Please sign your name below, and then complete your machine-readable form by filling in the circle corresponding to the single, best response for each question below.
 

1.  In the context of trade theory, what are acquired resources?
a) production inputs that corporations import from foreign locations
b) resources that national (or sub-national) governments purchase from domestic producers
c) resources that national (or sub-national) governments purchase from foreign producers
d) resources that result from investment, training, or other human actions
e) the primary sectors of the economy

2.  How have we defined a country’s competitive advantage?
a) location decisions by large companies
b) the degree of vertical integration in a national economy
c) those products for which a country has lower production costs than its potential trading partners
d) those products that a country can produce with the lowest opportunity costs
e) those sectors in which companies based in a given country have profitable worldwide markets

3.  What’s the benefit of national specialization and trade according to comparative advantage?
a) All the resources of the trading countries will be put to their most productive use.
b) Countries’ scarce factors of production will be exported.
c) Each country focuses on production in sectors in which it is more efficient than other countries.
d) Specialized products sell for higher prices (and, usually, profits) than generic, “one-size-fits-all” products.
e) While some countries will produce less than they would without trade, the world system benefits overall.

4.  In the current world system, which factor is internationally immobile?
a) capital
b) labor
c) raw materials
d) mature technology
 

The table below describes a world in which there are only two countries (Lest and Wesson), two possible products (beer and pretzels), and one resource (resource).   The cell entries tell how many resource units are required to make one ton of beer or one ton of pretzels in each country, without trade.
 

6.  What’s the opportunity cost of a ton of beer in Wasson?
a)  9/10 ton of pretzels
b)  10/9 ton of pretzels
c)  10/5 = 2 tons of pretzels
d)  9 resource units
e)  10 resource units

7.  Which country produces beer more efficiently than the other?
a) Lest
b) neither:  their efficiencies are equal
c) Wasson

8.  Which country has a comparative advantage in beer production?
a) Lest
b) neither:  this is the rare case where neither country has a clear comparative advantage
c) Wasson

9.  Which country produces pretzels more efficiently than the other?
a) Lest
b) neither:  their efficiencies are equal
c) Wasson

10.  Which country has a comparative advantage in pretzel production?
a) Lest
b) neither:  this is the rare case where neither country has a clear comparative advantage
c) Wasson

11.  Which of the following is the best statement of the factor-proportions theory of comparative advantage?
a) A country has a comparative advantage in the production of any desired good, by adopting a technology that emphasizes its abundant resources.
b) A country has a comparative advantage in the production of goods that use relatively large amounts of its abundant factors of production.
c) A country has a comparative advantage in the production of goods that use relatively large amounts of its scarce factors of production.
d) A country has a comparative advantage in the production of goods that it produces more efficiently than potential trading partners.
e) A country has a comparative advantage in the production of goods that require high proportions of acquired resources.

12.  Which of the following most generally states the impact of specialization and trade on the distribution of economic returns within a country?
a) increased demand for and prices of the country’s abundant factors, and reduced demand for and prices of the country’s scarce factors
b) increased demand for and prices of the country’s scarce factors, and reduced demand for and prices of the country’s abundant factors
c) increased income to the country’s corporations
d) increased income to the country’s government
e) increased income to the country’s highly skilled labor

13.  What’s the economic argument for “infant-industry” protection?
a) Allocating resources to those economic sectors in which the country has a comparative advantage should allow the country to export more.
b) By restricting imports in a particular economic sector, a country can develop the infrastructure and economies of scale and agglomeration that will yield a domestic comparative advantage in that sector.
c) By restricting imports in most sectors, a country can increase its real income (over the long term) by developing its own industries.
d) By restricting imports in a particular economic sector, a country can produce high-profit products domestically.

 14.  A company like Nike, that has a world-famous trademark and proprietary shoe designs, makes its money by
a) foreign direct investment to produce shoes in low-labor-cost settings.
b) foreign direct investment to produce shoes in wealthy markets.
c) using its advanced production technology to produce shoes for other labels.
d) vertically disintegrating to obtain its shoes (to its specifications) from external manufacturers, and putting its label on them.
e) vertically integrating to produce shoes, using its unique production technology.

15.  According to the product life cycle of international trade and investment, why would a labor-rich country export capital-intensively produced goods to a capital-rich country?
a) In the second (growth) stage of the product life cycle, labor-rich countries begin exporting the labor-intensive product to capital-rich countries.
b) One or more MNCs has accessed international capital sources and transferred its production technology to a low-wage country for worldwide export of a fourth-stage product.
c) Products are typically introduced in labor-rich countries, using capital-intensive technology.
d) Products are typically introduced in labor-rich countries, using labor-intensive technology.
e) The comparative advantage of a labor-rich country should be export-oriented production of capital-intensive products.

16.  How does the “new” international division of labor (NIDL) differ from the “old”?
a) The NIDL includes flows of manufactured goods from poorer to wealthy countries.
b) The NIDL includes flows of unprocessed raw materials from poorer to wealthy countries.
c) The NIDL includes large-scale, international, human migrations.
d) The NIDL requires vertical disintegration among major companies.

17.  Fordism entails
a) manufacturing production by as advanced a technology as possible.
b) mass production of standardized products for large, stable markets that include the mass-production workers.
c) mass production, breaking the work process into simple steps that unskilled workers can perform for the minimum or subsistence wages.
d) the sequential focus of a national economy on agriculture, manufacturing, and services.
e) wealthy countries’ importing of manufactured goods from low-wage settings.

18.  The import substitution strategy of development is best suited for countries that
a) have access to large foreign markets.
b) have few domestic natural resources.
c) have large domestic markets.

19.  The export promotion strategy of development is best suited for countries that
a) have access to large foreign markets.
b) have small domestic markets.
c) restrict most imports of manufactured goods.

20.  Post-Fordism entails
a) movement of manufacturing plants in wealthy countries from heavily industrial to formerly agricultural regions within the countries (e.g., from the NE to SE in the U.S.).
b) rising wages for industrial workers in the “Third World.”
c) the declining world market share of American automobile companies.
d) wealthy countries’ importing of mass-produced goods from countries that buy relatively few consumer manufactures.

21.  Which of the following is not a characteristic of post-Fordism?
a) deregulation
b) erosion of workers’ benefits and the growth of “temporary” labor
c) flexible organization through networks of subcontractors
d) relative market stability
e) small batches of nonstandardized goods

22.  Which of the following is not among the ways of seeing economic development as a progression from ”less-developed” to “developed” (or “advanced”)?
a) cumulative causation
b) declining shares of labor employment in agriculture, then in manufacturing
c) demographic transition
d) sectoral change through increased processing of natural resources to develop manufacturing sectors

23.  Which of the following can help break the cycle of development as a polarizing process?
a) economies of agglomeration
b) economies of scale
c) factor mobility
d) new-product invention in wealthy settings
 

If you have opted to write an in-class essay on the assigned topic (instead of handing in a typed version), please do so below — you can use the reverse side of these sheets, or you can use your own paper or exam book.

Using information from Chapters 9 and 11 of the textbook, and models that we’ve covered in this class, write about the trends in location, investment, trade, and technology for a particular sector (e.g., apparel, automobiles, banking, electronics, etc.) in a particular country or trade bloc:  what's been happening, and why?  Relate a few simple trends to (at least two of) our models of industrial location, trade, trade policy, and development.