Foreıgn Trade Ara 8. Deneme Sınavı
Toplam 20 Soru1.Soru
- Two countries, two commodities and two factors of production
- Technology is the same in both countries.
- Both of the countries are labor-abundant.
- One of the commodities is labor-intensive and the other one is capital-intensive in both countries.
Which of the assumptions above are among the weaknesses of the Heckscher- Ohlin Theory?
I and III |
II and IV |
I, II and III |
I, II and IV |
II, III and IV |
The following assumptions indicate the weaknesses of the Heckscher- Ohlin Theory:
- Two countries, two commodities and two factors of production
- Technology is the same in both countries.
- One of the commodities is labor-intensive and the other one is capital-intensive in both countries.
- One of the countries is labor-abundant and the other one is capital-abundant (not both of the countries are labor-abundant).
The correct answer is D.
2.Soru
................... which is constructed upon both the Theory of Absolute Advantage and the Theory of Comparative Advantage postulates that the basis of the comparative advantage is the labor theory of value.
Which choice correctly completes this sentence?
Classical Trade Theory, |
Labor theory of value, |
Neo-Classical Trade Theory, |
Theory of Absolute Advantage, |
Theory of Comparative Advantage, |
Classical Trade Theory which is constructed upon both the Theory of Absolute Advantage and the Theory of Comparative Advantage postulates that the basis of the comparative advantage is the labor theory of value. The correct answer is " A " .
3.Soru
Which of the simplifying assumptions of the Heckscher-Ohlin Theory is the assumption that both countries are continuing to produce both commodities?
Demand preferences are the same in both countries. |
There is perfect competition in the commodities and the factor markets in both countries. |
There is full employment in all resources in both of the trading countries. |
There is incomplete specialization in the production in both countries. |
There is free trade between the trading countries. |
The assumption that ‘There is incomplete specialization in the production in both countries.’ postulates that both countries are continuing to produce both commodities. Countries trade with each other with respect to the comparative advantage under free trade. Each country specializes in the production of the commodity in which it has comparative advantage but does not end up to produce the other commodity in which it has a comparative disadvantage.
4.Soru
Which one of the following assumptions of Heckscher-Ohlin Theory acknowledges that there is no factor-intensity reversal?
Two countries, two commodities and two factors of production |
One of the commodities is labor-intensive and the other one is capital-intensive in both countries |
One of the countries is labor-abundant and the other one is capital-abundant |
Technology is the same in both countries |
There is constant returns to scale in the production of both commodities |
One of the commodities is labor-intensive and the other one is capital-intensive in both countries: This assumption acknowledges that there is no factor-intensity reversal. However, as we have already discussed in the previous chapter, factorintensity reversal is a factor that makes the Heckscher-Ohlin Theory invalid. Even though the studies show that the factor-intensity reversal rarely occurs, it is still an element that might impede the Heckscher-Ohlin Theory.
5.Soru
Which of the following measures the ease with which one factor of production can be substituted for another within the production as the relative price of the factor declines?
Factor-Intensity Reversal |
Elasticity of substitution of factors of production. |
The Specific Factors Model |
Leontief Paradox |
Hecskcher-Ohlin Theory |
Elasticity of substitution of factors of production measures the ease with which one factor of production can be substituted for another within the production as the relative price of the factor declines. For example; suppose that the elasticity of substitution of labor for capital is much greater in the production of corn than in the production of wheel. Thus, it is much easier to substitute labor for capital in the production of corn than in the production of wheel.
6.Soru
Which of the followings refers to the goods or services that are bought from a foreign country?
Trade surplus. |
Exports. |
Imports. |
Balance of trade. |
Trade deficit. |
Defining the key terms and concepts has to start with the term volume of trade. Volume of trade gives the total amount of imports and exports. Imports are the goods or services that are bought from a foreign country while exports refer to the goods or services that are sold to a foreign country. Therefore, the correct option is C.
7.Soru
Which one below is an acquired advantage?
Ceramics of Kütahya |
Coffee of Brasil |
Petroleum of Saudi Arabia |
Hazelnut of Turkey |
Corn of the USA |
Acquired Advantage; A country’s advantage in terms of products. The advantage gained in product technology is that a country produces unique products that can be easily distinguished from its competitors. Ex.; Danish silver-cutlery sets, Kütahya ceramics and porcelain.
8.Soru
Which of the following choices correctly defines the concept of " income inelastic demand "?
It refers to the situation when the increase in the demand for a certain commod-ity is smaller than the increase in income. |
It explains the condition that the increase in the demand for a certain commod-ity is greater than the increase in income. |
It displays that income elasticity of demand can appear in three forms. |
It refers to the circumstance when the demand for a certain commodity decreas-es while the income increases. |
It postulates that countries with similar income levels have more or less identical demand preferences. |
Income inelastic demand: It refers to the situation when the increase in the demand for a certain commodity is smaller than the increase in income. Food and clothing are the main examples of income inelastic demand. Normal goods have income inelastic demand. The correct answer is " A ".
9.Soru
Which of the followings refers to the situtaion when the cost of producing a unit of commodity decreases as its output rate increases?
Positive economies of scale. |
Non-tariff restrictions. |
Pattern of trade. |
Foreign exchange market. |
Negative economies of scale. |
Positive economies of scale exist when the cost of producing a unit of commodity decreases as its output rate increases. Therefore, the correct option is A.
10.Soru
Which of the following statement correct about the income terms of trade?
It gives the nation’s export-based capacity to import and an increase in it is a negative sign with respect to its economic development, |
It gives the nation’s export-based capacity to import and an increase in it is a positive sign with respect to its economic development, |
It gives the nation’s import-based capacity to export and an increase in it is a positive sign with respect to its economic development, |
It gives the nation’s import-based capacity to export and an increase in it is a negative sign with respect to its economic |
It gives the nation’s productive capacity and an increase in it is a positive sign with respect to its economic development, |
KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE-Income terms of trade
Apart from the commodity or net barter terms of trade which is examined above, there are income terms of trade that are mostly used in studies related with economic development. Income terms of trade gives the nation’s export-based capacity to import. In spite of a deterioration in the commodity terms of trade of the nation, an increase in its income terms of trade is a positive sign with respect to its economic development.
11.Soru
Which of the following is an example of acquired advantage?
Saudi Arabia-Petroleum |
Brazil-Coffee |
Turkey-Hazelnut |
Norway-Fish |
Kütahya ceramics and porcelain |
Acquired Advantage; A country’s advantage in terms of products. The advantage gained in product technology is that a country produces unique products that can be easily distinguished from its competitors. Ex.; Danish silver-cutlery sets, Kütahya ceramics and porcelain.
12.Soru
How would you define the term " Indifference curve "?
It gives the total supply of a country. |
It displays the production possibilities frontier of Sunland. |
It refers to an exchange, giving up a thing to get something else. |
It produces at any point inside the production possibilities frontier. |
It represents the total demand of a country. |
Indifference curve (I)
It represents the total demand of a country. The correct answer is " E ".
13.Soru
Which of the following assumptions does not indicate one of the weaknesses of the Heckscher-Ohlin Theory?
There is free trade between the trading countries. |
Demand preferences are different in both countries. |
There is incomplete specialization in the production in both countries. |
There is constant returns to scale in the production of both commodities. |
There is perfect competition in the commodities and the factor markets in both countries. |
The following assumptions indicate the weaknesses of the Heckscher-Ohlin Theory:
- There is free trade between the trading countries.
- There is incomplete specialization in the production in both countries.
- There is constant returns to scale in the production of both commodities.
- There is perfect competition in the commodities and the factor markets in both countries.
The Heckscher-Ohlin Theory assumes that demand preferences are the same (not different) in both countries. The correct answer is B.
14.Soru
Considering the terms of trade, which of the followings refers to a deterioration in the terms of trade?
Trade surplus. |
Increase. |
Income. |
Decrease. |
Commodity. |
The decrease in the terms of trade often refers to a deterioration in the terms of trade. Therefore, the correct option is D.
15.Soru
Which trade cost includes collecting information about the demand preferences of the consumers, searching for new trade partners and regulations about new trading countries?
Transports costs |
Logistic costs |
Border crossing costs |
Information and transaction costs |
Trade restriction costs |
Information and transaction costs include collecting information about the demand preferences of the consumers, searching for new trade partners and regulations about new trading countries. It also includes the contracting cost. The correct answer is "D".
16.Soru
"Government tax and subsidy programs alter the prices charged for goods and services. These changes can be sufficient to generate advantages in production of certain products. In these circumstances, advantageous trade may arise solely due to differences in government policies across countries."
Which one of the basic reasons below is directly related with the statment above?
Differences in Technology: |
Differences in Resource Endowments |
Existence of Government Policies |
Existence of Economies of Scale in Production |
Differences in Demand |
Existence of Government Policies: Government tax and subsidy programs alter the prices charged for goods and services. These changes can be sufficient to generate advantages in production of certain products. In these circumstances, advantageous trade may arise solely due to differences in government policies across countries.
17.Soru
In which of the following stages of the Product Cycle Model does the innovating country protect itself from imitators by the use of patent rights?
Product-standardization stage |
New-product stage |
Product-maturity stage |
Product-growth stage |
Product-decline stage |
In the product-growth stage, production is performed only in the innovating country. Thus, the innovating country has a temporary monopoly power both in domestic and foreign market. This temporary monopoly power is enjoyed by the patent rights.
18.Soru
Which one of the following terms is used for the circumstance when the demand for a certain commodity decreases while the income increases?
Income inelastic demand |
Income elastic demand |
Inferior goods |
Product differentiation |
Product cycle |
Inferior goods: It refers to the circumstance when the demand for a certain commodity decreases while the income increases. Potatoes and rice can be taken as examples for inferior goods. Inferior goods are the commodities that low-income consumers demand (Parkin, 2005, p. 90)
19.Soru
Which choice is about " Foreign exchange rate "?
The price at which a currency is exchanged for the other currency refers to it. |
Lowering the value of the national currency by the decision of the Central Bank is called devaluation. |
Raising the value of the national currency by the decision of the Central Bank is referred to revaluation. |
They are the accounts that give rise to the inflow of the international payments to the country. |
International transactions are recorded into the balance of payments by the double-entry bookkeeping principle. |
Foreign exchange rate: The price at which a currency is exchanged for the other currency refers to foreign exchange rate. Doğru yanıt " A " dır.
20.Soru
Which one of the following refers to the degree of responsiveness of demand for a commodity or a service against a change in income, provided that all other things remain the same?
Factor price index |
Income elasticity of demand |
Increasing returns to scale |
Factor-intensity reversal |
Unemployment rate |
Income elasticity of demand: It is the degree of responsiveness of demand for a commodity or a service against a change in income, provided that all other things remain the same
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