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ECON 327 Exam 2
Terms in this set (16)
In the Heckscher-Ohlin model, countries are assumed to differ only in their
Suppose a country experiences a capital inflow from the rest of the world but the world relative price remains the same. In that country, output of the capital-intensive good will ____ and output of the labor-intensive good will ____.
Suppose a country is labor abundant relative to the rest of the world. When it opens to trade, which factor(s) will be better off?
If market size increases, then the total number of firms will ---- and the price will ----.
lower, more, more
In monopolistic competition, compared to a firm with higher marginal cost, a firm with lower marginal cost will set a ---- price, produce ---- output, and earn ---- profits.
flatter; reduce; increase
In the model of monopolistic competition, an increase in industry size will cause individual firms' demand curves to become ----, which will ---- demand for higher-priced goods and ---- demand for lower-priced goods.
some firms that can earn a profit on domestic sales to refrain from exporting their goods.
In the model of monopolistic competition, trade costs between countries cause
use FDI; export
A firm is trying to decide whether to export its good or use horizontal FDI. High trade costs make a firm more likely to ---- and internal economies of scale make a firm more likely to ----.
Dumping in the U.S. steel industry would tend to ---- U.S. consumers and ---- U.S. steel manufacturers.
decreases; an improvement
Suppose there are two large countries in the world, Home and Foreign. If Home imposes a tariff on imports, then the price of the good in Foreign ---- and this represents ---- in Home's terms of trade.
An export subsidy results in an efficiency ---- and a terms of trade ----.
As the number of firms in a monopolistically competitive industry increases, average cost ---- and prices ----.
Which is NOT a key feature of a monopolistically competitive industry?
A large country never gains from imposing an import tariff.
Which statement is false?
the country abundant in skilled labor.
Consider a Heckscher-Ohlin model with two countries where the factors of production are skilled and unskilled labor. After opening to trade, the skill premium will rise in
The country as a whole - Owners of capital
In the Heckscher-Ohlin model, suppose a relatively capital-abundant country opens to trade. Who gains? Check all that apply
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