961. Interindustry trade can be explained by all of the following except ?
A. high transportation costs as a proportion of product value
B. different growing seasons of the year for agricultural products
C. product differentiation for good such as automobiles
D. high per capita incomes in exporting countries

962. The factor endowment model of international trade was developed by ?
A. Adam Smith
B. David Ricardo
C. John Stuart Mill
D. Eli Heckscher and Bertil Ohlin

963. Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no longer manufacture the product ?
A. Theory of factor endowments
B. Theory of overlapping demands
C. Economies of scale theory
D. Product life cycle theory

964. The trade model of the Swedish economies Heckscher and Ohlin maintains that ?
A. Absolute advantage determines the distribution of the gains from trade
B. Comparative advantage determines the distribution of the gains from trade
C. The division of labor is limited by the size of the world market
D. A country exports goods for which its resource endowments are most suited

965. According to the trade theory of Staffan Linder trade tends to be most pronounced in manufactured goods when trading countries have ?
A. similar endowments of natural resources
B. similar levels of technology
C. similar per-capita incomes
D. similar wage levels

966. Should international transportation costs decrease the effect on international trade would include a (an) ?
A. increase in the volume of trade
B. Smaller gain from trade
C. Decline in the income of home producers
D. Decrease in the level of specialization in production

967. Intra-industry trade theory ?
A. Explains why the United States might export autos and import clothing
B. Explains why the United States might export and import differentiated versions of the same product such as different types of autos
C. Assumes that transport costs are very low or do not exist
D. ignores seasonal considerations for agricultural goods

968. Difference in environmental standards or other government regulations among nations ?
A. have no impact on patterns of international trade
B. have tended to make U.S steel companies more competitive internationally
C. can affect production costs and thus alter comparative advantages and trade patterns
D. have been eliminated by the nations participating in NAFTA

969. According to the Heckscher-Ohlin model the source of comparative advantage is a country’s ?
A. technology
B. advertising
C. factor endowments
D. both (a) and (c)

970. The comparative advantage model of Ricardo was based on ?
A. intraindustry specialization and trade
B. interindustry specialization and trade
C. demand conditions underlying specialization and trade
D. income conditions underlying specialization and trade


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