1. External economies of scale arise when the cost per unit A. rises as the industry grows larger. B. falls as the industry grows larger rises as the average firm grows larger. C. falls as the average firm grows larger. D. remains constant. E. None of the above. Answer: B 2. Internal economies of scale arise when the cost per unit A. rises as the industry grows larger. B. falls as the industry grows larger. C. rises as the average firm grows larger. D. falls as the average firm grows larger. E. None of the above. Answer: D 3. External economies of scale A. ay be associated with a perfectly competitive industry. B. cannot be associated with a perfectly competitive industry. C. tends to result in one huge monopoly. D. tends to result in large profits for each firm. E. None of the above. Answer: A 4. Internal economies of scale A. may be associated with a perfectly competitive industry. B. cannot be associated with a perfectly competitive industry. C. are associated only with sophisticated products such as aircraft. D. cannot form the basis for international trade . E. None of the above. Answer: B 5. A monopolistic firm A. an sell as much as it wants for any price it determines in the market. B. cannot determine the price, which is determined by consumer demand. C. will never sell a product whose demand is inelastic at the quantity sold. D. cannot sell additional quantity unless it raises the price on each unit. E. None of the above. Answer: C 7 6. Monopolistic competition is associated with A. cut-throat price competition. B. product differentiation. C. explicit consideration at firm level of the feedback effects of other firms' pricing decisions. D. high profit margins. E. None of the above. Answer: B 29.
Two countries engaged in trade in products with no scale economies, produced under conditions of perfect competition, are likely to be engaged in A. monopolistic competition. B. inter-industry trade. C. intra-industry trade. D. Heckscher-Ohlin trade. E. None of the above. Answer: B 19. A monopoly firm engaged in international trade will A. equate average to local costs. B. equate marginal costs with foreign marginal revenues. C. equate marginal costs with the highest price the market will bear. D. equate marginal costs with marginal revenues in both domestic and in foreign markets. E. None of the above.
Answer: D 9. Where there are economies of scale, the scale of production possible in a country is constrained by A. the size of the country. B. the size of the trading partner's country. C. the size of the domestic market. D. the size of the domestic plus the foreign market. E. None of the above. Answer: D Brown field : ?? ??? ??? ???? ?? , ????? ???? Green field : ????? ?????? ??? ?? ??? ???? ???? ?? ?? ??? ?? 21. A firm in monopolistic competition A. earns positive monopoly profits because each sells a differentiated product. B. earns positive oligopoly profits because each firm sells a differentiated product.
C. earns zero economic profits because it is in perfectly or pure competition. D. earns zero economic profits because of free entry. E. None of the above. Answer: D 16. International trade based on scale economies is likely to be associated with A. Ricardian comparative advantage. B. comparative advantage associated with Heckscher-Ohlin factor- proportions. C. comparative advantage based on quality and service. D. comparative advantage based on diminishing returns. E. None of the above. Answer: E ---------------------------------------------Ch7---------------------------------------------- . The effective rate of protection measures A. the "true" ad valorum value of a tariff. B. the quota equivalent value of a tariff. C. the efficiency with which the tariff is collected at the customhouse. D. the protection given by the tariff to domestic value added. E. None of the above. Answer: D 1. Specific tariffs are A. import taxes stated in specific legal statutes. B. import taxes calculated as a fixed charge for each unit of imported goods. C. import taxes calculated as a fraction of the value of the imported goods. D. the same as import quotas. E. None of the above. Answer: B . Ad valorem tariffs are A. import taxes stated in ads in industry publications. B. import taxes calculated as a fixed charge for each unit of imported goods. A. import taxes calculated as a fraction of the value of the imported goods. B. the same as import quotas C. None of the above. Answer: C The main redistribution effect of a tariff is the transfer of income from A. domestic producers to domestic buyers. B. domestic buyers to domestic producers. C. domestic producers to domestic government. D. domestic government to domestic consumers. E. None of the above. Answer: B 21.
Which of the following policies permits a specified quantity of goods to be imported at one tariff rate and a higher tariff rate to imports above this quantity? A. Import tariff B. Voluntary exports restraint C. Tariff quota D. Ad valorum tariff E. None of the above. Answer: C 22. Should the home country be "large" relative to its trade partners, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the A. revenue effect plus redistribution effect. B. protective effect plus revenue effect. C. consumption effect plus redistribution effect.
D. protective distortion effect plus consumption distortion effect. E. None of the above. Answer: D An import quota: Is always more costly to a country than an import tariff. Has the same effects on welfare as an import tariff. Generates rents that might go to foreigners. Is always less costly to a country than an import tariff. ??? ????? ???? ->????????? ?? ???? ????? ->?? ? ???? ? ??? ?? -------------------------------Ch9------------------------------------------- 27. The imperfect capital market justification for infant industry promotion A. Assumes that new industries will tend to have low profits. B.
Assumes that infant industries will soon mature. C. Assumes that infant industries will be in products of comparative advantage. D. Assumes that banks can allocate resources efficiently. E. None of the above. Answer: A 2. Sophisticated theoretical arguments supporting import-substitution policies include A. Terms of trade effects. B. Scale economy arguments. C. Learning curve considerations. D. The problem of appropriability. E. None of the above. Answer: D 14. Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation? A. Export promotion.
B. Import substitution. C. International commodity agreements. D. Infant Industry promotion. E. None of the above. Answer: A 1. The infant industry argument was an important theoretical basis for A. Neo-colonialist theory of international exploitation. B. Import - substituting industrialization. C. Historiography of the industrial revolution in Western Europe. D. East-Asian miracle. E. None of the above. Answer: B 6. The wage differential theory which argued that shifting resources from agriculture to manufacturing entailed positive social benefits implied that A. Free trade policies would promote competitiveness. B.
Free trade policies would promote economic growth for both static and dynamic reasons. C. Protectionism was likely to lead to economic stagnation. D. Protectionism and import substitution was likely to promote economic growth. Answer: D 12. Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers, who thus can take over markets already established in the country? A. International commodity agreement. B. Export promotion. C. Multilateral contract. D. Import substitution. E. None of the above. Answer: D 18. Import substitution policies make use of
A. Tariffs that discourage goods from entering a country. B. Quotas applied to goods that are shipped abroad. C. Production subsidies granted to industries with comparative advantage. D. Tax breaks granted to industries with comparative advantage. E. None of the above. Answer: A 25. The infant industry argument is that A. Comparative advantage is irrelevant to economic growth B. Developing countries have a comparative advantage in agricultural goods. C. Developing countries have a comparative advantage in manufacturing. D. Developing countries have a potential comparative advantage in manufacturing. E. None of the above.
Answer: D 26. The infant industry argument calls for active government involvement A. Only if the government forecasts are accurate. B. Only if some market failure can be identified. C. Only if the industry is not one already dominated by industrial countries. D. Only if the industry has a high value added. E. None of the above. Answer: B 30. Import substitution policies have over time tended to involve all but the following A. Overlapping import quotas. B. Exchange controls. C. Domestic content rules. D. Simple tariffs. E. Multiple exchange rate schemes. Answer: D 35. The HPAE (High Performance Asian Economies) countries
A. Have all consistently supported free trade policies. B. Have all consistently maintained import-substitution policies. C. Have all consistently maintained non-biased efficient free capital markets . D. Have all maintained openness to international trade. E. None of the above. Answer: D ================================ch11========================== 1. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would Pakistan and India fall under? A.
Low-income B. Upper middle- income C. High-income D. Lower middle-income E. Pakistan and India fall between lower-middle and upper-middle Answer: A 2. While many developing countries have reformed their economies in order to imitate the success of the successful industrial economies, the process remains incomplete and most developing countries tend to be characterized by all of the following except: A. Seigniorage B. Control of capital movements by limiting foreign exchange transactions connected with trade in assets. C. Use of natural resources or agricultural commodities as an important share of exports.
D. A worse job of directing savings toward their most efficient investment uses. E. Reduced corruption and poverty due to limited underground markets. Answer: E 4. Compared with industrialized economies, most developing countries are poor in the factors of production essential to modern industry: These factors are A. capital and skilled labor B. capital and unskilled labor C. fertile land and unskilled labor D. fertile land and skilled labor E. water and capital Answer: A 5. The main factors that discourage investment in capital and skills in developing countries are: A. olitical instability, insecure property rights B. political instability, insecure property rights, misguided economic policies C. political instability, misguided economic policies D. political instability E. insecure property rights, misguided economic policies Answer: B 6. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would sub-Saharan Africa fall under? A. Low-income B. Upper middle- income C. High-income D. Lower middle-income E.
Sub-Saharan Africa falls between lower-middle and upper-middle Answer: A 7. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would mainland China fall under? A. Low-income B. Upper middle- income C. High-income D. Lower middle-income Answer: B 8. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies.
What category would the smaller Latin American and Caribbean countries fall under? A. Low-income B. Upper middle- income C. High-income D. Lower middle-income E. Smaller Latin American and Caribbean countries fall between low income and lower middle income Answer: D 9. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the Saudi Arabia falls under? A. Low-income B.
Upper middle- income C. High-income D. Lower middle-income E. Saudi Arabia falls between low income and lower middle income economies Answer: B 10. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the Turkey falls under? A. Low-income B. Upper middle- income C. High-income D. Lower middle-income E. Turkey falls between low income and lower middle income economies
Answer: B 11. The world’s economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle- income and high-income economies. What category would the Poland, Hungary, and the Czech and Slovak Republics fall under? A. Low-income B. Upper middle- income C. High-income D. Lower middle-income E. Poland, Hungary, and the Czech and Slovak Republics fall between low income and lower middle income economies Answer: B
