Regarding trade costs associated with national borders

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Reference no: EM131095960

After searching previously answered questions for this on this site the majority were completely wrong.

1. Compare to a monopolistically competitive firm with a higher marginal cost, a firm with a lower marginal cost will

a. earn lower profits

b. produce less output

c. set the same price because the firm is a price taker

d. set a lower price

2. Which of the following is true regarding trade costs associated with national borders?

a. Trade costs reduce the export sales of forms that do reach those customers across the border

b. Because of close proximity and intergrated economies, the U.S-CANADA border substantially increases traade columes between Canadian provinces and U.S states

c. In U.S. industries where exports represent a substantial proportion of total production, such as chemical, the majority of firms exports

d. Both B and C.

3. Trade costs explains why only a subset of firms export, and they also explain why this subset of firms will consist of

a. relatively larger and more productive firms

b. relatively larger and more unproductive firms

c. those firms with hogher marginal cost

d. relatively smaller and more productive firms

4. Most firms in the apparel and footwear industries choose to outsource production to countries whrere labor is abundant (primary, Southeast Asia and the Carib bean)-but those forms do not intergrate with their suppliers there. On the other hand, firms in many capitals -intensice industries choose to intergrate with their suppliers. What would choices imply for the extent of intra-firm trade across industries? That is, in what industries would a greater proportion of trade occur within firms? Intra-firm trade will be

a. Lower in capiutal-intensice industries

b. higher in industries where there is a large level of imports but virtually no exports

c. higher in industries with a higher degree of vertical FDI

d. higher in industries that rely prolarily on outsourcing

5. For the following, specify whether th eforeign direct investment is horizontal or vertical; in addition, describe whether that investment represents an FDI inflow or outflow from the countries that are mentioned. Nestle (a swiss muntinational producer of food and drinks) builds a new production factory in Bulgaria to produce KIT Kat chocolate bars

Choose right answer below.

This would be a (horizontal, vertical)?

FDI outflow from (Swiss, Bulgaria)?

and inflow into (Swiss, Bulgaria)?

Reference no: EM131095960

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