The clustering of some industries in one location, such as automobiles in Detroit and computer software in San Francisco, is often a response to

1. 		factor price equalization.
   		constant returns to scale.
   		external scale economies.
   		product differentiation.

1 points   

QUESTION 10

2. If the market for automobiles is monopolistically competitive and a country engages in intra-industry trade in autombiles, such trade is usually based on __________.

   		factor price equalization.
   		constant returns to scale.
   		external economies of scale.
   		product differentiation.

1 points   

QUESTION 11

2. Suppose the amount of exports of steel from the United States to the rest of the world equals 2 million metric tons. The amount of imports of steel into the United States from the rest of the world equals 8 million metric tons. Calculate the intra-industry trade index (IIT) for steel in the United States and enter the numeric value below (round your answer to one decimal place).

1 points   

QUESTION 12

2. We expect the value of the Intra-industry Index of Trade (IIT), or Grubel-Lloyd Index, to vary by industry.  Which of the following statements best describes our expectations the value of the index for the industries identified below?

   		Corn will have a larger index value than shoes.
   		Corn will have a smaller index value than shoes.
   		Shoes will have a larger index value than clothing.
   		Corn will have a larger index value than agricultural products.

1 points   

QUESTION 13

2. The Imperfect Competition Model of international trade assumes that production includes __________.

   		homogenous goods produced with constant returns to scale.
   		homogenous goods produced with increasing returns to scale.
   		differentiated goods produced with constant returns to scale.
   		differentiated goods produced with increasing returns to scale.