Quiz 4

Trade stifles the development of new industries that could be more efficient than the existing ones.

A country that imports goods produced under conditions of external economies of scale may suffer if...

That this trade will lead to greater product differentiation.

A product is produced in a monopolistically competitive industry with economies of scale. If this industry exists in two countries, and these two countries engage in trade one with the other, then we would expect...

Firm costs fall as firm output increases, firm costs fall as industry output increases

An internal economy means that ________, while an external economy means that ________.

Comparative advantage has proven completely incapable of predicting trade.

Comparative advantage has mixed results when it comes to predicting a country's trade patterns. Which of the following is FALSE?

Concentrated industries will not be competitive

Concentration of industries can lead to external economies for all of the following reasons EXCEPT...

decline, expansion

If trade in a particular good interindustry, the expansion of an industry in one country is likely to lead to the ________ of that industry in the othercountry. If trade in that good is intraindustry, expansion of the industry in one country is likely to lead to the ________ in the other country.

Firms will locate close to the market.

In an industry where transportation costs are high and there are limited scale economies, ...

Economies of scale

Intraindustry trade relies on...

Not allowed

Suppose that the United States decided to subsidize a major competitive effort by the semiconductor industry to bring to market the next generation computer chip. Under the current rules of the WTO and GATT, the U.S. effort is

Allowed as long as the subsidies are for developing a "precompetitive" technology.

Suppose that the United States decided to subsidize a major research and development effort by U.S. firms in the semiconductor industry. Underthe current rules of the WTO and GATT, the U.S. effort is

All of these answers are correct.

The creation of an integrated market as a result of international trade results in...

Intraindustry trade

The simultaneous export and import of steel by Japan is an example of...

Diseconomies of scale make it impossible for new firms to enter the market.

Under some circumstances, trade could stifle the development of new industries and reduce global efficiency. All of the following describe conditions that could lead to that situation except...

The combined size of the domestic and foreign market

When there are economies of scale, the scale of production possible in a country is constrained by...

The maquiladora industry has not created much employment in Mexico because most of the production is capital intensive.

Which of the following is FALSE?

Higher prices for the exported product

Which of the following is NOT a likely result of intraindustry trade based on internal economies of scale?

Wages are low and the production process is labor intensive.

Which of the following is NOT a situation providing a potential advantage for Mexico that makes it competitive compared to China in trade with the United States?

Trading oil for trucks

Which of the following is NOT an example of intraindustry trade?

Trading Nokia smartphones for Apple iPhones

Which of the following is an example of intraindustry trade?

Are more likely to be associated with an imperfectly competitive industry

With regard to global trade, internal economies of scale...