Question : 19.3   The Sources of Comparative Advantage 1) The quantity and quality : 1381275

19.3   The Sources of Comparative Advantage

1) The quantity and quality of labor, land, and natural resources of a country are its

A) capital stock.

B) productive capacity.

C) factor endowments.

D) economic potential.

2) The software industry depends on highly trained workers, who are abundantly available in Country A. The heavy equipment industry depends on the availability of a large stock of physical capital with which Country B is well endowed. According to Heckscher-Ohlin theorem

A) Country A should export heavy equipment.

B) Country B should import software.

C) Country B should import heavy equipment.

D) Country A should import software.

3) A significant portion of actual world trade patterns results from

A) different factor endowments between countries.

B) the different tastes and preferences of people in different countries.

C) the industrial policies of governments.

D) different sizes of the countries.

4) An example of an acquired comparative advantage is

A) the United States producing more agricultural products than other countries because land is more abundant in the United States than in other countries.

B) United States consumers buying television sets produced in Japan because Japanese companies have a reputation for producing a higher-quality TV than those produced in the United States.

C) United States companies selling to other countries chemical products that cannot be sold in the United States.

D) the United States purchasing coconuts from other countries, because they cannot be produced in the United States.

5) An example of acquired comparative advantage is that

A) the United States imports coffee beans because coffee beans cannot be grown in the United States.

B) some U.S. consumers prefer German cars over American cars because German cars have a reputation for being very safe.

C) China specializes in the production of labor-intensive goods because of the amount of labor available in the country relative to capital.

D) the U.S. government provides a subsidy to firms that are trying to increase their exports to other countries.

6) Which of the following phenomena CANNOT be explained by the simple comparative advantage theory?

A) A country that does not have much farmland tends to import agricultural goods.

B) A country with a lot of skilled labor tends to export highly technical goods.

C) A country tends to export the goods that it can produce at a lower opportunity cost.

D) A country imports and exports the same goods.

7) The Heckscher-Ohlin theorem looks to ________ to explain trade flows.

A) relative factor endowments

B) the existence of trade barriers

C) acquired comparative advantage

D) the differences in preferences among consumers

8) A country with a lot of human capital is likely to have a comparative advantage in highly technical goods.

9) The Heckscher-Ohlin theorem says that a country is likely to have a comparative advantage in a labor intensive product, if it has a large labor supply.

10) The Heckscher-Ohlin theorem explains why the U.S. both imports and exports cars.

11) Acquired comparative advantage come from factor endowments.