ECON 335 MIDTERM AND FINAL EXAM COMPLETE SET
Intraindustry trade refers to - ANSWER: International trade of products made within
the same industry
Intraindustry trade is characterized by what 2 features of the industry and market? -
ANSWER: 1. Economies of scale
2. Differentiated products
One reason that a large share of the trade between high-income industrial
economies is intraindustry trade because... - ANSWER: it allows firms to take
advantage of internal economies of scale.
Strategic trade policy is concerned with - ANSWER: capturing excess profits from
foreign producers
Which of the following is NOT correct - ANSWER: a)Choosing the industry to target
b)Knowing the optimum amount of resources to provide the targeted industry
c)The encouragement of rent seeking by firms in other industries
d)All of the above are problems
Two areas where the US maintains considerable industrial support are - ANSWER:
agriculture and defense
Which of the following is NOT true about the Grubel-Lloyd index given by the
equation - ANSWER: If either X<M or M<X, then this necessarily implies that GL>1
An internal economies of scale is defined as - ANSWER: one with falling costs over a
relatively large range of output
Which is TRUE about monopolistic competition? - ANSWER: It is competition among
many firms producing similar but differentiated products
T/F: Suppose that by 1999, the US exported $17.3 billion of motor vehicle parts and
imported $34.2 billion of motor vehicle parts. If so, the Grubel-Lloyd index in this
industry was 67.18% - ANSWER: TRUE
Which of the following is TRUE about intraindustry trade? - ANSWER: a)economies of
scale allow firms to enjoy lower avg. costs
b)it creates gains from trade
c)it may involve heightened competition and lower prices for consumers
d)it increases consumer choice
Is intraindustry trade happening due to comparative advantage? - ANSWER: NO
The Ricardian Model of trade is based on - ANSWER: Relative productivity
, Market failures occur whenever... - ANSWER: a)private returns may be greater than
social returns
b)social returns may be greater than private returns
c)the free market produces less than what is socially optimal
d)monopolies exist in a market
e)all of the above
Under some circumstances, trade could stifle the development of new industries and
reduce global efficiency. All of the following describe conditions that could lead to
that situation: - ANSWER: a) an initial head start gives a scale advantage to already
existing firms in one country.
b) a location has a better-developed linkage between suppliers and producers, giving
it a cost advantage
c) a historical accident, such as the shifting of airplane production to the US to avoid
WWII bombings, causes firms in one location to have a competitive adv.
Would diseconomies of scale make it impossible for new firms to enter the market? -
ANSWER: NO
Would economies of scale make it difficult for new firms to enter the market? -
ANSWER: YES
Which of the following is a reason social returns might be greater than private
returns? - ANSWER: a)knowledge spillovers
c)spillovers from research and development
d)capital market imperfections
e)allq
Suppose that by 1999, the US exported $17.3 billion of motor vehicle parts and
imported $34.2 billion of motor vehicle parts. If so, the Grubel-Lloyd index is -
ANSWER: 67.18%
Which of the following is true? - ANSWER: a)economies of scale may be internal,
external, or both.
b)with internal economies of scale, the gains from trade include a wider selection of
consumer choices and lower prices.
c)with external economies of scale, the gains from trade are less certain since, in
theory, they can lock in production in a less efficient country and prevent the
development of production in a more efficient country.
d)all of the above
The following are all true - ANSWER: a)most of the maquiladora industry is locate in
the states of Mexico that border the US.
b)the maquiladora industry accounts for more than half of Mexico's exports today.
d)growth in Mexico's northern border cities, such as TJ and Cd. Juarez, took off
almost a decade before NAFTA because of the maquiladora industry
Intraindustry trade refers to - ANSWER: International trade of products made within
the same industry
Intraindustry trade is characterized by what 2 features of the industry and market? -
ANSWER: 1. Economies of scale
2. Differentiated products
One reason that a large share of the trade between high-income industrial
economies is intraindustry trade because... - ANSWER: it allows firms to take
advantage of internal economies of scale.
Strategic trade policy is concerned with - ANSWER: capturing excess profits from
foreign producers
Which of the following is NOT correct - ANSWER: a)Choosing the industry to target
b)Knowing the optimum amount of resources to provide the targeted industry
c)The encouragement of rent seeking by firms in other industries
d)All of the above are problems
Two areas where the US maintains considerable industrial support are - ANSWER:
agriculture and defense
Which of the following is NOT true about the Grubel-Lloyd index given by the
equation - ANSWER: If either X<M or M<X, then this necessarily implies that GL>1
An internal economies of scale is defined as - ANSWER: one with falling costs over a
relatively large range of output
Which is TRUE about monopolistic competition? - ANSWER: It is competition among
many firms producing similar but differentiated products
T/F: Suppose that by 1999, the US exported $17.3 billion of motor vehicle parts and
imported $34.2 billion of motor vehicle parts. If so, the Grubel-Lloyd index in this
industry was 67.18% - ANSWER: TRUE
Which of the following is TRUE about intraindustry trade? - ANSWER: a)economies of
scale allow firms to enjoy lower avg. costs
b)it creates gains from trade
c)it may involve heightened competition and lower prices for consumers
d)it increases consumer choice
Is intraindustry trade happening due to comparative advantage? - ANSWER: NO
The Ricardian Model of trade is based on - ANSWER: Relative productivity
, Market failures occur whenever... - ANSWER: a)private returns may be greater than
social returns
b)social returns may be greater than private returns
c)the free market produces less than what is socially optimal
d)monopolies exist in a market
e)all of the above
Under some circumstances, trade could stifle the development of new industries and
reduce global efficiency. All of the following describe conditions that could lead to
that situation: - ANSWER: a) an initial head start gives a scale advantage to already
existing firms in one country.
b) a location has a better-developed linkage between suppliers and producers, giving
it a cost advantage
c) a historical accident, such as the shifting of airplane production to the US to avoid
WWII bombings, causes firms in one location to have a competitive adv.
Would diseconomies of scale make it impossible for new firms to enter the market? -
ANSWER: NO
Would economies of scale make it difficult for new firms to enter the market? -
ANSWER: YES
Which of the following is a reason social returns might be greater than private
returns? - ANSWER: a)knowledge spillovers
c)spillovers from research and development
d)capital market imperfections
e)allq
Suppose that by 1999, the US exported $17.3 billion of motor vehicle parts and
imported $34.2 billion of motor vehicle parts. If so, the Grubel-Lloyd index is -
ANSWER: 67.18%
Which of the following is true? - ANSWER: a)economies of scale may be internal,
external, or both.
b)with internal economies of scale, the gains from trade include a wider selection of
consumer choices and lower prices.
c)with external economies of scale, the gains from trade are less certain since, in
theory, they can lock in production in a less efficient country and prevent the
development of production in a more efficient country.
d)all of the above
The following are all true - ANSWER: a)most of the maquiladora industry is locate in
the states of Mexico that border the US.
b)the maquiladora industry accounts for more than half of Mexico's exports today.
d)growth in Mexico's northern border cities, such as TJ and Cd. Juarez, took off
almost a decade before NAFTA because of the maquiladora industry
