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International trade based on scale economies is likely to be associated with O A. the law of diminishing returns O B. Ricardian comparative advantage O C. absolute advantages due to resource abundance. O D. comparative advantages associated with Heckscher-Ohlin factor-proportions. O ENone of the above.
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28 When there are external economies of scale, an increase in the size of the market will: A) not affect the number of firms, but will lower the price per unit. B) decrease the number of firms and lower the price per unit. C) decrease the number of firms and raise the price per unit. D) increase the number of firms and raise the price per unit. E) increase the number of firms and lower the price per unit. -...
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Suppose there exists external economies of scale in an industry
located in country X. If country X moves from free trade to
autarky, it necessarily loses welfare. Explain in detail,
using any relevant diagrams, whether the above statement
is true, false or uncertain.
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Distinguish between the external return to scale and internal return to scale. How does the new trade theory of economic returns to scale differ from the traditional trade theories like Ricardian model, and Heckscher - Ohlin model? 3. 4. What is the Rybczynski theorem? How does theorem predict changes in factors usage in production and change in trading volume if there is an influx of immigrant?
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Suppose the production of clothing displays external economies
of scale. Suppose further that clothing production is a
labor-intensive process, and Country A is the most labor abundant
country in the world. If Country A does not export any clothing, is
the model of trade driven by external economies of scale incorrect,
or flawed? Why or why not?
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Production of a good is characterized by external scale
economies. Currently there is no trade in the product, and the
product is produced in two countries. If trade is opened in this
product, all production will be driven to occur in only one
country.
a. With free trade, why would production occur only in one
country?
b. Does opening trade bring gains to both countries?
Explain.
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International trade
ar 36 Internal economies of scale will by average cost when output is Pr A) increase; increas ed; a firm B) reduce; increased; the industry C) increase; increased; the industry D) reduce; reduce; the industry E) reduce; increased; a firm and 37 The learning curve describes the A) direct; unit cost; cumulative output B) inverse; educ ation; annual income C) inverse; unit cost; cumulative output D) direct; education; annual income E) direct; education; labor productivity , relationship between...
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47. If relatively capital-abundant country A opens trade with relatively labor-abundant country B and the trade takes place in accordance with the Heckscher-Ohlin theorem, what would be the consequence for factor prices (w/r) in the two countries? a. (w/r) rises in A and falls in B b. (w/r) rises in A and also rises in B c. (w/r) falls in A and rises in B d. (w/r) falls in A and also falls in B 48. Which one of the...
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These questions are about international trade.
I want to know the answers.
5 Heckscher-Ohlin Model. Suppose the production of cloth is labour intensive and the production of food is land intensive and suppose the United States (US) is labour abundant and Canada is land abundant. (a) Show how the US production possibility frontier (PPF) differs from the Canadian PPF. Briefly explain. (Use the general version of the PPF's) (b) Which country will have the lower price of cloth Pc relative...
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international trade: Internal Economies of
Scale
Problem 1 Suppose two countries, Canada and Japan are considering making computers. Firms in each individual country are identical and symmetric in their cost structures. It costs $5 Million to set up a computer production facility and then an addition $20 to make each computer individually, in either country. The price at which each firm can sell its computers is affected by the amount of firms it must compete with, and is given by...