Summary Ecs3702 Assessment 1, 2, and 4

Adam Smith believed that countries gained from trade by specializing in the production of
the product of their absolute advantage. As a result,




a.
The gains from specialization is the increased input and maximized individual welfare


b.
Specialization leads to increased output of both commodities, and the gains from
specialization is the increased output and maximized individual welfare




c.
Specialization leads to decreased output of both commodities, and the loss from
specialization is the loss of output




d.
Specialization leads to increased output of both commodities, and the gains from
specialization is only the maximized individual welfare



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The correct answer is:
Specialization leads to increased output of both commodities, and the gains from
specialization is the increased output and maximized individual welfare

Question 2
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Question text

,Which of the following statements is correct?




a.
Intra-industry trade refers to trade in differentiated products of different industries.




b.
Inter-industry trade refers to trade in differentiated products and intra-industry trade refers
to trade in different products.




c.
Intra-industry trade is comparative advantage and differences in factor endowments, while
the H-O model is based on product differentiation and economies of scale.




d.
Intra-industry trade tends to be larger among industrial economies of similar size and factor
proportions.



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The correct answer is:
Intra-industry trade tends to be larger among industrial economies of similar size and factor
proportions.

Question 3
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,Question text
The following statements are correct, except




a.
intra-industry trade arises to take advantage of economies of scale in production




b.
consumers benefit from an increased variety of products because of intra-industry trade




c.
intra-industry trade is based on natural comparative advantage


d.
intra-industry trade is based on product differentiation and economies of scale



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The correct answer is:
intra-industry trade is based on natural comparative advantage

Question 4
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Question text
Use the hypothetical scenario below to answer the questions that follow
Output Togo Mali

, Cheese (ton/hr) 60 10
Aircrafts (Units/hr) 40 20


If Togo exchanges 60C for 60A with Mali, the range of mutually beneficial trade is




a.
20A<120C<120A




b.
40A<60C<120A




c.
60A<60C<120A




d.
60A<60C<120C



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The correct answer is:
40A<60C<120A

Question 5
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