Which theory predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce?

Multiple Choice

• mercantilism

• theory of absolute advantage

• Heckscher-Ohlin theory

• theory of comparative advantage

• Samuelson's critique

• Bethany works for a company that makes sports socks. Unlike many smaller companies, Bethanys company ships out such large quantities of sports socks that their unit cost is less than half of the competition. What does this company benefit from?

  Multiple Choice

• mercantilism

• diminishing returns

• economies of scale

• product life-cycle

• JIT inventory

• According to Vernon, what eliminates the need for pioneering U.S. firms to look for low-cost production sites in other countries?

  Multiple Choice

• The uncertainties and risks inherent in introducing new products are very low.

• The demand for most new products tends to be based mainly on price.

• U.S. labor costs are relatively low compared to global standards.

• Firms can charge relatively high prices for new products.

• The production of innovative products in other advanced countries limits the potential for exports from the United States.

• One of the suggestions of new trade theory is that

  Multiple Choice

• differences in technology leads to differences in productivity, which in turn, drives international trade patterns.

• nations may benefit from trade irrespective of resource endowments or technology.

• the demand for most new products tends to be based on nonprice factors.

• globally dispersed production reduces the production costs of mature products.

• comparative advantage does not arrive from a difference in factor endowments but from a difference in productivity.