ch 6 Flashcards
Which of the following puzzles in trade data is addressed by the New Trade Theory?
a) The large volume of trade between vastly different developed countries.
b) The scarcity of intraindustry trade among countries.
c) The significant amount of trade between similar developed countries.
d) The absence of comparative advantage in trade patterns.
C.
Which phenomenon in trade does the New Trade Theory help explain?
a) The dominance of interindustry trade between countries.
b) The absence of trade between developed and developing countries.
c) The presence of intraindustry trade, where countries import and export the same products simultaneously.
d) The complete reliance on absolute advantage in determining trade patterns.
C
What is a key assumption of the monopolistically competitive market for goods and services, as described in the New Trade Theory?
a) Businesses can only produce one variety of a product.
b) Businesses cannot charge higher prices based on product differentiation.
c) Businesses can produce different varieties of the same product and charge higher prices based on product differentiation.
d) Businesses are required to sell their products at the same price regardless of differentiation.
C
What additional assumption is made in the monopolistically competitive market for goods and services according to the New Trade Theory?
a) Consumers prefer limited variety in products.
b) Consumers do not care about product differentiation.
c) Businesses do not differentiate their products.
d) Consumers enjoy having access to a larger variety of products.
D
What characterizes internal economies of scale in production according to the New Trade Theory?
a) As production increases, average costs remain constant.
b) Average costs increase as production levels rise.
c) Average costs decline as production increases due to large, upfront fixed costs.
d) There are no economies of scale in production.
C
What happens to average costs as production increases according to internal economies of scale in the New Trade Theory?
a) Average costs remain constant.
b) Average costs fluctuate randomly.
c) Average costs increase as production increases.
d) Average costs decline as production increases.
D
What characterizes external economies of scale according to the New Trade Theory?
a) Businesses experience no benefits from locating together.
b) Businesses experience decreased productivity when located together.
c) Businesses benefit from locating together.
d) There is no relation between business location and productivity.
C
How does locating together benefit businesses according to the New Trade Theory?
a) It leads to a decrease in the pool of talented workers available.
b) It has no impact on the availability of talented workers.
c) It increases the pool of talented workers available as workers move to the area.
d) It results in a decrease in the quality of workers available.
C
a) It increases the costs of transportation for services businesses.
b) It has no impact on the costs of transportation for services businesses.
c) It decreases the pool of potential customers for services businesses.
d) It reduces the costs of transportation for services businesses as they can access necessary services in the same area.
D
How does locating together benefit businesses according to the New Trade Theory?
a) It increases transportation costs for needed resources.
b) It has no impact on transportation costs for needed resources.
c) It decreases the availability of needed resources.
d) It reduces transportation costs for needed resources.
D
What is the concept of industrial clusters, as described in the New Trade Theory?
a) Businesses of different types located in various cities or regions.
b) Businesses of the same type dispersed across multiple cities or regions.
c) Many businesses of the same type located in a single city or region.
d) A single business dominating an entire city or region.
C
What factor is attributed to the exact location of industrial clusters within countries, according to the New Trade Theory?
a) Comparative advantage.
b) Strategic government planning.
c) Historical accident.
d) Market demand fluctuations.
C
What explanation does the New Trade Theory provide for the large amount of trade between similar developed countries?
a) Different countries have different industrial clusters of products, and countries must trade with each other to get a larger variety of products.
b) Different countries have similar industrial clusters of products, and countries must trade with each other to compete.
c) Different countries have identical industrial clusters of products, and countries must trade with each other to specialize.
d) Different countries have diverse industrial clusters of products, and countries must trade with each other to control markets.
A
What benefit do countries achieve by trading with each other according to the New Trade Theory?
a) Increased average costs due to specialization.
b) Decreased variety of products at lower prices.
c) Access to economies of scale, leading to lower average costs and a wider variety of products at lower prices.
d) Complete self-sufficiency in production, eliminating the need for trade.
C
Scale economies are said to be present when:
a. an increase in output leads to an increase in average cost.
b. an increase in output has no impact on average cost.
c. an increase in output leads to a decrease in average cost.
d. there is a single firm in an industry
C
