Most firms in the apparel and footwear industries choose to outsource production to countries where labor is abundant (primarily, Southeast Asia and the Caribbean) but those firms do not integrate with their suppliers there. On the other hand, firms in many capital-intensive industries choose to integrate with their suppliers. What would these 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 OA. higher in industries with a high degree of vertical FDI OB. higher in labor-intensive industries. OC. higher in industries that rely primarily on outsourcing OD. higher in industries where there is a large level of imports but virtually no exports

Most firms in the apparel and footwear industries choose to outsource production to countries where labor is abundant (primarily, Southeast Asia and the Caribbean) but those firms do not integrate with their suppliers there. On the other hand, firms in many capital-intensive industries choose to integrate with their suppliers. What would these 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 OA. higher in industries with a high degree of vertical FDI OB. higher in labor-intensive industries. OC. higher in industries that rely primarily on outsourcing OD. higher in industries where there is a large level of imports but virtually no exports

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.3P

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Similar questions

Why is product differentiation by itself incapable of explaining intra-industry trade? Why does the explanation of intra-industry trade require both product differentiation and economies of scale?
Suppose firms incur transportation costs to sell their product abroad. How do transportation costs affect the prices that firms charge abroad? Suppose the price offered at home and in the export market is identical, but there are transport costs to ship the good abroad. Does dumping occur? How does an increase in the number of product varieties benefit an importing country? Explain how increasing returns to scale in production can be a basis for trade. Why is trade within a country greater than trade between countries? Why would you expect sellers of branded goods with high upfront research and development costs to be more interested in free trade than producers who do not incur any fixed costs? Focus attention on the Ricardian model, the Heckscher-Ohlin model, and the monopolistic competition model if trade. Consider the intra-industry trade index for each model. What value for the index does each models predict? Explain your answer.
Which of the following is some evidence we discussed in lecture that trade affects firms of different productivities differently? A) high cost firms were most likely to begin selling goods from Canada to the US when the two countries signed a trade agreement. B) Countries with smaller firms were less likely to gain from trade C) low productivity firms faced with Chinese import competition were more likely to shrink and shut down compared with higher productivity firms
In todays economy, what are some examples of intrastate commerce? In other words, what business does not affect interstae commerce?
Which of the following is predicted by the models of intraindustry trade we have studied? Countries will export what they have a relatively low opportunity cost of producing and import what they have a high opportunity cost of producing. Trade will either help consumers or help producers in a given industry but never both. Trade may decrease the price and increase the variety in the same industry for two countries that begin to trade.
Many trading partners trade the same goods and services with one another. The U.S. exports automobiles to Europe and Europe exports automobiles to the United States. In fact, that's true for food, appliances, computers and many other goods. Does intra-industry trade contradict the theory of comparative advantage? Why or why not?
GlobalCell is an American firm producing cell phones. GlobalCell imports cell phone components from Japan and assembles them domestically. Suppose that in the United States, a cell phone sells for $100 and that 60% of the cell phone's value comes from the value of the imported components. The United States imposes a 30% tariff on cell phones and a 10% tariff on the cell phone's components. Assume that costs of producing components are the same in the United States and Japan and that transit costs are nonexistent. Based on the information provided, the effective rate of protection that GlobalCell receives from the tariff is A. 60% B. -20% C. -13.3% D. 26.7%
Which of the following is true of intra-industry trade? Multiple Choice Intra-industry trade is mostly based on the differences stressed in the Heckscher-Ohlin trade theory. Intra-Industry trade is usually discouraged by the government. Intra-industry trade is said to occur when the United States exports Ford automobiles and imports petroleum. Intra-Industry trade is said to occur when the United States exports Ford automobiles and Imports Honda automobiles.
The opening statement on the website of the Organization of Petroleum Exporting Countries (OPEC) says its members seek “ … to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.” To achieve these goals, OPEC attempts to coordinate and unify petroleum policies by raising or lowering its members’ collective oil production. However, increased production by the United States, Russia, Oman, Mexico, Norway, and other non-OPEC countries has placed downward pressure on the price of crude oil. Please explain: To achieve these goals of stable and fair oil prices, what must OPEC do to maintain the price of oil at its desired level? How easy is it for OPEC to achieve this goal?
When was the concept of “demand” formally introduced in international trade models? Who did that?
Three countries, Hungary, Bulgaria, and Czech Republic, have Ricardian technologies as listed in the table below and can produce two types of goods, namely butter and beer. Number of labor units required to produce one unit of output Country Butter Hungary Bulgaria Czech Republic 234 4 Beer 4 7 5 Which country has an absolute advantage in the production of beer and which country in butter?
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