Deck 5: Intraindustry Trade

Question 1

A relatively large amount of intraindustry trade would be associated with:

A) an index of intraindustry trade close to zero.
B) an index of intraindustry trade of .20.
C) a large amount of imports in a product category with few exports in the same product category.
D) an index of intraindustry trade close to 1.0.

Answer 1

an index of intraindustry trade close to 1.0.

Question 2

When there is balanced (exports equal imports) intraindustry trade in a certain product, the index of intraindustry trade is:

A) 0.00.
B) 0.25.
C) 0.50.
D) 1.00.

Answer 2

1.00.

Question 3

If in 2002, U.S. automobile exports were $100 billion and imports were $300 billion, the index of intraindustry trade would be:

A) 0.25.
B) 0.75.
C) 0.50.
D) 1.00.

Answer 3

0.50.

Question 4

In which of the following market structures is there only one firm?

A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition

Question 5

Distinguish between interindustry and intraindustry trade.

Question 6

Suppose that a country's imports of computer chips are $1 billion and its exports of computer chips are $800 million. Calculate the intraindustry trade index for this country. Explain what the results of your calculation mean.

Question 7

List and explain the reasons for intraindustry trade in homogeneous products.

Question 8

Explain the difference between horizontally and vertically differentiated products.

Question 9

What is the relationship between economies of scale and intraindustry trade?

Question 10

What is the product cycle? How is it related to intraindustry trade?

Question 11

Use the Linder hypothesis to explain the fact that the U.S. simultaneously imports and exports automobiles.

Question 12

Why would intraindustry trade occur between developed and developing countries?

Question 13

Discuss the reasons why countries may engage in intraindustry trade.

Question 14

List and explain the welfare effects of intraindustry trade.