11) Two countries engaged in trade in products with no scale economies, produced under conditions of perfect competition, are likely to be engaged in
A) inter-industry trade.
B) monopolistic competition.
C) intra-industry trade.
D) Heckscher-Ohlin trade.
E) oligopolistic competition
12) Two countries engaged in trade in products with scale economies, produced under conditions of monopolistic competition, are likely to be engaged in
A) intra-industry trade.
B) price competition.
C) inter-industry trade.
D) Heckscher-Ohlinean trade.
E) immiserizing trade.
13) We often observe “pseudo-intra-industry trade” between the United States and Mexico. Actually, such trade is consistent with
A) comparative advantage associated with Heckscher-Ohlin model.
B) oligopolistic markets.
C) optimal tariff issues.
D) the Ricardian model of trade.
E) the specific factors model of trade.
14) Intra-industry trade will tend to dominate trade flows when which of the following exists?
A) small differences between relative country factor availabilities
B) large differences between relative country factor availabilities
C) homogeneous products that cannot be differentiated
D) constant cost industries
E) uneven distribution of abundant resources between two countries
15) Trade without serious income distribution effects is most likely to happen
A) in sophisticated manufactures trade between rich countries.
B) in simple manufactures trade between developing countries.
C) in sophisticated manufactures trade between rich and poor countries.
D) in agricultural trade between rich countries.
E) in labor-intensive industries like clothing.
16) Imagine scale economies were not only external to firms, but were also external to individual countries. That is, the larger the worldwide industry (regardless of where firms or plants are located), the cheaper would be the per-unit cost of production. Describe what world trade would look like in this case.
17) Refer to above figure. The monopolist can export as much as it likes of its steel at the world price of $5/ton. How much steel will the monopolist sell, and at what price?
18) Refer to above figure. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what?
19) Refer to above figure. While selling exports it would also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel would the firm sell domestically, and at what price?
20) If the market for products produced by firms in a monopolistically competitive industry becomes ________, then there will be ________ firms and each firm will produce ________ output and charge a ________ price.
A) smaller; fewer; less; higher
B) smaller; more; less; higher
C) smaller; more; less; lower
D) smaller; fewer; less; lower
E) smaller; fewer; more; higher
21) In an industry where firms experience internal scale economies, the long-run cost of production will depend on
A) the size of the market.
B) the size of the labor force.
C) whether the country engages in intra-industry trade.
D) individual firms’ fixed costs.
E) whether the country engages in inter-industry trade.
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