Sources of Comparative Advantage

A. abundant
B. scarce
C. neither
D. can’t tell without more information

A. The prices of trade goods to be lower than when there are no transportation costs
B. specialization to stop when the production costs of the trading partners equalize
C. The volume of trade to be less than when there are no transportation costs
D. The gains from trade to be greater than when there are no transportation costs

A. pursue free trade as a policy that leads to maximum global efficiency
B. grant subsidies to firms offering potential comparative advantage
C. provide loans to domestic workers in exporting industries
D. increase interest rates on loans made to firms in import-competing industries

A. everyone automatically gains from trade
B. The gainers from trade outnumber the losers from trade
C. The scarce factor necessarily gains from trade
D. None of the above

A. U.S exports are capital intensive relative to U.S imports
B. U.S imports are labor intensive relative to U.S exports
C. U.S exports are neither labor nor capital intensive
D. None of the above

A. tastes and preferences
B. technology levels
C. factor indowments
D. Both A and B

A. countries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other
B. countries with tend to specialize but not completely in their comparative advantage good
C. reciprocal demand leads to an equilibrium terms of trade by inducing change in both demand and supply
D. All of the above

A. supply condition only
B. demand conditions only
C. supply and demand conditions
D. can’t tell without more information

A. research and development subsidies
B. loan guarantees
C. low interest rate loans
D. All of the above

A. static, short run trade theory
B. dynamic long run trade theory
C. zero-sum theory of trade
D. negative-sum theory of trade