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Chapter 5

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IE Chapter 5

Frage 1 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, an influx of workers from across the border would

Wähle eine der folgenden:

  • move the point of production along the production possibility curve.

  • shift the production possibility curve outward; and increase the production of both goods.

  • shift the production possibility curve outward and decrease the production of the labor-intensive product.

  • shift the production possibility curve outward and decrease the production of the capital-intensive product.

  • shift the possibility curve outward and displace preexisting labor.

Erklärung

Frage 2 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, the two countries differ in

Wähle eine der folgenden:

  • tastes and preferences.

  • military capabilities.

  • the size of their economies.

  • relative abundance of factors of production.

  • labor productivities.

Erklärung

Frage 3 von 47

1

One way in which the Heckscher-Ohlin model differs from the Ricardo model of comparative advantage is by assuming that ____________ is (are) identical in all countries.

Wähle eine der folgenden:

  • factor endowments

  • scale of production

  • factor intensities

  • technology

  • opportunity costs

Erklärung

Frage 4 von 47

1

If a country produces good Y (measured on the vertical axis) and good X (measured on the horizontal axis), then the absolute value of the slope of its production possibility frontier is equal to

Wähle eine der folgenden:

  • the opportunity cost of good X.

  • the price of good X divided by the price of good Y.

  • the price of good Y divided by the price of good X.

  • the opportunity cost of good Y.

  • the cost of capital (assuming that good Y is capital intensive) divided by the cost of labor.

Erklärung

Frage 5 von 47

1

The Heckscher-Ohlin model differs from the Ricardian model of Comparative Advantage in that the former

Wähle eine der folgenden:

  • has only two countries.

  • has only two products.

  • has two factors of production.

  • has two production possibility frontiers (one for each country).

  • has varying wage rates.

Erklärung

Frage 6 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, the country with a relative abundance of _______________ will have a production possibility frontier that is biased toward production of the ________________ good.

Wähle eine der folgenden:

  • labor; labor intensive

  • labor; capital intensive

  • land; labor intensive

  • land; capital intensive

  • capital; land intensive

Erklärung

Frage 7 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, the country with a relative abundance of _____________ will have a production possibility frontier that is biased toward production of the _________________ good.

Wähle eine der folgenden:

  • capital; capital intensive

  • labor; capital intensive

  • land; labor intensive

  • land; capital intensive

  • labor; land intensive

Erklärung

Frage 8 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, the production possibility frontier is kinked when

Wähle eine der folgenden:

  • there is no factor substitution in production.

  • the opportunity cost of production is constant.

  • there are unemployed factor resources.

  • a country does not engage in trade.

  • transportation costs are very high.

Erklärung

Frage 9 von 47

1

The assumption of diminishing returns in the Heckscher-Ohlin model means that, unlike in the Ricardian model, it is likely that

Wähle eine der folgenden:

  • countries will not be fully specialized in one product.

  • countries will benefit from free international trade.

  • countries will consume outside their production possibility frontier.

  • comparative advantage will not determine the direction of trade.

  • global production will decrease under trade.

Erklärung

Frage 10 von 47

1

In the Heckscher-Ohlin model, countries are assumed to differ only in terms of their

Wähle eine der folgenden:

  • factor endowments.

  • tastes and preferences.

  • available technologies.

  • factor productivities.

  • physical size.

Erklärung

Frage 11 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, trade will _____________ the owners of a country's ________________ factor and will ___________ the good that uses that factor intensively.

Wähle eine der folgenden:

  • benefit; abundant; export

  • harm; abundant; import

  • benefit; scarce; export

  • benefit; scarce; import

  • harm; scarce; export

Erklärung

Frage 12 von 47

1

According to the Heckscher-Ohlin model, the source of comparative advantage is a country's

Wähle eine der folgenden:

  • factor endowments.

  • technology.

  • advertising.

  • human capital.

  • political system.

Erklärung

Frage 13 von 47

1

In the 2-factor, 2 good Heckscher-Ohlin model, trade will ____________ the owners of a country's _______________ factor and will ________________ the good that uses that factor intensively.

Wähle eine der folgenden:

  • harm; scarce; import

  • harm; abundant; import

  • benefit; scarce; export

  • benefit; scarce; import

  • harm; scarce; export

Erklärung

Frage 14 von 47

1

According to the Heckscher-Ohlin model

Wähle eine der folgenden:

  • the gainers from trade could compensate the losers and still retain gains.

  • everyone gains from trade.

  • the scarce factor gains from trade and the abundant factor loses.

  • a country gains from trade if its exports have a high value added.

  • only the country with the more advanced technology gains from trade.

Erklärung

Frage 15 von 47

1

In the Heckscher-Ohlin model, when two countries begin to trade with each other

Wähle eine der folgenden:

  • the relative prices of traded goods in the two countries converge.

  • relative factor prices in the two countries diverge.

  • benefits from trade are evenly distributed between the two countries.

  • all factors in both countries will gain from trade.

  • all factors in one country will gain, but there may be no gains in the other country.

Erklärung

Frage 16 von 47

1

Assume that only two countries, A and B, exist.
Factor Endowments A B
Labor Force 45 20
Capital Stock 15 10

Refer to the table above. If good S is capital intensive, then following the Heckscher-Ohlin Theory

Wähle eine der folgenden:

  • country B will export good S.

  • country A will export good S.

  • both countries will export good S.

  • trade will not occur between these two countries.

  • both countries will import good S.

Erklärung

Frage 17 von 47

1

Assume that only two countries, A and B, exist.
Factor Endowments A B
Labor Force 45 20
Capital Stock 15 10

Refer to the table above. If you are told that Country B is very much richer than Country A, then the correct answer is

Wähle eine der folgenden:

  • country B will export good S.

  • country A will export good S.

  • both countries will export good S.

  • trade will not occur between these two countries.

  • both countries will import good S.

Erklärung

Frage 18 von 47

1

Assume that only two countries, A and B, exist.
Factor Endowments A B
Labor Force 45 20
Capital Stock 15 10

Refer to the table above. You are told that Country B is very much larger than country A. The correct answer is

Wähle eine der folgenden:

  • country B will export good S.

  • country A will export good S.

  • both countries will export good S.

  • trade will not occur between these two countries.

  • both countries will import good S.

Erklärung

Frage 19 von 47

1

Assume that only two countries, A and B, exist.
Factor Endowments A B
Labor Force 45 20
Capital Stock 15 10

Refer to the table above. You are told that Country B has no minimum wage or child labor laws. Now the correct answer is

Wähle eine der folgenden:

  • country B will export good S.

  • country A will export good S.

  • both countries will export good S.

  • trade will not occur between these two countries.

  • both countries will import good S.

Erklärung

Frage 20 von 47

1

If a good is labor intensive it means that the good is produced

Wähle eine der folgenden:

  • using relatively more labor than goods that are not labor intensive.

  • using labor as the only input.

  • using more labor per unit of output than goods that are not labor intensive.

  • using labor such that the total cost of labor is greater than the total cost of capital.

  • using labor such that the cost of labor is more than 50% of total cost.

Erklärung

Frage 21 von 47

1

In the Heckscher-Ohlin model, when there is international-trade equilibrium

Wähle eine der folgenden:

  • the relative price of the capital intensive good in the capital rich country will be the same as that in the capital poor country.

  • the capital rich country will charge less for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.

  • the capital rich country will charge more for the capital intensive good than the price paid by the capital poor country for the capital-intensive good.

  • workers in the capital rich country will earn more than those in the poor country.

  • the workers in the capital rich country will earn less than those in the poor country.

Erklärung

Frage 22 von 47

1

If a good is capital intensive it means that the good is produced

Wähle eine der folgenden:

  • using relatively more capital than goods that are not labor intensive.

  • using capital as the only input.

  • using more capital per unit of output than goods that are not capital intensive.

  • using capital such that the total cost of capital is greater than the total cost of labor.

  • using capital such that the cost of capital is more than 50% of total cost.

Erklärung

Frage 23 von 47

1

The Heckscher-Ohlin model predicts all of the following EXCEPT

Wähle eine der folgenden:

  • the volume of trade.

  • which country will export which product.

  • which factor of production within each country will gain from trade.

  • that relative wages will tend to become equal in both trading countries.

  • that trade increases a country's overall welfare.

Erklärung

Frage 24 von 47

1

If Australia has relatively more land per worker, and Belgium has relatively more capital per worker, then if trade began between these two countries

Wähle eine der folgenden:

  • the relative price of the land-intensive product would increase in Australia.

  • the relative price of the capital-intensive product would increase in Australia.

  • the relative price of the land-intensive product would increase in Belgium.

  • the relative price of the capital-intensive product would decrease in Belgium.

  • relative product prices would diverge between Australia and Belgium.

Erklärung

Frage 25 von 47

1

If Australia has more land per worker, and Belgium has more capital per worker, then if trade began between these two countries

Wähle eine der folgenden:

  • the real income of landowners in Belgium would decline.

  • the real income of capital owners in Australia would increase.

  • the real income of labor in Australia would decline.

  • the real income of labor in Belgium would decline.

  • the real income of labor in both countries would decline.

Erklärung

Frage 26 von 47

1

If Japan is relatively capital rich and the United States is relatively land rich, and if food is relatively land intensive then trade between these two, formerly autarkic countries will result in

Wähle eine der folgenden:

  • an increase in the relative price of food in the U.S.

  • an increase in the relative price of food in Japan.

  • a global increase in the relative price of food.

  • a decrease in the relative price of food in both countries.

  • an increase in the relative price of food in both countries.

Erklärung

Frage 27 von 47

1

Trade benefits a country by

Wähle eine der folgenden:

  • increasing available consumption choices.

  • reducing the need for specialization in production.

  • reducing the relative price of the exported good.

  • increasing the real income of all resource owners.

  • increasing the wage rate.

Erklärung

Frage 28 von 47

1

If Gambinia has many workers but very little land and even less productive capital, then, following the Heckscher-Ohlin model, we predict that Gambinia will export

Wähle eine der folgenden:

  • labor-intensive goods.

  • capital-intensive goods.

  • both capital- and land-intensive goods.

  • land-intensive goods.

  • both labor- and land-intensive goods.

Erklärung

Frage 29 von 47

1

If Gambinia has many workers but very little land and even less productive capital, then, following the Heckscher-Ohlin model, in order to improve the country's economic welfare, the Gambinian government should

Wähle eine der folgenden:

  • engage in free trade.

  • protect the capital-intensive product.

  • protect the land-intensive product.

  • protect the labor-intensive product.

  • discontinue all international trade.

Erklärung

Frage 30 von 47

1

Starting from an autarky (no-trade) situation with Heckscher-Ohlin model, if Country H is relatively labor abundant, then once trade begins

Wähle eine der folgenden:

  • wages should rise and rents should fall in H.

  • wages and rents should rise in H.

  • wages and rents should fall in H.

  • wages should fall and rents should rise in H.

  • rent will be unchanged but wages will rise in H.

Erklärung

Frage 31 von 47

1

Suppose that there are two factors, capital and land, and that the United States is relatively land endowed while the European Union is relatively capital-endowed. According to the Heckscher-Ohlin model

Wähle eine der folgenden:

  • European capitalists should support U.S.-European free trade.

  • European landowners should support U.S.-European free trade.

  • all capitalists in both countries should support free trade.

  • all landowners should support free trade.

  • the U.S. should compensate European countries once trade commences.

Erklärung

Frage 32 von 47

1

International trade has strong effects on income distributions. Therefore, international trade

Wähle eine der folgenden:

  • will tend to hurt some groups in each trading country.

  • is beneficial to everyone in both trading countries.

  • will tend to hurt one trading country.

  • will tend to hurt everyone in both countries.

  • will be beneficial to all those engaged in international trade.

Erklärung

Frage 33 von 47

1

Factors tend to be specific to certain uses and products

Wähle eine der folgenden:

  • in the short run.

  • in countries lacking comparative advantage.

  • in capital-intensive industries.

  • in labor-intensive industries.

  • in countries lacking fair labor laws.

Erklärung

Frage 34 von 47

1

If the price of the capital intensive product rises more than does the price of the land intensive product, then

Wähle eine der folgenden:

  • the relative price of the capital intensive product will fall to some point between the pretrade relative prices.

  • demand will shift away from the capital-intensive product, and its production will decrease.

  • demand will shift away from the capital-intensive product, and its production will decrease relative to that of the land intensive product.

  • the production of the capital-intensive product will decrease, but by less than production of the land-intensive product.

  • the country that exports the capital-intensive good will lose its comparative advantage.

Erklärung

Frage 35 von 47

1

If trade opens up between the two formerly autarkic countries, Australia and Belgium, then

Wähle eine der folgenden:

  • the real income of both countries may increase.

  • the real income of Australia and of Belgium will increase.

  • the real income of Australia but not of Belgium will increase.

  • the real income of neither country will increase.

  • the real income of both countries will increase.

Erklärung

Frage 36 von 47

1

The Leontief Paradox

Wähle eine der folgenden:

  • failed to support the validity of the Heckscher-Ohlin model.

  • supported the validity of the Ricardian theory of comparative advantage.

  • supported the validity of the Heckscher-Ohlin model.

  • failed to support the validity of the Ricardian theory.

  • proved that the U.S. economy is different from all others.

Erklärung

Frage 37 von 47

1

The Leontief Paradox

Wähle eine der folgenden:

  • refers to the finding that U.S. exports were more labor intensive than its imports.

  • refers to the finding that U.S. Exports were more capital intensive than its exports.

  • refers to the finding that the U.S. produces outside its Edgeworth Box.

  • still accurately applies to today's pattern of U.S. international trade.

  • refers to the fact that Leontief—an American economist—had a Russian name.

Erklärung

Frage 38 von 47

1

The 1987 study by Bowen, Leamer and Sveikauskas

Wähle eine der folgenden:

  • supported the validity of the Leontief Paradox.

  • supported the validity of the Heckscher-Ohlin model.

  • used a two-country and two-product framework.

  • demonstrated that in fact countries tend to use different technologies.

  • proved that the U.S.'s comparative advantage relied on skilled labor.

Erklärung

Frage 39 von 47

1

Empirical observations on actual North-South trade patterns tend to

Wähle eine der folgenden:

  • support the validity of the Heckscher-Ohlin model.

  • support the validity of the Leontief Paradox.

  • support the validity of the Rybczynski Theorem.

  • support the validity of the wage equalization theorem.

  • support the validity of the neo-imperialism exploitation theory.

Erklärung

Frage 40 von 47

1

The Case of the Missing Trade refers to

Wähle eine der folgenden:

  • the fact that factor trade is less than predicted by the Heckscher-Ohlin theory.

  • the 9th volume of the Hardy Boys' Mystery series.

  • the fact that world exports does not equal world imports.

  • the fact that the Heckscher Ohlin theory predicts much less volume of trade than actually exists.

  • the fact that the Heckscher Ohlin theory never applies to China-U.S. trade practices.

Erklärung

Frage 41 von 47

1

If two countries are very different in relative factor abundance, then empirical support for which of the following would less likely?

Wähle eine der folgenden:

  • the Factor Price Equalization Theorem

  • the Heckscher-Ohlin Theorem

  • the Law of One Price

  • the Law of Demand

  • the Gravity Theorem

Erklärung

Frage 42 von 47

1

Which of the following empirical studies cast the most doubt on the Heckscher-Ohlin model?

Wähle eine der folgenden:

  • the study by Wassily Leontief

  • the study by Bowen, Leamer, and Sveikauskas

  • the study by David Ricardo

  • the study by Adam Smith

  • the study by Davis and Weinstein

Erklärung

Frage 43 von 47

1

Which of the following empirical studies provided the most support for the Heckscher-Ohlin model?

Wähle eine der folgenden:

  • the study by Wassily Leontief

  • the study by Bowen, Leamer, and Sveikauskas

  • the study by David Ricardo

  • the study by Adam Smith

  • the study by Davis and Weinstein

Erklärung

Frage 44 von 47

1

Empirical support for the Hecksher-Ohlin model was weakest when the study applied

Wähle eine der folgenden:

  • all of the assumptions of the model.

  • all of the assumptions of the model except that regarding technology.

  • all of the assumptions of the model except those regarding technology, goods and shipping costs.

  • all of the assumptions of the model except those regarding technology, shipping costs and gravity.

  • all of the assumptions of the model except those regarding shipping costs.

Erklärung

Frage 45 von 47

1

Which of the following is an assertion of the Heckscher-Ohlin model?

Wähle eine der folgenden:

  • The wage-rental ratio is determined by relative product prices.

  • An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.

  • In the long-run, labor is mobile and capital is not.

  • Factor price equalization will occur only if there is costless mobility of all factors across borders.

  • Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

Erklärung

Frage 46 von 47

1

Which of the following is an assertion of the Heckscher-Ohlin model?

Wähle eine der folgenden:

  • The wage-rental ratio determines the capital-labor ratio in a country's industries.

  • An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.

  • In the long-run, labor is mobile and capital is not.

  • Factor price equalization will occur only if there is costless mobility of all factors across borders.

  • Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

Erklärung

Frage 47 von 47

1

Which of the following is an assertion of the Heckscher-Ohlin model?

Wähle eine der folgenden:

  • An increase in a country's labor supply will increase production of the labor-intensive good and decrease production of the capital-intensive good.

  • An increase in a country's labor supply will increase production of both the capital-intensive and the labor-intensive good.

  • In the long-run, labor is mobile and capital is not.

  • Factor price equalization will occur only if there is costless mobility of all factors across borders.

  • Factor endowments determine the technology that is available to a country, which determines the good in which the country will have a comparative advantage.

Erklärung

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