Question

Question 214 pts

If the world price is above the domestic “no-trade” equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.

True

False

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Question 224 pts

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

the industrial countries tend to have a higher population than the developing countries.

the industrial countries are capital intensive countries.

the consumption patterns in the industrial countries are highly heterogeneous.

the trade policies of the industrial nations are more favorable than the developing countries.

the consumption patterns in the industrial countries are more or less uniform.

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Question 234 pts

A country benefits from trade if it is able to obtain a good from a foreign country:

by giving up less of other goods than it would have to give up to obtain the good at home.

that has a substantial number of substitutes in the domestic market.

that has a very low domestic demand.

by giving up more of other goods than it would have to give up to obtain the good at home.

the production of which requires a steady supply of unskilled labor.

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Question 244 pts

We know that industrial countries tend to trade with other industrial countries. This pattern counters the:

human skills theory of comparative advantage.

product life cycle theory of comparative advantage.

concept of intraindustry trade.

preference theory of comparative advantage.

factor abundance theory of comparative advantage.

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Question 254 pts

It seems evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

True

False

Answer 1

1. If the world price is above the domestic “no-trade” equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.

False

Explanation:

If the world price is above the domestic “no-trade” equilibrium price, then with international trade, the domestic surplus can be exported to the rest of the world.

2. Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because the consumption patterns in the industrial countries are more or less uniform.

Ans is e) the consumption patterns in the industrial countries are more or less uniform

3. A country benefits from trade if it is able to obtain a good from a foreign country by giving up less of other goods than it would have to give up to obtain the good at home.

Ans is a) by giving up less of other goods than it would have to give up to obtain the good at home

4. We know that industrial countries tend to trade with other industrial countries. This pattern counters the factor abundance theory of comparative advantage.

Ans is e) factor abundance theory of comparative advantage

5.

It seems evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

This is True statement.