Question 1

The essential characteristic of a competitive firm is that:

Accepted Answer

A)   it is a price maker.
B)   it is a price taker.
C)   the market demand for the product does not exist.
D)   firms produce differentiated products.
E)   it is the only producer.F) B) and E)
G) A) and E)

Question 2

The difference between a Rolls Royce and a Chevrolet is an example of vertical product differentiation.

Accepted Answer

A) True 
 B)False

Question 3

Intra-industry trade can be explained in part by economies of scale.

Accepted Answer

A) True 
 B)False

Question 4

The simultaneous export and import of beer by the U.S. is an example of:

Accepted Answer

A)   interindustry trade.
B)   perfect competition.
C)   constant returns to scale.
D)   intra-industry trade.
E)   comparative advantage trade.F) B) and E)
G) A) and E)

Question 5

If a country is importing 20 units of a product and exporting 10 units, then the IIT index would be approximately:

Accepted Answer

A)   0.0.
B)   1.0.
C)   0.67.
D)   0.1.
E)   2.48.F) A) and C)
G) B) and E)

Question 6

Economies of scale in differentiated products can lead to IIT.

Accepted Answer

A) True 
 B)False

Question 7

Interindustry trade cannot be explained by the factor-proportions theory.

Accepted Answer

A) True 
 B)False

Question 8

Intra-industry trade can be defined as trade between countries in very dissimilar goods, e.g., steel and wheat.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would be an example of intra-industry trade based on overlapping demands?

Accepted Answer

A)   bourbon
B)   beer
C)   Volvos
D)   movies
E)   all of the aboveF) A) and B)
G) A) and C)

Question 10

According to Linder, a country would tend to export goods to countries with very different per capita incomes.

Accepted Answer

A) True 
 B)False

Question 11

A decline in average costs caused by the expansion of a firm is a form of:

Accepted Answer

A)   external economies of scale.
B)   internal economies of scale.
C)   expansionist economies of scale.
D)   fixed economies of scale.
E)   final economies of scale.F) A) and C)
G) A) and D)

Question 12

Firms in imperfectly competitive markets:

Accepted Answer

A)   are not able to influence the price of the product.
B)   can influence the price of the product by changing the quantity offered for sale.
C)   are not able to differentiate the products within the industry.
D)   have alliances with foreign countries to avoid double taxation.
E)   have absolutely no market power.F) B) and E)
G) A) and D)

Question 13

If the intra-industry trade index is close to one for a particular industry this means that there is a lot of intra-industry trade in that industry.

Accepted Answer

A) True 
 B)False

Question 14

If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intra-industry trade would be:

Accepted Answer

A)   0.25.
B)   0.75.
C)   0.50.
D)   1.00.
E)   1.50.F) B) and E)
G) A) and C) C

Question 15

A large amount of international trade:

Accepted Answer

A)   involves differentiated products.
B)   is intra-industry trade.
C)   is based on imperfect competition.
D)   All of the above
E)   None of the aboveF) All of the above
G) C) and E) D

Question 16

Interindustry trade is the situation where a country is both importing and exporting the same product.

Accepted Answer

A) True 
 B)False

Question 17

Intra-industry trade is not an effective method of reducing the monopoly power of domestic firms.

Accepted Answer

A) True 
 B)False  False

Question 18

In a high-income country which of the following statements is true with respect to the product cycle?

Accepted Answer

A)   The country would tend to export low-priced versions of goods.
B)   The country would tend to import high-priced versions of goods.
C)   R&D for high-priced versions of goods would be done in low-income countries where labor is cheaper.
D)   The country would tend to import low-priced versions and export high- priced versions of goods.
E)   It is unrelated to economies of scale.F) All of the above
G) B) and E)

Question 19

The minority taste for a particular version of a product in a country has nothing to do with intra-industry trade.

Accepted Answer

A) True 
 B)False

Question 20

A problem associated with measuring intra-industry trade is:

Accepted Answer

A)   the industry or product groups are well defined.
B)   the industries do not have the data to measure trade.
C)   the trade is two-way trade.
D)   the products are not counted as exports or imports.
E)   entrepot trade.F) B) and E)
G) A) and C)

Exam 5: Intra-Industry Trade

The essential characteristic of a competitive firm is that:

Correct AnswerverifiedShow Answer

The difference between a Rolls Royce and a Chevrolet is an example of vertical product differentiation.

Correct AnswerverifiedShow Answer

Intra-industry trade can be explained in part by economies of scale.

Correct AnswerverifiedShow Answer

The simultaneous export and import of beer by the U.S. is an example of:

Correct AnswerverifiedShow Answer

If a country is importing 20 units of a product and exporting 10 units, then the IIT index would be approximately:

Correct AnswerverifiedShow Answer

Economies of scale in differentiated products can lead to IIT.

Correct AnswerverifiedShow Answer

Interindustry trade cannot be explained by the factor-proportions theory.

Correct AnswerverifiedShow Answer

Intra-industry trade can be defined as trade between countries in very dissimilar goods, e.g., steel and wheat.

Correct AnswerverifiedShow Answer

Which of the following would be an example of intra-industry trade based on overlapping demands?

Correct AnswerverifiedShow Answer

According to Linder, a country would tend to export goods to countries with very different per capita incomes.

Correct AnswerverifiedShow Answer

A decline in average costs caused by the expansion of a firm is a form of:

Correct AnswerverifiedShow Answer

Firms in imperfectly competitive markets:

Correct AnswerverifiedShow Answer

If the intra-industry trade index is close to one for a particular industry this means that there is a lot of intra-industry trade in that industry.

Correct AnswerverifiedShow Answer

If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intra-industry trade would be:

Correct AnswerverifiedC

A large amount of international trade:

Correct AnswerverifiedD

Interindustry trade is the situation where a country is both importing and exporting the same product.

Correct AnswerverifiedShow Answer

Intra-industry trade is not an effective method of reducing the monopoly power of domestic firms.

Correct AnswerverifiedFalse

In a high-income country which of the following statements is true with respect to the product cycle?

Correct AnswerverifiedShow Answer

The minority taste for a particular version of a product in a country has nothing to do with intra-industry trade.

Correct AnswerverifiedShow Answer

A problem associated with measuring intra-industry trade is:

Correct AnswerverifiedShow Answer

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C

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D

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False

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