A. Absolute advantage determines the distribution of the gains from trade
B. Comparative advantage determines the distribution of the gains from trade
C. The division of labor is limited by the size of the world market
D. A country exports goods for which its resource endowments are most suited
Related Mcqs:
- According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will ?
A. Devote excessive amounts of resources to agricultural production
B. Devote insufficient amounts of resources to agricultural production
C. Export products that are land-intensive
D. Import products that are land-intensive - According to the Heckscher-Ohlin model the source of comparative advantage is a country’s ?
A. technology
B. advertising
C. factor endowments
D. both (a) and (c) - One of the predictions of the Heckscher-Ohlin model is that ?
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 - According to the Heckscher-Ohlin model ?
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 - The Heckscher-Ohl in model rules out the classical model’s basis for trade by assuming that _________ is (are) identical between countries?
A. factor endowments
B. factor intensities
C. technology
D. opportunity costs - The Heckscher-Ohlin theory explains comparative advantage as the result of differences in countries ?
A. Economies of large-scale production
B. Relative abundance of various resources
C. Relative costs of labor
D. Research and development expenditures - The Heckscher-Ohlin theorem states that a country will have comparative advantage in the good whose production in relatively intensive in the with which the country is relatively abundant ?
A. tastes
B. technology
C. factor/resource
D. opportunity cost - When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ?
A. trade diversion
B. trade channeling
C. trade creation and trade diversion
D. trade creation - Members of the EU find that trade creation|| is fostered when their economies are ?
A. highly competitive
B. highly noncompetitive
C. small in economic importance
D. geographically distant - The factor endowment model of international trade was developed by ?
A. Adam Smith
B. David Ricardo
C. John Stuart Mill
D. Eli Heckscher and Bertil Ohlin
