DIŞ TİCARET - Deneme Sınavı - 3

The following assumptions indicate the weaknesses of the Heckscher- Ohlin Theory:

The correct answer is D.

The following assumptions indicate the weaknesses of the Heckscher-Ohlin Theory:

The Heckscher-Ohlin Theory assumes that demand preferences are the same (not different) in both countries. The correct answer is B.

The main aims of trade restrictions are:

The correct answer is C.

The most referred demand oriented model of international trade is the Overlapping Demands Model. The Model was developed by the Swedish economist Staffan Linder in 1961 (I). According to Linder, much of the current international trade involves trade in manufactured commodities,and demand conditions constitute a big importance in explaining international trade patterns (II); the main determinant of the demand preferences of the domestic consumers is their income levels (III), and firms within a country produce commodities for the domestic market, and they are motivated to produce more (not less) when the market is enlarged (IV). The correct answer is C.

One of the ranges of income elasticity of demand, inferior goods 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. The correct answer is A.

Product Cycle Model divides the life cycle of a new product into five stages: new-product stage, product-growth stage, product-maturity stage, product-standardization stage and product-decline stage (II-IV-III-V-I). The correct answer is B.

Hereditary skill, local market for skill, introduction to new ideas and use of specialized machinery are among the advantages that an industrial district can create for the firms that operate within the same industry. Rather than downsizing of subsidiaries, an industrial district can create growth of subsidiaries in that when firms are concentrated within a particular area, there will probably be new establishments in the form of subsidiaries; they will be the firms that supply materials or inputs to the industry. The correct answer is D.

The main reasons for intra-industry trade are: internal economies of scale, product differentiation, transportation costs, scope of commodity classification and differences (not similarities) in distribution of income. The correct answer is E.

New international trade theories,in other words post- Heckscher-Ohlin theories, do not reject the Heckscher-Ohlin Theory. They improve it as of complementary trade theories. The correct answer is " A ".

Unemployment rate: It is the number of unemployed people expressed as a percentage of all the people who have jobs or are looking for one (Parkin, 2005, p. 467). The correct answer is " B ".

One of the main aims of trade restrictions is to protect domestic producers. Actually, this aim is known as traditional aim of trade restrictions. Another
traditional aim of trade restrictions is to collect revenue to the Treasury. Adjust balance of payments: Trade restrictions are effective instruments to adjust the balance of payments. Serve for diplomatic relations: Countries can use trade restrictions as an instrument of diplomatic relations. The ccorrect answer is        " D ".

The most referred demand oriented model of international trade is the Overlap-ping Demands Model. The Model was developed by the Swedish economist Staffan Linder in 1961 (Linder, 1961). Representing the name of the economist, the Overlapping Demands Model usually entitled as Linder Model. The correct answer is " C ".

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 ".

Product differentiation: Producing a commodity slightly different from the commodity produced by the competitor is called product differentiation. The correct answer is " D ".

Product Cycle Model rests on the recognition of dynamic changes that affect the manufactured commodities. The correct answer is " A ".

Patent rights: They are a type of intellectual property rights. Intellectual property is a general term referring to creations of the mind. Intellectual property rights designate creators with the right to protect themselves from the imitators for a limited period of time. Intellectual property rights have many types. For example; books, paintings and films are protected by copyrights while eligible inventions are protected by patents and brand names and product logos
are registered as trademarks (WTO, 2019). The correct answer is " B ".

Economies of scale: Economies of scale exist when the increase in the output is proportionally more than the increase in the input. The correct answer is " E ".

Imperfect competition: It is a market structure in which the conditions of perfect competition do not prevail. Imperfect competition can either be in the type of monopoly, oligopoly, monopolistic competition or monopsony, oligopsony, monopsonistic competition. The correct answer is " C ".

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.

Since countries use more than two factors of production, it is impossible to find out the relative factor prices that are the determinants of the factor endowments without using factor price index. We need to know the factor price index so as to determine factor endowments of the trading countries in the real world of many countries, many commodities and many factors of production.