Ohlin model, a "box diagram" describes the distribution of:

C) labor and capital between the two producing sectors of a country.

Import tariffs are ___________ on imports, and import quotas are ____________ on imports

C) taxes; quantity limits

h-Larger countries will trade more with one another; this is empirically supported by:

C) the gravity equation.

In the short-run (specific-factors) model, an FDI inflow into a country's manufacturing sector will cause:

D) an increase in the output of and employment in the manufacturing sector.

h-When firms charge different prices for differentiated products in imperfect competition, each firm faces a demand curve that is ___________ than would be the case if the market was perfectly competitive.

D) less elastic

Consumers gain from trade within a monopolistically competitive industry because:

D) prices fall and product varieties increase.

Which of the following is characteristic of a monopolistically competitive industry?

Individual firms can influence the market price.

h-Which of the following describes the long-run situation for a firm in a monopolistically competitive market?

New firms enter the market because of monopoly profits, the firm's demand curve shifts to the left and becomes flatter, and monopoly profits disappear.

How will an increase in offshoring affect the demand for skilled labor and the wages of skilled labor in the home country?

The demand for skilled labor and the wages of skilled labor will both increase.

How would offshoring affect the demand for high-skilled workers in the home country?

The relative demand would increase and the absolute demand would decrease.

36. What will happen to wages of skilled workers domestically when offshoring occurs?

They will rise.

When work done by skilled workers is offshored, what will happen to wages of skilled workers abroad?

They will rise.

3. (Figure: A Firm's Production With and Without Offshoring I) In the graph, which line shows the initial level of production for this firm?

Y0

A small country in international trade faces:

a perfectly elastic world supply curve.

. In the long run (the Heckscher-Ohlin model), immigration will lead to:

an increase in the production of the labor-intensive good and a decrease in the production of the capital-intensive good in the receiving country

The home import demand curve is downward sloping because:

as the price falls below domestic equilibrium, the shortage in demand is filled by importing more quantity from abroad.

According to the specific-factors model, what happens when the supply of labor increases?

ase. D) The wages of workers will decrease.

In the long run, a monopolistically competitive firm will produce where:

average cost equals price.

Increasing returns to scale occur when a firm's:

average costs of production decrease as its output increases.

When consumers are able to buy a product at a price lower than its marginal value to them, it is called:

consumer surplus.

Products that are very similar and very close substitutes, but that may be of different quality or prices, are called:

differentiated products

h-The gravity equation is used to predict:

he level of bilateral trade.

In the long run, if all resources can move within a nation, an inflow of FDI will

increase production in the capital-intensive sectors as capital becomes cheaper

h-What term is used to describe situations in which countries specialize in and trade different varieties of the same type of product?

intra-industry trade

If a large country imposes a tariff:

its economic welfare may increase.

h-A monopolist maximizes its profits by selling up to the point at which:

its marginal revenue equals its marginal costs.

study quiz

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h-In long-run equilibrium with trade, losses from import competition will force some firms to ______________, increasing demand for the remaining firms' output, which will then cause their demand curves to become ______________, due to the increased variety of products from _______________.

leave the industry; flatter; foreign firms

h-6- A firm's average costs will be falling whenever its marginal costs are:

less than average costs.

. Most offshoring involves moving abroad those activities that have

lower skill intensity.

In the long run (the Heckscher-Ohlin model), immigration will lead to

no change in the either the wages paid to laborers or the rent paid to capital- and land-owners in the receiving country.

h-- In the long run (the Heckscher-Ohlin model), immigration will lead to:

no change in the either the wages paid to laborers or the rent paid to capital- and land-owners in the receiving country.

The provision of a service or input component part that is assembled into a final good at another location is known as:

offshoring.

In the long run, a monopolistically competitive firm that trades internationally will ____________than it would in autarky.

produce more output

When firms are able to sell units of a good at a price higher than the marginal cost of production, they are getting:

producer surplus.

To measure the impact of a tariff on the total welfare of society, we calculate the:

rise in producer surplus plus the increase in tariff revenue going to the government minus the loss of consumer surplus

Other things equal, the level of bilateral trade between two countries will increase as their GDP:

rises.

The short-run model that allows labor to move between industries while keeping other factors fixed is called the ____________ model.

specific-factors

h-Measuring the effects of labor migration shows:

that immigration benefits the recipient nation by raising the marginal product of capital, expanding labor-intensive production, and lowering prices of laborintensive goods.

GATT is the acronym (or abbreviation) for:

the General Agreement on Tariffs and Trade.

WTO is the acronym for:

the World Trade Organization

Job polarization refers to situations in which:

the employment shares of jobs with lower and higher wages both rise.

The higher the value for the index of intra-industry trade:

the greater is the percentage of intra-industry trade in that good.

An increase in offshoring will raise the relative wage of skilled labor in both the home and offshored nations because:

the home nation will shift resources from lower-skilled to higher-skilled domestic workers, and the offshored nation will see a shift in in demand from lower-skilled to higher-skilled workers.

A country will find offshoring attractive when:

the international relative price of components is less than the home price of components

7. The gravity equation is used to predict:

the level of bilateral trade.

h-- The index of intra-industry trade is calculated as:

the minimum of imports and exports divided by the average of imports and exports.

The index of intra-industry trade is calculated as:

the minimum of imports and exports divided by the average of imports and exports.

Which of the following is the gravity equation calculation?

the product of the GDPs in two nations divided by a measure of the distance between them times a constant, reflecting other factors affecting trade

What is the most important labor market situation at home and abroad that affects a firm's decision to offshore?

the relative equilibrium wages of skilled versus unskilled workers at home and abroad

"Slicing the value chain" refers to:

the transfer of activities that are more profitable when carried out in foreign nations

If the index of intra-industry trade for an industry is zero, then:

there are either no exports or no imports in that industry.

(Figure: Home's Import-Competing Industry) What is this nation's "welfare" before trade?

triangle AFB

. A large nation faces a(n) ____ foreign export supply curve, rather than a(n) ____ foreign export supply curve.

upward-sloping; flat

When does it become more desirable to shift more activities in the value chain abroad?

when trade costs decline

As offshoring activities increase, the relative demand for skilled workers in the home nation

will increas