The theory which predicts that trade occurs because of differences in the availability of factor inputs across countries and the differences in the proportions in which the inputs are used in producing different products is called
A. the Heckscher-Ohlin theory.
B. the theory of comparative advantage.
C. the Stolper-Samuelson theory.
D. the theory of factor price equalization.
Answer: A
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Using the Cobb-Douglas production function, while holding other inputs constant, if the amount of a specific factor is increasing ________
A) the increased amount of output from an extra unit of input declines B) the increased amount of output from an extra unit of input increases C) that factor's share of output is declining D) that factor's share of output is increasing E) none of the above
Which of the following occurs when the goods market is in equilibrium?
A) Domestic output (Y) equals the demand for domestic goods. B) Y equals the domestic demand for goods. C) Y equals the domestic demand for domestic goods. D) Net exports equals 0. E) Demand for domestic goods equals the domestic demand for goods.