Question

1.The following statements about intra-industry trade are true, except one. Which one?

a. It reflects the trade in similar goods between countries.

b. It results from economies of scale.

c. It results from comparative advantage.

d. It does not affect income distribution as much as inter-industry trade.

2.Consider the following diagram. P is the autarky production point, and C is the free trade consumption point. P₁ represents autarky prices and P₂ represents free-trade prices.




In this case, the autarky consumption point is ____, and the free trade production point is ______.

good Y good x

a. P; R

b. G; R

c. P; G

d. G; P

3.As a nation increases its production of exports, demand for specific or fixed factors (such as capital and land) will

a. rise.

b. fall.

c. remain the same.

d. decrease, but only slightly.

4.Consider an offer curve graph with country X's exports on the horizontal axis and country Y's exports on the vertical axis. Which of the following events will pivot country X's offer curve to the right?

a. country Y imposes a tariff

b. decreased demand for Y's products by X

c. increased demand for X's products by Y

d. reduced tariff on Y's products by X

Answer 1

Q1)option C)

Intra industry trade doesn't result from comparative advantage.

2) option A)

consumption point in autarky always equals the production point, hence it's P

Production point is always on PPF, so it's R

3) option A)

to increase exports , more specific factors are needed,hence their demand rise

4) option. D)

If Tariff on Y's products are reduced, then exports of Y will rise,

Thus any level of exports of X, exports of Y will also rise

So, offer curve of X will shift to right.