Homework answers / question archive / Monash University BFW 2104 CHAPTER 6 Multiple Choice 1)Relaxing the assumptions on which the Heckscher-Ohlin theory rests: leads to rejection of the theory leaves the theory unaffected requires complementary trade theories any of the above   Which of the following assumptions of the Heckscher-Ohlin theory, when relaxed, leave the theory unaffected? Two nations, two commodities, and two factors both nations use the same technology the same commodity is L-intensive in both nations all of the above Which of the following assumptions of the Heckscher-Ohlin theory, when relaxed, require new trade theories? Economies of scale incomplete specialization similar tastes in both nations the existence of transportation costs   International trade can be based on economies of scale even if both nations have identical: factor endowments tastes technology   all of the above   A great deal of international trade: is intra-industry trade involves differentiated products is based on monopolistic competition all of the above   The Heckscher-Ohlin and new trade theories explains most of the trade: among industrial countries between developed and developing countries in industrial goods all of the above   The theory that a nation exports those products for which a large domestic market exists was advanced by: Linder Vernon Leontief Ohlin   Intra-industry trade takes place: because products are homogeneous in order to take advantage of economies of scale because perfect competition is the prevalent form of market organization all of the above   If a nation exports twice as much of a differentiated product that it imports, its intra- industry (T) index is equal to: a

Monash University BFW 2104 CHAPTER 6 Multiple Choice 1)Relaxing the assumptions on which the Heckscher-Ohlin theory rests: leads to rejection of the theory leaves the theory unaffected requires complementary trade theories any of the above   Which of the following assumptions of the Heckscher-Ohlin theory, when relaxed, leave the theory unaffected? Two nations, two commodities, and two factors both nations use the same technology the same commodity is L-intensive in both nations all of the above Which of the following assumptions of the Heckscher-Ohlin theory, when relaxed, require new trade theories? Economies of scale incomplete specialization similar tastes in both nations the existence of transportation costs   International trade can be based on economies of scale even if both nations have identical: factor endowments tastes technology   all of the above   A great deal of international trade: is intra-industry trade involves differentiated products is based on monopolistic competition all of the above   The Heckscher-Ohlin and new trade theories explains most of the trade: among industrial countries between developed and developing countries in industrial goods all of the above   The theory that a nation exports those products for which a large domestic market exists was advanced by: Linder Vernon Leontief Ohlin   Intra-industry trade takes place: because products are homogeneous in order to take advantage of economies of scale because perfect competition is the prevalent form of market organization all of the above   If a nation exports twice as much of a differentiated product that it imports, its intra- industry (T) index is equal to: a

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12. Transport costs:

1. increase the price in the importing country
2. reduces the price in the exporting country
3. both of the above
4. neither a nor b

13. Transport costs can be analyzed:

1. with demand and supply curves
2. production frontiers
3. offer curves
4. all of the above

14. The share of transport costs will fall less heavily on the nation:

1. with the more elastic demand and supply of the traded commodity
2. with the less elastic demand and supply of the traded commodity
3. exporting agricultural products
4. with the largest domestic market

15. A footloose industry is one in which the product:

1. gains weight in processing
2. loses weight in processing
3. both of the above
4. neither a nor b.