(Download PDF) International Trade 3rd Edition Feenstra Test Bank Full Chapter

International Trade 3rd Edition Feenstra
Test Bank
Go to download the full and correct content document:
https://testbankfan.com/product/international-trade-3rd-edition-feenstra-test-bank/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
International Trade 3rd Edition Feenstra Solutions

Manual
https://testbankfan.com/product/international-trade-3rd-edition-
feenstra-solutions-manual/
International Trade 4th Edition Feenstra Test Bank
https://testbankfan.com/product/international-trade-4th-edition-
feenstra-test-bank/
International Trade 4th Edition Feenstra Solutions

Manual
https://testbankfan.com/product/international-trade-4th-edition-
feenstra-solutions-manual/
International Economics 3rd Edition Feenstra Test Bank
https://testbankfan.com/product/international-economics-3rd-
edition-feenstra-test-bank/
International Macroeconomics 3rd Edition Feenstra
Solutions Manual
https://testbankfan.com/product/international-macroeconomics-3rd-
edition-feenstra-solutions-manual/
International Logistics Management of International

Trade Operations 3rd Edition David Test Bank
https://testbankfan.com/product/international-logistics-
management-of-international-trade-operations-3rd-edition-david-
test-bank/
Essentials of International Economics 3rd Edition

Feenstra Solutions Manual
https://testbankfan.com/product/essentials-of-international-
economics-3rd-edition-feenstra-solutions-manual/
International Economics 4th Edition Feenstra Test Bank
https://testbankfan.com/product/international-economics-4th-
International Macroeconomics 4th Edition Feenstra Test

Bank
https://testbankfan.com/product/international-macroeconomics-4th-
TestBanks Chapter 06: Increasing Returns to Scale and Monopolistic
Competition
1 Suppose that imports and exports in an industry are $100 million

and $200 million, respectively. Will the index of intraindustry
trade for this industry rise, fall, or remain unchanged if exports
fall to $100 million?
It will rise.
It will fall.
It will remain unchanged.
There is not enough information to determine how the index
will change.
2 The ____________ model best explains intraindustry trade.
Ricardian
HeckscherOhlin
monopolistic competition
specificfactors
3 To analyze intraindustry trade, we must bring in imperfect

competition, and we change our assumptions about our trade
models to allow:
priceconscious consumers.
shortrun unemployment.
differentiated products.
perfect competition.
4 Products traded between two nations that are very similar and
very close substitutes, but that may be of different quality or
prices, are called:
differentiated complements.
differentiated substitutes.
differentiated products.
perfect substitute products.
5 The crosstrade of very similar products exported and imported

by trading partners seems to contradict which of the following
model(s)?
Ricardian
HeckscherOhlin
specificfactors
It contradicts all of these models.
6 A differentiated product is one that:
is slightly different from the competitor's product, although it

is a close substitute.
is very different.
is traded within firms and is not for sale in retail markets.
has a shelf life of less than a year.
7 “Differentiated” is another word for:

identical.
homogeneous.
heterogeneous.
None of these has the same meaning.
8 What will happen when a firm raises the price of a differentiated

product in an imperfectly competitive market?
It will see lower sales but will not lose all its sales.
It will lose all its sales to competitor firms.
It will actually get new customers from other firms.
It will see an increase in revenues.
9 Which of the following features is characteristic of monopolistic

competition?
many large producers
homogeneous products
differentiated products
No individual producer has any influence on the market price.
10 Which of the following is NOT characteristic of a monopolistically

competitive industry?
monopoly profits
many firms in the industry
differentiated products
Individual firms can influence the market price.
11 Increasing returns to scale occurs when a firm's:
average costs of production increase as its output increases.

average costs of production decrease as its output increases.
average fixed costs increase as its output increases.

marginal costs increase as its output increases.
12 A feature of imperfect competition is _________, which means

that as the firm expands its production, average costs of
production fall. Therefore, the firm can _______ its costs of
production by selling internationally.
economies of scale; decrease
economies of scale; increase
increasing returns to scale; decrease
specialization; increase
13 Which of the following is the term describing very similar

products being exported and imported by trading partners?
reciprocal trade
imperfect competition
intraindustry trade
interindustry trade
14 Intraindustry trade refers:
to imports and exports within the same industry.

to imports and exports originating in different industries.
to international trade patterns predicted by the Heckscher
Ohlin model.
to Ricardian comparative advantage.
15 What term is used to describe situations where countries

specialize in and trade different varieties of the same type of
product?
comparative advantage
the HeckscherOhlin model
intraindustry trade
increasing returns to scale
16 Equilibrium in a monopoly occurs when:
the monopolist has driven out all competitors.

the monopoly firm has sold the maximum number of units.
the monopoly firm produces the quantity that maximizes its
profits (or minimizes loss) where MR = MC.
the monopoly firm has gotten unions to agree to wage
concessions.
17 For a monopolistic competitor, marginal revenue at its shortrun

equilibrium price and quantity equals:
price.
marginal cost.
average cost.
average revenue.
18 A monopolist maximizes its profits by selling up to the point

where:
its price equals its marginal cost.
its price equals its marginal revenue.
its marginal revenue equals its marginal costs.
the difference between its price and average cost is
maximized.
19 The price charged by a monopoly firm is the market price

(demand curve) at which:
MR = MC, and usually P > MR and P > MC.
the firm is just breaking even.
the firm makes a normal profit.
the firm can export its products.
20 A monopolistic competitive firm:
will always earn monopoly profits.

will never earn monopoly profits.
may earn monopoly profits in the short run.
may earn monopoly profits in the long run.
21 A duopoly is a market structure in which:
two consumers buy the product.

two firms sell the product.
one firm sells the product and one consumer buys the
product.
two firms sell the product and two consumers buy the
product.
22 If there is a duopoly and the products are identical

(homogeneous), the firm selling the product for a lower price:
will earn less revenue.
will get 100% of the sales.
will have a hard time being profitable.
will be perceived to have lower quality products.
23 In a duopoly where products are differentiated and firms charge

different prices, the demand curves are _______________ than
if the firms sell identical products at the same price.
steeper
farther to the right
more elastic (flatter)
less elastic
24 In a duopoly, each firm faces:
a more elastic demand curve if it raises its price.

a more elastic demand curve if it lowers its price.
a perfectly elastic demand curve.
a perfectly inelastic demand curved.
25 Which of the following is NOT an assumption of monopolistic

competition?
Each firm's output is slightly different from other firms in the
industry.
There are many firms in the industry.
Production occurs with increasing returns to scale technology.
Each firm faces a perfectly elastic demand curve.
26 The demand curve facing a monopolistic competitor:
is perfectly inelastic.
is perfectly elastic.
slopes downward to the right.
has a positive slope.
27 To analyze monopolistic competition in trade, we make several

assumptions about the market. Which of the following is NOT an
assumption of monopolistic competition?
many firms in the industry
easy entry and exit
constant longrun average cost
increasing returns to scale, falling longrun average cost
28 Which of the following is NOT a characteristic of monopolistic

competition?
Firms have some control over their markets.
Firms produce an identical product.
Firms retain some ability to control prices.
The average cost for firms declines as they produce more
output.
29 Which of the following is NOT an assumption for monopolistic

competition?
Firms produce goods, using a technology with increasing
returns to scale.
There are many firms in the industry.
Firms have some control over the price of the product.
Each firm produces a good that is similar to, but
differentiated from, the goods that other firms in the industry
produce.
30 When average costs of production are falling, average cost:
is higher than marginal cost.

is equal to price.
is negative.
is less than marginal cost.
31 When there are increasing returns to scale, average costs must

be:
falling.
rising.
constant.
falling, then rising.
32 Whenever a firm's marginal costs are less than its average costs,
its average costs must be:
falling.
rising.
constant.
falling, then rising.
33 Which of the following will NOT cause increasing returns to scale

and declining average costs?
focusing on a single product line and specializing
exporting goods to other countries
selling more in their home market
hiring more workers at the existing plant
34 A firm's average costs will be falling whenever its:
marginal costs are positive.

marginal costs are negative.
marginal costs are less than average costs.
marginal costs are less than fixed costs.
35 Firm X's total fixed costs are $1,000. Its total variable costs of
producing 100 units are $2,000, and its total variable costs of
producing 200 units are $4,000. Which of the following will
happen to firm X's average costs as it increases output from 100
to 200 units?
Average costs increase.
Average costs decrease.
Average costs remain constant.
Average costs increase slightly.
36 Consider the following cost information for a monopolist: its MR

= $15, its MC = $23, and it is producing 9 units of output. Which
of the following statements is correct?
The monopolist should produce and sell 9 units of output.
The monopolist should increase production of output.
We need more information to decide if the firm needs to
produce.
The monopolist should not produce this output because MR <
MC.
37 At its current production level, a monopolist's marginal revenue

is $20 and its marginal cost is $10. Which of the following is
CORRECT?
The monopolist should produce and sell more output.
The monopolist should produce and sell less output.
The monopolist is maximizing its profits at its current level of
output.
More information is required to decide if the firm needs to
change its production.
38 A monopolistic competitor has fixed costs of $100 and marginal

costs of $10 per unit. What is its average cost of producing 100
units?
$10
$11
$1,100
$2,000
39 A monopolistic competitor has fixed costs of $100 and marginal

costs of $10 per unit. What is its marginal revenue at its
equilibrium price and quantity?
$10
$11
$1,100
$2,000
40 If a firm has a total cost of $150 and a variable cost of $100 for
producing 5 units of output, then the fixed cost is:
$35.
$50.
$250.
$100.
41 If a firm has an average total cost of $55 and an average fixed

cost of $10 for producing 5 units of output, then the total
variable cost will be:
$550.
$525.
$225.
$65.
42 If a firm has a total fixed cost of $75 and an average variable

cost of $35 for producing 10 units of output, the average total
cost would be:
$425.
$42.50.
$110.
$350.
43 In the long run, profits in a monopolistic competition market are

zero because:
of government regulations.
of collusion.
firms are free to enter and exit the market.
firms produce a differentiated product.
44 In the short run, in equilibrium, firms that operate in a

monopolistically competitive market face a down sloping demand
curve and will charge a price where _____ and ______.
quantity produced is maximized; costs are minimized
sales revenue is maximized; costs are falling
MR = MC; P > average cost
average costs are rising; sales are rising
45 Figure: Costs and Demand for a Monopolistic Competitor
Reference: Ref 61
(Figure: Costs and Demand for a Monopolistic Competitor) The

profitmaximizing amount of output produced:
will be 42.
will be 32.
will be 0 (not profitable).
will be 50.

Reference: Ref 61
(Figure: Costs and Demand for a Monopolistic Competitor) What

price should the firm charge?
$15
$10
The firm cannot be profitable, so the price is zero.
The firm is a price maker, so it should charge $20.
Reference: Ref 61

total cost of producing the profitmaximizing output is:
$320.
$480.
$420.
$500.

Reference: Ref 61

profits for the firm are:
$320.
$480.
$160.
$420.
49 SCENARIO: A MONOPOLIST'S MARKET

A monopolistically competitive firm faces demand given by this
equation: P = 50 Q. It has no fixed costs and its marginal cost
is $20 per unit.
Reference: Ref 62
(Scenario: A Monopolist's Market) What quantity will the firm

produce when it is maximizing its profits?
10
15
20
25

is $20 per unit.
Reference: Ref 62
(Scenario: A Monopolist's Market) What price will the firm charge

when it is maximizing its profits?
$20
$25
$30
$35

is $20 per unit.
Reference: Ref 62
(Scenario: A Monopolist's Market) What is the value of the firm's

monopoly profits when it sets a price that maximizes its
monopoly profits?
$125
$300
$425
$225
52 Demand Equation for a Good Produced by a

Monopolistically Competitive Firm:
P = 10 – Q
Reference: Ref 63
(Demand Equation) At what price is the firm's total revenue

maximized?
$9
$7
$5
$3

P = 10 – Q
Reference: Ref 63
(Demand Equation) If the firm's marginal cost is a constant $2

per unit, what price will it charge and how many units will it
produce if it maximizes its profits?
$8 and 2 units
$7 and 3 units
$6 and 4 units
$5 and 5 units

P = 10 – Q
Reference: Ref 63
(Demand Equation) If the firm has no fixed costs and variable

costs of $2 per unit, what is the value of the firm's monopoly
profits when it sets a price that maximizes its monopoly profits?
$7
$12
$15
$16
55 Which of the following describes the longrun situation in a

monopolistically competitive market?
Competition drives out firms until there is only one left.
New firms enter the market because of monopoly profits, the
demand curve shifts to the left and becomes flatter, and profits
disappear.
New firms enter the market and eventually there is only one
kind of product, and each firm agrees to share the profits.
Consumers are left with no choices and no close substitutes,
and firms make higher profits.
56 When firms charge different prices for differentiated products in

imperfect competition, each firm's demand curve is
___________ than would be the case if all firms had identical
products and prices.
flatter
steeper
farther to the right
less elastic
57 In the long run, a monopolistically competitive firm will produce

where:
average cost equals price.
average cost equals marginal revenue.
marginal revenue equals price.
marginal cost equals price.
58 In the long run, a monopolistically competitive firm:
will earn normal profits.

will earn excess profits.
will earn no profits.
will produce where marginal cost equals price.
59 If a firm in monopolistic competition lowers its price, what will

happen to the quantity of products it sells?
The quantity of products sold will increase and sales revenue
will fall.
The quantity of products sold will decrease because this is not
perfect competition.
The quantity of products sold will increase slightly—and in
some cases not at all.
The quantity of products sold and sales revenues will increase
as the firm lures customers from its competitors and attracts
new customers.
60 In the short run, international trade allows a monopolistically

competitive firm an opportunity:
to produce more output.
to earn monopoly profits.
to reduce its average costs.
to produce more output, earn monopoly profits, and reduce
its average costs.
61 What is the expected outcome when trade occurs in a

monopolistically competitive industry if the nations have similar
tastes, technology, products, and costs?
No trade is possible.
Consumers are left with no choices.
Each firm has a larger market in which to sell, and consumers
have more choices of sellers and products.
Transportation costs become the driving factor.
62 Suppose that there are 50 firms in a monopolistically competitive

industry in country A and 50 firms in the same monopolistically
competitive industry in country B. If country A and country B
engage in international trade, we expect that the total number of
firms in this industry:
will increase.
will decrease.
will remain unchanged.
will first decrease, then increase.
63 When trade occurs among nations with similar tastes,

technology, products, and costs, monopolistically competitive
firms will have an incentive:
to lower prices to get new customers and increase market
share.
to raise prices to take advantage of a lucrative situation.
to cut corners in manufacturing to boost profits.
to raise quality, so they can charge a higher price than the
competition.
64 In longrun equilibrium with trade, losses from import

competition will force some firms to ______________,
increasing demand for the remaining firms' output, which will
then cause their demand curves to become ______________,
due to the increased variety of products from
_______________.
raise prices; steeper; new firms entering the industry
leave the industry; flatter; foreign firms
lower prices; more inelastic; new firms entering the industry
lay off workers; more elastic; the research and development
departments in firms
65 In the long run, international trade allows a monopolistically

competitive firm an opportunity:
to produce more output and earn monopoly profits.
to produce less output and earn monopoly profits.
to produce more output and reduce its average costs.
to produce less output and increase its average costs.
66 In the long run, prices in a monopolistically competitive industry

________ prices without trade.
will be higher than
will be lower than
will be equal to
will be the same as
67 In the long run, a monopolistically competitive firm that trades

internationally ____________ than it would in autarky.
will produce more output
will earn more monopoly profits
will have higher average costs
will produce more output and earn more monopoly profits
68 With increasing returns (falling average costs), as the remaining

firms expand, their demand curves become _______________
due to foreign competition, and firms must _______________.
steeper; raise prices
flatter; lower prices
flatter; raise prices
steeper; lower prices
69 Consumers gain from trade within a monopolistically competitive

industry because:
prices fall and product varieties decrease.

prices rise and product varieties increase.
prices rise and product varieties decrease.
prices fall and product varieties increase.
70 How do consumers benefit from trade among monopolistically

competitive firms?
Prices are the same as in autarky, but the wider choice of
goods increases consumer surplus.
Consumer surplus increases because prices are lower than in
autarky, and there is a wider choice of goods.
Prices are higher than in autarky, but the wider choice of
goods increases consumer surplus.
The government provides cash subsidies to consumers.
71 In what two ways does trade benefit consumers when firms are
monopolistically competitive?
better quality products, increased information
higher incomes, more dependable products
lots of bells and whistles, higher wages
lower prices, more variety
72 Which of the following is likely under free trade and monopolistic

competition?
Domestic firms will always be provided cash subsidies.
Some domestic firms will shut down.
Consumers will not benefit at all from trade.
Foreign firms will sell the product at a higher price in the
export market.
73 The costs identified with opening trade are called:
shortrun costs.
adjustment costs.
variable costs.
overhead costs.
74 Adjustment costs include:
dealing with child labor issues.

human rights.
getting used to foreign products.
shortterm unemployment.
75 In the long run, the equilibrium number of monopolistically

competitive firms with trade:
is less than the total number of firms worldwide in autarky.
is the same as the total number of firms worldwide in
autarky.
is greater than the total number of firms worldwide in
autarky.
may be less than, the same as, or greater than the total
number of firms worldwide in autarky.
76 Which of the following is NOT a reason for Canada to join
NAFTA?
Canadian firms can expand their markets by selling to the
United States and Mexico.
Canadian firms can enjoy lower average costs by producing
more.
Canada did not want U.S. products to dominate its domestic
market.
Canada will see an increase in income and employment by
joining NAFTA.
77 Using a model of imperfect competition, economist Daniel Trefler

concluded that the North American Free Trade Agreement:
cost Canada more than 100,000 jobs that were never
replaced.
presented no real issue about job loss in Canada.
caused Canada to lose 5% of jobs in manufacturing because
Canadian tariffs had to be cut, but over time the trade
agreement created higher productivity and more jobs to offset
losses.
created new jobs in Canada from day one, as firms sold
across the border and undercut U.S. firms.
78 NAFTA benefited Canadian consumers because:
of higher wages and more travel opportunity.

of lower wages but also lower taxes.
of lower prices but lower quality.
of lower prices and increased variety.
79 Studies have concluded that NAFTA caused ________ in

economic welfare to Canada.
a gain
a loss
no change
first a gain, then a loss
80 Studies of U.S.–Canadian free trade have concluded that free

trade produced what effect on Canadian firms?
increased productivity
decreased productivity
no change in productivity
could not be determined
81 Studies of U.S.–Canadian free trade have concluded that the

number of new jobs created in Canadian manufacturing were
_________ the number of jobs lost elsewhere in Canadian
manufacturing due to free trade.
less than
equal to
greater than
substantially greater than
82 Since NAFTA was signed, Mexico saw the productivity of its

firms:
decrease in the nonmaquiladora plants.
decrease in the maquiladora plants.
increase in the maquiladora plants at a faster pace than in
the nonmaquiladora plants.
increase in the maquiladora plants at a slower pace than in
the nonmaquiladora plants.
83 Studies of NAFTA have concluded that from 1994 to 2003, free

trade caused ______ increases in the productivity of Mexican
maquiladora firms producing for export than for Mexican firms
mainly producing for the Mexican domestic market.
larger
smaller
identical
substantially larger
84 NAFTA is believed to have __________ manufacturing

productivity, especially in the maquiladora plants.
raised
lowered
had no effect on
greatly hindered
85 Which of the following probably slowed NAFTA's effect on the

wages of Mexican workers?
the Mexican peso crisis in which Mexico's currency fell greatly
in value
the reluctance of the U.S. government to allow guest workers
the Iraq war

so much illegal immigration
86 Mexico's gains from NAFTA have benefited mostly:
unskilled workers.
semiskilled workers.
higherincome workers.
agricultural workers.
87 NAFTA probably helped productivity in Mexico's maquiladora

sector, but:
trade with China has taken on more importance.
world competition and the close relationship with the United
States may have limited its comeback.
both governments have reversed some of the tariff
reductions.
Mexico has raised taxes on the maquiladoras, and that has
caused international tension.
88 Studies of NAFTA have concluded that free trade caused ______

in the variety of U.S. imports from Mexico.
decreases
increases
no change
slight decreases
89 Studies of NAFTA have concluded that increases in the variety of
U.S. imports from Mexico are equivalent to about a ________
per year reduction in Mexican import prices.
100.2%
10.2%
1.2%
0.2%
90 The United States has benefited from NAFTA substantially in

terms of increased ____, which has lowered prices and given
consumers more choices.
prices
variety
manufacturing jobs
quality
91 Using data from Trade Adjustment Assistance claims, we can

make an accurate estimate of:
the variety of products U.S. consumers import from Mexico.
U.S. exports to Mexico that give Mexican consumers more
product variety.
the barriers to trade erected by affected firms.
the unemployment caused by NAFTA.
92 Approximately how many U.S. workers received Trade

Adjustment Assistance from 1994 to 2002 as a result of job
losses due to NAFTA?
525 million
52.5 million
5.25 million
0.525 million
93 U.S. unemployment caused by NAFTA over the years from 1994

to 2002:
totaled 13% of manufacturing job loss in the United States
during that period.
was not permanent as most workers were reemployed within
three years.
was offset completely by increased product variety imports
and lowered prices.
totaled 13% of manufacturing job loss in the United States
during that period was not permanent, as most workers were re
employed within three years, and was offset completely by
increased product variety imports and lowered prices.
94 U.S. unemployment as a result of freetrade agreements such as

NAFTA:
should be taken much more seriously, and workers should be
offered assistance.
is a temporary phenomenon to which the economy will adjust
within a few years.
results in a shift into lower productivity jobs such as
hamburger flipping.
results in a shift into lower productivity jobs such as
hamburger flipping and is a temporary phenomenon to which the
economy will adjust within a few years.
95 U.S. Trade Adjustment Assistance:
is not available to workers in manufacturing.

is not available to workers displaced by NAFTA.
is not available to workers in service industries.
expired with the advent of the WTO in 1995.
96 Select the best answer: A recap of the effects of NAFTA for its
first 9 years reveals some adjustment costs were offset by:
I. benefits for U.S. manufacturing productivity.
II. benefits for U.S. consumers.
III. benefits for higherwage workers in Mexican maquiladora
industries.
I
II
III
I, II, and III
97 When imports and exports for the same type of good are nearly
equal:
the laws of comparative advantage break down.
it is an indication that nearly all the trade is intraindustry.
exports are probably just “finished” in the nation instead of
being fully sourced there.
there is a very low level of intraindustry trade.
98 Which of the following is the calculation that tells us the

proportion of trade in each product involving both imports and
exports?
the index of overlapping production
the index of effective trade
the index of intraindustry trade
the index of displacement
99 The index of intraindustry trade is calculated as:
the minimum of imports and exports divided by the average

of imports and exports.
the maximum of imports and exports divided by the sum of
imports and exports.
imports divided by exports.
imports plus exports divided by the average of imports and
exports.
100 Suppose that industry X and industry Y have intraindustry

trade indexes equal to 0.80 and 0.20, respectively. Which of the
following is then correct?
There is a greater share of intraindustry trade in industry X
than in industry Y.
There is a greater share of intraindustry trade in industry Y
than in industry X.
Industry X and industry Y have equal shares of intraindustry
trade.
There is no intraindustry trade in either industry X or
industry Y.
101 For which of the following products would you expect the index
of intraindustry trade to be lowest?
golf clubs
automobiles
whiskey
natural gas
102 If the index of intraindustry trade is high, products are

probably ______, and costs in both nations are ______.
identical; different
differentiated; similar
identical; similar
differentiated; different
103 What is the value of the index of intraindustry trade for an

industry in which exports are $100 million and imports are $200
million?
100/300 = 0.33
(100 + 200)/100 = 3.00
100/[1/2 × (100 + 200)] = 0.67
100/200 = 0.50
104 If the index of intraindustry trade for an industry is zero, then:
exports and imports in that industry are equal.

there are no exports in that industry.
there are no imports in that industry.
there is no trade in that industry.
105 If exports of an industry are $100 million and imports are zero,
which of the following is the value of the index of intraindustry
trade?
0
1
0.5
100 million
106 What is the value of the intraindustry trade index for an

million?
100/200 = 0.50
(100 + 100)/100 = 2.00
100/[1/2 × (100 + 100)] = 1.00
(100 – 100)/100 = 0.00
107 What is the value of the intraindustry trade index for an

million?
2.00
(200 + 20)/20 = 11.00
20/[1/2 × (200 + 20)] = 0.18
(200 – 20)/200 = 0.90
108 Table: Imports and Exports of Commodities Within U.S.

Industries
Product Value of Value of Exports
Imports ($million)
($million)
Golf Clubs $305.8 $318.7
Large passenger 7000 18,821.5
aircraft
Fax machines 271.8 150.2
Men's shorts 701.3 12.1
Reference: Ref 64
(Table: Imports and Exports of Commodities Within U.S.

Industries) Which of the following is the intraindustry trade
index for large passenger aircraft?
129.10%
54%
2.56%
42%

Industries
Imports ($million)
($million)
Golf Clubs $305.8 $318.7
aircraft
Reference: Ref 64

Industries) What is the intraindustry trade index for fax
machines?
211%
90%
71%
98%

Industries
Imports ($million)
($million)
Golf Clubs $305.8 $318.7
aircraft
Reference: Ref 64

Industries) In the table, which industry has the lowest intra
industry trade index?
large passenger aircraft
fax machines
golf clubs
men's shorts
111 The higher the value for the index of intraindustry trade:
the lower total trade is for other products.

the greater percentage of trade in that good is intra
industry.
the more we should be concerned about job loss and
outsourcing.
the higher the gains from trade.
112 The gravity equation is used to predict:
the level of bilateral trade.

the level of intraindustry trade.
the weight of exports plus imports.
the level of interindustry trade.
113 Which of the following is (are) factors affecting the constant in

gravity equation estimates?
I. tariffs and quotas
II. customs' issues and finance and currency issues
III. administrative barriers to trade
I
II
III
I, II, and III
114 Economist Jan Tinbergen developed a formula, called ______,

to predict which nations would engage in bilateral trade.
the trade deficit equation
the index of equality
the Tinbergen ratio
the gravity equation of trade
115 The gravity equation uses a calculation to predict the level of

bilateral trade based directly on ____ and inversely on _____.
wages; technology
size of the countries' GDP; the geographic distance between
the countries
the percent of the countries' GDP in manufacturing; their
level of tariffs
the growth rates of the countries' GDP; their openness to
trade
116 Other things equal, the gravity equation predicts that the United
States will have more trade with __________ than with
_________.
Bangladesh; Japan
Russia; Japan
Canada; Bangladesh
Russia; Bangladesh
117 Other things equal, the level of bilateral trade between two
countries will increase as their GDP:
rises.
falls.
stays the same.
becomes less equal.
118 Table: Distances and GDP

Country Distance from the GDP
United States
Germany 4,000 miles $4 trillion
Norway 4,000 miles $0.5 trillion
France 4,000 miles $2 trillion
Sweden 4,000 miles $1 trillion
Reference: Ref 65
(Table: Distances and GDP) According to the gravity equation,

which country should be the United States's largest trade
partner?
Germany
Norway
France
Sweden
119 Table: Distances and GDP

Country Distance from the GDP
United States
Germany 4,000 miles $4 trillion
Norway 4,000 miles $0.5 trillion
France 4,000 miles $2 trillion
Sweden 4,000 miles $1 trillion
Reference: Ref 65
(Table: Distances and GDP) According to the gravity equation,

which country should be the United States's smallest trade
partner?
Germany
Norway
France
Sweden
120 The distances from Paris, France, to Frankfurt, Germany;

Stockholm, Sweden; and Oslo, Norway, are about 400 miles,
450 miles, and 500 miles, respectively. Would you expect
French trade to be greatest with Germany, Sweden, or Norway?
Germany
Sweden
Norway
Equal volumes of trade would be expected with each
country.
121 Larger countries will trade more with one another; this is
empirically supported by:
the intraindustry trade.
the increasing returns to scale.
the gravity equation.
the comparative advantage.
122 Which of the following is the gravity equation calculation?
the inverse of the average GDPs times transportation costs

the sum of GDPs times total exports
the product of the GDPs in two nations divided by a measure
of the distance between them times a constant, reflecting other
factors affecting trade
the product of the land mass of the two nations divided by
the average of their GDPs times a constant factor, reflecting
other factors affecting trade
123 The gravity equation was tested and found to be very accurate
in predicting:
world trade in total.
trade between various provinces in Canada and American
states.
trade between the United States and Japan.
trade between nations in the European Union.
124 To test the gravity equation of trade, a regression model was

calculated for two nations, the United States and Canada,
testing the correlation among:
regional trade, size of GDP, and distance for states and
provinces.
intraindustry trade, size of GDP, and size of states and
provinces.
bilateral trade and ratio of GDP for states and provinces.
bilateral trade, size of GDP, and distance for states and
provinces.
125 What do tests of the gravity equation for trade between

Canadian provinces and American states indicate?
Individual state and individual provincial GDPs are negatively
related to the amount of trade between individual states and
provinces.
Individual state and individual provincial GDPs are positively
provinces.
Individual state and individual provincial GDPs are not at all
provinces.
The gravity equation does not apply to U.S.Canadian trade.
126 Border effects can result from:
trade.
tariffs.
monopolistic competition.
imperfect competition.
127 What did the gravity equation predict about trade within the
borders of a nation?
Trade between states or regions within a nation is much
more likely than trade outside the borders.
Trade between states or regions within a nation is much less
likely to occur.
There was no predictive value for trade within a nation's
borders.
Trade between states or regions within a nation is more
subject to national law and regulation and therefore not as
predictable.
128 When research and development costs are spread out over
more consumers, it is an example of what?
Answer:
economies of scale
129 Why can't the models developed in previous chapters

(Ricardian, specific factors, and HeckscherOhlin) be used to
explain trade in intraindustry products?
Answer:
Intraindustry trade is not possible in these previous models,

since they assumed two sectors, each producing a
homogeneous product.
130 XYZ Corporation is a monopolistic competitor. It has fixed costs of $1,000

per month and a constant marginal cost of $1 per unit of production.
A) Will it earn a monopoly profit if it produces 1,000 units and sells each
for $1.50?
B) Suppose the demand curve facing XYZ Corporation shifts to the right, so
it now can sell 2,000 units at $1.50 each. Will it now earn a monopoly
profit?
C) Why might XYZ's demand curve shift to the right?
D) What must XYZ do to find its shortrun equilibrium price and quantity?
Answer:
A) No; its average cost of production [($1,000 + $1.50 × 1,000)/1,000 =

$2.50] still exceeds the price it receives per unit.
B) No; its average cost of production [($1,000 + $1.50 × 2,000)/2,000 =
$2.00] still exceeds its average cost of production.
C) Other monopolistic competitors in the industry may have ceased
production, thus shifting demand to XYZ's output.
D) It must search for the output level where its MC of $1 equals the MR
earned from selling another unit of production.
131 ABC Corporation is a monopolistic competitor. It has fixed costs of $5,000 and a
constant marginal cost of $500 per unit of production. It faces a demand curve
described by this equation:
P = 1,000 – 10Q.
A) Find ABC's equilibrium price and quantity.
B) Will it earn monopoly profits at this equilibrium?
C) What will happen to ABC's price, quantity, and monopoly profits in the long
run?
Answer:
A) The demand curve for this equation has x and y intercepts of Q = 1,000 and P
= 100. Its slope is –10. Its MR is P = 500 – 20P, while its MR curve has x and
y intercepts of Q = 500 and P = $1,000 and a slope of –20. To derive the MR
curve, multiply the demand curve by P and take the derivative, that is, TR =
PQ = (1,000 – 10Q) × Q = 1,000Q – 20Q2 and dTR/dQ = 1,000 – 20Q. Setting
MC (= $500) equal to MR (= 1,000 – 20Q) yields 20Q = 500 and Q = 25.
Inserting Q = 25 into the demand equation yields a price of 1,000 – 10 × 49 =
$550.
B) At the price of $550 and quantity of 25, the firm's total revenue is $13,750 and
its total cost is $5,000 + 25 × $100 = $7,500. It is earning a monopoly profit
of $6,250.
C) Its price will fall, its output may fall or rise, depending on the change in its
demand curve as more firms enter its market, and its monopoly profits will
disappear.
132 A monopolistic competitor has fixed costs of $100 and a

constant $1 marginal cost of production.
A) Will this firm earn shortrun monopoly profits if it produces
and sells 300 units at a price of $2.00 each?
B) What can we expect to happen to this monopolistic
competitor in the long run?
Answer:
A) Yes; its total revenue is $600 ($2 × 300) and its total costs
are $400 (TFC of $100 and TVC of $300 = $1 × 300). The
difference is $200 of monopoly profits.
B) In the long run, these monopoly profits will attract new
entrants to the industry, which will shift the firm's demand
curve to the left until P = AC.
133 Does the demand curve facing a monopolistic competitor

become more or less elastic when it engages in international
trade? Why?
Answer:
The firm's demand curve becomes more elastic when it engages

in trade because the number of firms increases with each firm
producing a slightly differentiated product from other firms.
With the greater number of product varieties available to
consumers, demand for each individual variety will become
more elastic. The increase in the number of potential consumers
also increases the quantity demanded at each price, which
further flattens the demand curves facing individual firms.
134 Why would you expect firms with high research and
development costs to be more interested in free trade?
Answer:
Research and development costs are fixed costs. When these

costs are high, firms desire to spread those costs across more
consumers in order to increase profits.
135 The fall in real wages for the maquiladora workers during the
1990s was likely due to what?
Answer:
The rising prices of imported goods were caused by the peso

crisis, not by NAFTA.
136 Would you say that the gains from NAFTA clearly outweigh its
costs for the United States?
Answer:
No; the initial gains from additional variety roughly equaled the
initial costs of adjustment. However, the accumulated gains
from additional variety clearly outweigh the adjustment costs.
137 Has the United States gained or lost from NAFTA?
Answer:
Estimates in the text are that expansion in import variety due to

NAFTA has had the same beneficial impact on consumers as a
reduction in import prices of 1.2% per year. It estimates that a
1.2% reduction in the prices for Mexican imports would save
U.S. consumers $1.1 billion per year. These consumer savings
are permanent and increase over time, as export varieties from
Mexico continue to grow. Thus, in the first year of NAFTA, the
gain to U.S. consumers was $1.1 billion; in the second year, a
gain of $2.2 billion—equivalent to a total fall in prices of 2.4%;
in the third year, a gain of $3.3 billion, and so on. Adding these
up over the first nine years of NAFTA, the total benefit to
consumers was $49.5 billion, or an average of $5.5 billion per
year. In 2003, the 10th year of NAFTA, consumers would gain
by $11 billion as compared with 1994.
On the loss side, some 525,000 workers, or about 58,000 per

year, lost their jobs and were certified as adversely affected by
trade or investment with Canada or Mexico under the NAFTA
TAA program. As a result, those workers were entitled to
additional unemployment benefits. How large is the
displacement of 58,000 workers per year due to NAFTA? NAFTA
layoffs of 58,000 workers were about 13% of the total
displacement in manufacturing, which is a substantial amount.
Wages lost per each displaced worker were $93,000: $5.4
billion per year during the first nine years of NAFTA.
These losses are nearly equal to the average welfare gains of

$5.5 billion per year due to the expansion of import varieties
from Mexico from 1994 to 2002, but the gains from increased
product variety continue and grow over time, as new imported
products become available to American consumers. Recall from
the previous calculation that the gains from the ongoing
expansion of product varieties from Mexico were $11 billion in
2003, the 10th year of NAFTA, or twice as high as the $5.4
billion costs of adjustment. As the consumer gains continue to
grow, adjustment costs due to job losses fall. Thus, the
consumer gains from increased variety, when summed over
years, considerably exceed the private losses from
displacement. This outcome is guaranteed to occur because the
gains from expanded import varieties occur every year that the
imports are available, whereas labor displacement is a
temporary phenomenon.
138 The following table gives intraindustry trade in three industries.

Which of the three industries has the greatest degree of intra
industry trade?
A B C
Exports 100 200 300
Imports 200 200 200
Answer:
Calculate the index of intraindustry trade for each industry.

A) Index = 100/[.5(100 + 200)] = 0.67
B) Index = 200/[.5(200 + 200)] = 1.00
C) Index = 200/[.5(300 + 200)] = 0.80
Industry B has the highest degree of intraindustry trade.
139 Suppose that imports and exports in an industry are both $100
million. If exports rise to $200 million, will the value of the
industry's index of intraindustry trade rise, fall, or remain the
same?
Answer:
It will fall. The previous index value was 100/[1/2 × (100 +

100)] = 100/100 = 1.00. With the higher exports, the index
becomes 100/[1/2 × (100 + 200) = 100/150 = 0.67.
140 Can the index of intraindustry trade ever exceed 1.00?
Answer:
No; it will equal 1.00 when imports equal exports. In any

situation in which exports and imports are not equal, the
numerator will always be less than 1/2 × (exports + imports).
141 Suppose the index of intraindustry trade in the U.S. computer

industry increases from 0.25 to 0.50. Assuming no change in
U.S. computer imports, does this increase mean that the U.S.
computer industry exports more or less computers?
Answer:
Assuming no change in U.S. computer imports, then an increase

in the index of intraindustry trade means that the U.S. exports
more computers. For example, suppose U.S. computer exports
and imports were originally $100 and $700, respectively. These
values yield an index equal to 0.25 [= $100/(1/2 × (100 +
$700). Now suppose U.S. computer exports increase to $233.
The index increases to $233/[1/2 × (233 + 700)] = 0.499, or
0.50.
142 The values of the index of U.S. intraindustry trade for small
cars and large passenger aircraft are 40% and 10%,
respectively (Table 64 in the textbook). Suggest reasons for
the difference in these values.
Answer:
The index of intraindustry trade (IIT) is [1 – (the absolute

value of exports minus imports)/the value of exports plus
imports)]. The higher index value for intraindustry trade in
small cars than for large passenger aircraft indicates that the
difference between the values of U.S. imports and exports of
small cars is smaller than the difference between the values of
U.S. exports and imports of large passenger cars.
For example, suppose that U.S. exports and imports of small
cars are $100 million and $200 million, respectively. The IIT is
then 1 – (|100 million – 200million|) /($100 million + $200
million or 1 – ($100 million/$300 million) = 0.67.
If the U.S. IIT for large passenger aircraft is lower than the
IIT for small cars, then the difference between U.S. exports and
imports for large passenger aircraft must be smaller than the
difference between U.S. exports and imports of small cars.
For example, suppose that U.S. exports and imports of large
passenger aircraft are $1,000 million and $100 million,
respectively. The IIT for large passenger aircraft then is 1 –
$900 million/$1,100 million or 1 – 0.82 = 0.18.
The lower index for large passenger aircraft indicates that the
U.S. exports of large passenger aircraft are considerably larger
than its imports of large passenger aircraft (or its exports are
considerably smaller than its imports) than the difference
between its exports and imports of small cars. The lower index
value may indicate that the US comparative in large passenger
aircraft is considerably more significant than its comparative
advantage in producing small cars. Most likely, U.S. exports of
Boeing aircraft throughout the world account for this
discrepancy.
143 Use this information to answer the following questions: The

GDPs of countries A, B, and C are $1,000, $2,000, and $3,000,
respectively. There are 1,000 miles between country A and
countries B and C. Assume that their markets are
monopolistically competitive. Does the gravity equation predict
that there will be more trade between A and B or between A and
C?
Answer:
For trade between countries A and B, the gravity equation

equals 0.5 × [(1,000 × 2,000)/1,000] = 1,000. For trade
between countries A and C, the gravity equation equals 0.5 ×
[(1,000 × 3,000)/1,000] = 1,500. The gravity equation predicts
that there will be more trade between A and C than between A
and B.
144 Other things equal, do you expect that the gravity equation will
predict that there will be more trade between the United States
and Canada than between the United States and Argentina?
Answer:
Assuming that the GDPs of Canada and Argentina are
approximately equal, the gravity equation suggests that U.S.–
Canadian trade will be larger than United States – Argentina
trade since the denominator of the gravity equation (distn) is
smaller in the U.S–Canada case than in the U.S.–Argentina
case. The smaller denominator yields a higher value of the
index, which indicates more trade in the U.S.–Canada case.
145 NAFTA includes an agreement that allows trucks from

neighboring countries access to highways on both sides of the
border. Why did it take 17 years for the agreement to be
implemented between the United States and Mexico? And what
actions did Mexico take to facilitate the agreement's
implementation?
Answer:
Political pressure from U.S. trucking firms and the Teamsters'

Union stalled progress on this agreement. Mexico finally
retaliated with tariffs of about $2 billion on some U.S. goods
destined for Mexico. These tariffs forced the U.S. government to
agree to implement the trucking agreement.
146 Explain why the gravity equation for U.S and European trade
may be higher than the gravity equation for U.S. and Canadian
trade even though that the U.S. and Canada share a border.
Answer:
The two components to the gravity equation are the GDPs of the
two countries (in the numerator) and the distance between the
two countries (in the denominator). In the case of U.S.–EU
trade, the EU's larger GDP may outweigh its greater distance
from the United States and lead to a higher value for the gravity
equation for U.S.–EU trade.
Another random document with
no related content on Scribd:
Overton first. Yet did he, could he, really understand how much—
how very much—it had mattered to her? In the midst of her walk
Diane stopped short.
“What am I doing?” she cried to herself. “What am I doing? I’ve just
promised to marry one man, and—and I’m crying out here in broad
daylight over another!”
“But you told him, you warned him!” replied an inner voice. “You have
a right to go on feeling just the same as you did before.”
“But I’ve no right to marry Faunce if I love another man more!” she
cried again, arguing with the unseen ego.
Then, in the rustle of the wind in the bare trees, and the crash of ice
falling from their boughs, she seemed to hear an answer—a sublime
voice that reassured her. Overton was dead. He was only a dim and
glorious presence now. He had entered that sphere where they
neither marry nor are given in marriage; how could it matter to him
what she did?
She went on, quickening her steps, trying to reassure herself. She
recalled Faunce, the warm certainty of his affection, the nearness of
his presence. She told herself that she was happy, that she was
right, that she had followed her heart.
XII
That assurance remained with her later on, when she and the judge
sat down to a slightly belated breakfast. It had so far tranquilized her
mood that she could chat with him across the table about Dr. Gerry’s
sleepless night and the storm, while she poured out his coffee and
put in the requisite amount of sugar and cream with a firm and
graceful hand.
“I saw two telegraph-poles down,” she said. “The drifts have
completely filled the hollow below Skerry’s Hill.”
The judge looked up sharply from his breakfast.
“Faunce had to cross that bridge. I wonder if he got home all right!”
She was a little startled, and then she smiled reassuringly.
“Why, of course, papa! It was early when he left. It was only snowing
a little then; don’t you remember?”
“How did I know?” her father retorted with something like a growl.
“This lumbago keeps me doubled up like a jack-in-the-box!”
“It’s too bad! I did hope Dr. Gerry had got the better of it, or had
helped you to get the better of it; but I suppose this dreadful weather
is sure to retard the case.”
“There isn’t any cure for it. I’ve told Gerry so a dozen times. If it
stayed continuously, I should only be fit for a menagerie; but it’s
intermittent, thank Heaven! By the way, Di, where’s the newspaper?”
“It hasn’t come; I suppose the trains are stalled. They said something
about trouble on the line between here and New York. When I was
passing Sidney’s, on my way this morning, I heard the men talking at
the door. You had last night’s paper, papa, didn’t you?”
“As if I wanted stale news!” he retorted, going on with his breakfast.
“I saw something about the English expedition returning from the
antarctic. They must have had some delays, but they’ll crow over the
venture, I suppose. They seem to have made good. If only Overton
had lived!”
She pushed her plate aside, though she had scarcely tasted her
food, and clasped her hands on the edge of the table, suddenly
aware that her fingers were not quite steady.
“I didn’t notice the article. What did it say? I’m sure, quite sure, that
Arthur did all he could to finish the work, even after—their fearful
loss.”
“Very likely he did, my dear; but if these Englishmen got ahead of
him—steal a march on him, as it were—he hasn’t won much.
Besides, they’ve saved their ship. I saw there would be a great
reception for them in London. There’s nothing but disappointment in
that polar business. I want Faunce to give it up. I’ll put him in politics
here.”
She looked thoughtfully across the table at her father’s gray head,
his massive face, and his keen eyes bent on the table, while his
strong hands plied his knife and fork. The stooping of his big frame
suggested nothing of the weakness of age. His personality, dominant
and resourceful, seemed as immovable as rock.
“I’d rather you didn’t, papa,” she said quietly. “I want him to go on—to
finish the work he’s begun. He’s put his hand to the plow, as it were,
and he mustn’t turn back.”
Herford again looked up sharply.
“That’s a strange sentiment from a girl who’s supposed to be in love!
Don’t you know it’s a terrible risk for a man? Have you forgotten
Overton so soon?”
She rose from the table and went to the window, standing there,
looking out. He could see only the slender grace of her young figure
and the slight droop of her brown head.
“I shall never forget him,” she replied without looking at her father. “I
remember so well what he was, what he did, what he surely would
have become had he lived, that I don’t want Arthur to remain in his
shadow, to be so much less than he was. If there’s anything great in
a man’s soul, I think it’s wrong to choke it with weeds, and—and
——”
“You think the political weed is very suffocating?” her father
commented dryly. “As far as that goes, you’re right, my dear; but I’ve
managed to keep a little above the worst growth all these years, and
it’s possible that Arthur might do some weeding out. Reform is not
only a fad—it’s a fact.”
“You’re made for that kind of a life, papa; you can stand like a rock in
the midst of the tempest. You have the instinct and the prestige and
the great traditions that go to make a man safe in politics; but Arthur
has none of these things to give him a raison d’être in your world. I
feel sure it would dwarf him and spoil him. I want him to go on, to
finish his own work.”
“And if he gets killed on the way, you’ll still have the glory, eh?”
She turned with a shocked face.
“As if I cared for anything more than Arthur’s life!”
The judge strummed on the table with his fingers. His lumbago was
rending him to the point of incivility.
“Exactly! But you’re sending him to the pole to die as Overton died,
without reaping any reward but—death.”
She listened in silence, her eyes fixed on his angry face, but her
mind seemed to be far away. In fact, she was again questioning
herself. This recurrent mention of Overton shocked her new sense of
security, and seemed like a return of the moment when Dr. Gerry’s
question had broken the spell of her joy. After all, was it meant that
she should not forget? Must she try out and search her heart yet
further?
“I want you to drop this nonsense,” her father went on more
composedly. “Faunce will give up the idea if you will let him. I want
him here. I may not live long—I’m getting old, Diane, and I want you
married and settled.”
“Is that why you’re angry at the thought of the new expedition?”
He nodded.
“I want you to get married soon—before spring, anyway.”
She was startled.
“That would be too hurried, papa! You must give me more time than
that.”
“Why do you need time? It’s settled, isn’t it? You’ve followed your
own heart, haven’t you?”
There it was again, the same question!
“I want you married,” the judge repeated with some force. “I like
Faunce; you like him—very good! I’m opposed to long engagements,
and a lot of fuss and feathers. Make it short and plain, my girl.”
Diane looked at her father a little reproachfully.
“I didn’t know you wanted to get rid of me so much, papa!”
“I don’t mean to get rid of you,” he retorted crustily. “I mean to break
up these polar follies and to keep Faunce here.”
She smiled faintly, a little flush on her face. Then she glanced out of
the window again.
“There’s Fanny Price. I’ll go and let her in. She has tramped over
through the snow.”
“Don’t bring her in here, then!” snapped the judge sharply. “My back
hurts like the devil. I want to finish my meal in peace.”
Diane reassured him and stepped out of the room, thankful enough
to be released. She began to see vaguely, and with some little alarm,
that her father had been quietly bending her to his will; that he had
purposely thrown Faunce in her way; that he was, in fact, making the
match. The thought of it, in this light, was so distasteful that she was
glad to go to the door to let in her visitor.
Fanny, muffled in furs and submerged under a big hat, was not as
visible to the eyes as usual. She seemed to evade observation by
withdrawing into the recesses of fur and felt; but she pounced upon
Diane with a swift, birdlike motion, and kissed her.
“I came right over,” she said in a rather high-pitched, nervous tone,
“to wish you joy, dear!”
Diane looked amazed.
“How in the world did you know?”
Fanny laughed softly.
“Your father phoned to papa last night—before the wires were down
—that you and Mr. Faunce were engaged.”
“Oh!”
There was a low note of surprise and dismay in the exclamation, but
Diane said no more. She drew Fanny into the sitting-room, where a
fire had been kindled on the hearth.
“Mama sent her love,” Fanny went on, trying to appear cordial, “and
of course papa must have said something over the phone; but, you
know, papa has to think twice before he says just the right thing.”
Diane was trying to remove Fanny’s hat and furs, but the latter
resisted.
“Oh, no, I can’t stay, really! I just ran over to—to wish you joy, dear
Diane!”
There was a suspicion of a quiver in the girlish voice which, at
another time, would not have failed to attract her friend’s attention;
but, at the moment, Diane’s mind was occupied with the vexatious
thought of her father’s haste. She knew him so well, knew how
skilled and subtle he was in his political manipulations, and she
experienced a new and unpleasant dread that he had used his skill
and subtlety on Arthur.
Was it possible that Arthur’s haste was due to her father? A deep
blush mounted to Diane’s hair, transforming and beautifying her face
so much that Fanny was startled.
“How beautiful you look, Di! Are you—is it because you’re so
happy?”
“I don’t think that’s just what I feel, Fanny. It’s too new to think of like
that. It only seems to pervade everything, and to change my point of
view. I’m—I’m not used to it yet, and I can’t think why papa was in
such a hurry to announce it!”
Fanny hesitated, looking down at the fire so as to keep the brim of
her hat between her eyes and Diane’s.
“Well, you know they’re great gossips, papa and your father. I
suppose he called up for something else, and then added that. Men
are awfully casual about our dearest concerns! Papa’s been asking
the judge’s advice about the changes at the seminary, you see.”
“Perhaps that was it,” Diane admitted with a feeling of relief. “He’s
anxious to have me settled down, too. It seems I’ve been on his
mind,” she added with an odd little laugh.
There was a second of hesitation before Fanny answered, and this
time Diane noticed a strange tone in the girl’s voice.
“You’re going to be married soon, then?”
Diane busied herself rearranging two old bronze vases on the high
colonial mantel. The storks and the coiled dragons that surrounded
them in high relief had been among the wonders of her childhood.
“I don’t know—how should I? You see, Fanny, Mr. Faunce is going to
be made the head of the new expedition, but papa doesn’t want him
to go. He wants him to stay here and go into politics.”
“Oh!” exclaimed Fanny, just above her breath.
“But I want him to go.”
“Oh!” her visitor gasped again. “Why, he might die, too! If I were you,
I’d never let him go!”
Diane’s eyes kindled with the look of one who visions far-off glories.
“I would gladly go with him!”
There was a little pause, and then Fanny spoke with an effort.
“I hadn’t thought of that. Of course you could, Di, you’re so heroic!
You measure up to all this great endeavor. That’s what I told him just
now.”
“You told him? Where did you see him, Fanny?”
“I met him as I came past the Gerry house. He and the doctor were
just coming out together, and I congratulated him.”
Diane stopped her play with the bric-à-brac and stood with one hand
still on the tallest vase, looking down on the top of Fanny’s big hat.
“Was he with Dr. Gerry this morning? How did he manage in the
snow, I wonder? Did they have the sleigh?”
Fanny looked up, and their eyes met.
“He said he knew very little about the storm. He spent the night with
Dr. Gerry.”
Diane made no reply. In the ensuing silence she turned to the mantel
and, lifting down the vase, began to wipe a little dust from the
elaborate design at its mouth. It was quite a long time before she
replaced it.
XIII
Diane’s engagement created a stir of pleasure and pride in
Mapleton, but very little surprise. It was said on all sides that it had
been expected. New York and Washington would find it news, and it
might do to cable to London and Paris, where Faunce was already
recognized; but Mapleton had been anticipating it for weeks. Of
course, both young people were overwhelmed with felicitations.
Faunce, flushed with a new kind of pride and a joy that disguised his
secret pain, appeared even more winning than usual, while Diane, if
her happiness was more subdued, was equally charming.
As soon as Judge Herford’s lumbago relaxed its grip, he gave a little
dinner to announce his daughter’s engagement, and it proved a
great success. Even Fanny Price, pretty and studiously gay, helped
to keep the ball rolling, while Diane, in a simple gown that exactly
suited her, had never looked more lovely. No one could blame
Faunce for the infatuation that he was at no pains to conceal. Their
happiness found a response in nearly every heart, recalling the
ancient apothegm that “all the world loves a lover.”
Almost immediately after this occasion, too, there began to be a
report that the marriage would take place within a few weeks, for
Arthur Faunce, in spite of his recent engagement and Judge
Herford’s political dreams, had accepted the command of the new
antarctic expedition. He was to succeed not only to Overton’s work,
but to Overton’s honors.
If it seemed strange that he should elect to leave his prospective
bride so soon, all gossip was silenced by Diane’s own enthusiasm. It
was her wish, she said, that Arthur should complete the great task
that he had undertaken, and should carry the expedition through to a
final triumph. She believed in it. Her soul seemed to rise above fear
and doubt, and her beautiful eyes were fixed on the visionary glory of
a finished achievement.
It was an open secret that her father had consistently opposed the
expedition, and had tried to induce his future son-in-law to enter
politics; but Diane had overruled him, people whispered, and it was
her inspiration that had fired Faunce to renewed effort. It was an
open secret, too, that she was planning to accompany him for at
least part of the journey. They would be married just before the ship
sailed, and she would go with her husband, sharing his hardships
and his dangers as far as a woman could follow in the perilous path
of the explorers.
“I can’t bear to let her go,” the irate judge told Dr. Gerry; “but she’s
set her heart on it, and I’ve told Arthur that it’s up to him to see that
she’s kept out of danger. We can do that without her finding us out
until the last moment. When he comes back”—the judge smiled
grimly—“then comes my turn—politics and a safe road to fame!”
Dr. Gerry refrained from comment. He was the only one who had not
expressed enthusiastic approval. All the other neighbors and old
friends seemed to consider it an occasion for great rejoicing, an
honor and distinction to Mapleton, since Faunce was already an
international character, and was so soon to lead another important
expedition.
It remained for the dean, however, to disturb Mrs. Price’s satisfaction
in an engagement so poetic and distinguished, as she herself
described it.
Dr. Price, called to New York on various occasions, returned by late
trains, and one night, delayed beyond reason, he arrived after the
household had retired. His entrance roused Mrs. Price from her
dreams, and, while the dean was preparing to go to bed, they carried
on a disjointed conversation through the open door of his dressing-
room, made up of questions on her part and abstracted answers on
his. But he had something on his mind, and finally emerged to
plunge into the topic that had so recently absorbed the village.
“My dear, I’m not sure that Diane’s making such a fine match,” he
remarked. “It’s the second or third time that I’ve met Faunce
prancing around in lonely places at all hours.”
Mrs. Price sat up in bed.
“My dear Edward, do you suppose he drinks?”
The dean shook his head thoughtfully.
“I spoke to him, and I don’t think he knew me at first. His wits
seemed to be wool-gathering.”
“Perhaps, Edward, he’s—he’s seeking a light!” she whispered in an
awed tone.
The dean looked unconvinced.
“He’s a young man, Julia, and not religious. There’s something odd
about it. You remember Overton? You could feel his strength—he
seemed fairly to give it out. If he’d been a professing Christian, I
believe he could have led a host; but Faunce——” Dr. Price stopped
and stared meditatively into space.
“But he’s so handsome, Edward, and so much in love! I’ve often
thought he looked inspired, like that picture—you remember it?—
Andrea del Sarto’s young St. John. I think it’s very touching if his
grief for Overton has unbalanced his mind. It’s such a perfect
instance of friendship, I suppose the judge would call it a case of
Orestes and Pylades, but I can only think of David and Jonathan. I
hate heathen analogies! You take my word for it, he’s grieving for
Overton.”
The dean was skeptical.
“I’ve lived a long time, Julia,” he remarked dryly, “and I’ve never
known a young man to die of grief for his friend—or to lose his
reason, either.”
“Oh, Edward, you remember what is said about ‘greater love’?”
“Julia, Faunce didn’t lay down his life for his friend, and”—the dean
put out the light with a jerk, and his wife heard a decisive note in his
voice, as if his idea had gained momentum in the darkness—“I don’t
believe he’s got the courage to, either!”
“Edward!” she exclaimed with indignation.
The dean, however, refused to modify his opinion, and cut short the
conversation by promptly falling asleep.
Dr. Price had not been the only one to observe these nocturnal
wanderings of Arthur Faunce. They began to appear in certain vague
rumors that were afloat on the countryside. Two or three other
belated wayfarers had encountered the young explorer on his
midnight rambles, and his haggard looks attracted attention. That he
was not well showed in his brilliant eyes and the habitual pallor of his
face, which was flushed only in moments of excitement or pleasure.
Recently he had been forced to frame excuses to Diane, who had
observed the change in him, his forced gaiety, his frequent fits of
abstraction. He had attributed all this to the difficulties he was
encountering in his preparations for the new expedition, and he had
succeeded in so far enlisting her interest in his description of his
plans that her anxiety had apparently been disarmed.
He was aware, too—and the thought stung him—that Diane’s love
had none of that intimate tenderness which enables one mind almost
intuitively to understand the other, and one soul to feel the
overshadowing of its mate. He tried to comfort himself with the
assurance that it was best so, that he would not have it otherwise,
since he must keep his own secrets. Yet it cost him a pang to feel
that here, as everywhere else, the shade of Overton came between
him and perfect happiness. Even the triumph of his successful love
was chilled by the thought that in Diane’s heart he was second, and
that her girlish imagination clung to the memory of the lost leader
who had fallen, like the hero he was, on the road to glory.
His confession to Dr. Gerry, and the doctor’s subsequent efforts to
break the chloral habit, had effected only a temporary relief. He was
face to face with the shame of having laid bare his soul to another, of
having disclosed the mortal secret that ground his heart, to see only
contempt and condemnation in the eyes of his father confessor.
Nor had the doctor been content with secret adjurations. He had
tried his utmost to make Faunce release Diane, and, by some act of
self-immolation, to offer a kind of spiritual expiation for his crime. To
the sturdy old man the whole matter was intolerable. He had no
sympathy with complex natures like that of Faunce. He would have
declared that the possibilities of such a soul had to bear some
proportionate relation to the general economies of value; that to try
to expand Arthur’s spiritual horizon would be attended with the
difficulties encountered by the frog of the ancient story, which lost its
life in trying to expand its dimensions to the size of the neighboring
cow.
As for Faunce, the frantic impulse that had carried him to the height
—or the depth—of confession had expired almost as soon as the
words were uttered. It had seemed to him that confession would
ease his conscience, that the mere act of telling of his cowardice
would wipe out some of the score against him; but it had not proved
so. He was still haunted, and he had the added humiliation of the
doctor’s knowledge, the uneasy fear that an accident might lead to
betrayal.
All these months his silence—so easy and so secure, since there
was no living man to contradict him—had covered his error. That
was what he called it to himself—an error. He could not call it a
crime. Dr. Gerry’s idea that it was like murder was inexpressibly
shocking.
Faunce told himself that he was incapable of murder, that Overton
had been as good as dead, and that he left him—sorely against his
own will—to save himself from the same fate. Was it necessary that
both should die when one could be saved? Was it right that a young,
strong man should lay down his life rather than desert a frozen
comrade, who had barely enough vigor left in him to keep his heart
beating an hour? The idea seemed monstrous, when he thought of
it. At the time he had not thought of it; he had merely obeyed an
overwhelming instinct and fled for his life.
It was not his fault that Overton’s honors had fallen upon him like a
mantle of glory, that he had succeeded to Overton’s command. He
knew that old Dr. Gerry condemned him still more for grasping these
honors—which would never have come his way if he had returned
with the bare story of his flight; but he was not strong enough to
decline them. He knew that he would have been ruined forever had
the truth been known, but he had succeeded in saving himself. He
had chosen to let the snow and ice cover his desertion, and out of
the wreck of his peace of mind he had snatched at the mundane
honors that came to him. They were all he had, for his conscience
was in agony, and the face of Overton haunted him.
Sometimes, when he wandered at night, unable to sleep, he recalled
the torments of Macbeth. There were moments, dark and secret
ones, when the chloral was slow in taking effect, and his mind was
clouded with lurid visions. He felt himself one with the company of
those who have followed, through all the ages, in the bloody
footprints of Judas Iscariot. It was after such moments as these that
he nearly yielded to Dr. Gerry’s admonition.
“Go break off your engagement!” the doctor thundered in his ear.
“What right have you to marry a girl like Diane? If she knew, she’d
never forgive you. I tell you you’ve got to break it—you shall!”
But he did not. Instead, he pursued his course with a peculiar
obstinacy, a tenacity of purpose that amazed his counselor. He loved
Diane. It was the strongest passion he had left in the wreck of his
moral consciousness. He meant to snatch at happiness as he
snatched at honors and high repute, and to hold them almost by
force.
He was tortured, too, by the thought that delay might in some
inexplicable way result in disaster, and he urged on Judge Herford’s
inclination toward an early marriage. They had planned, at first, that
it should take place just before the new expedition sailed. It was
welcome news when he was informed that the ship would be ready a
month earlier than had been expected, and that it remained for him
either to change the date of departure or to wait until the time
originally set.
The message sent the blood to his heart with a mad rush of joy. He
would make Diane consent to an earlier wedding. Then he would
feel secure—secure of her at last—and he could set out as soon as
possible. Alone, he would dread the frozen wastes, but with her—
courage and high endeavor must be inspired by a love like his. He
would rise to the height of achievement, would expiate his past
failures in brilliant success. Then his conscience would surely
absolve him for not having uselessly laid down his own life because
another man had to die!
XIV
Faunce hurried to Diane at once with his tidings. As he approached
the house, he let his eyes rest on it with almost a feeling of
ownership, not unpardonable in a man who was soon to be united to
the only child of the owner. It might be said that after that he, too,
would have a claim upon it.
The house was old; it had been in the Herford family for two hundred
years. Looking at it, Faunce could distinguish the older portions, the
slant of the wide gables from the high ridge-pole, the small,
diamond-paned windows, and the stoop, which suggested a Dutch
origin. One of the ancient chimneys still towered high between the
main building and the sprawling extension; but modern taste and
increased family fortunes had added a bay window or two, and a
wide Southern veranda had increased the dignity and importance of
Judge Herford’s “mansion,” as it was called among the townspeople
when they remembered to drop the more familiar synonym—“the old
Herford house on Broad Street.”
Faunce liked it He liked its air of dignity behind trim hedgerows, its
embowered vines, and the wide-spread branches of the elm before
the door. He went up the path with the feeling that here, at last, there
were peace and security for him.
He found Diane in the library, bending over some sewing, which she
put away as he entered. She laughed softly as he bent to kiss her.
“You mustn’t come so often,” she chided, “if you want me to be ready
two months from now!”
He held her, looking down into her eyes.
“I want it sooner! Diane, the ship is ready. Can’t we be married in two
weeks?”
She did not reply. Instead, her eyes sank under his, and he felt a
quiver run through her. He thought of Overton again, with a pang of
jealousy, and tightened his hold.
“Diane, you’ll say yes? I must go, but I can’t go without you. You—
you’re not going to refuse?” he pleaded urgently, clasping her with
one arm, while with his other hand he lifted one of hers and pressed
it fervently against his cheek.
She did not withdraw her hand, but he felt that it lay cold and still in
his clasp. She was a long time in replying.
“Of course you’ll go, Arthur, but—not so soon! I couldn’t go so soon!
It seems too horribly hasty, as if I were in such a hurry to get married
that I couldn’t wait for any kind of dignity and ceremony!”
“It’s I who am in a hurry,” he rejoined quickly. “My darling, I can’t feel
secure! I keep thinking that you don’t really love me, and that you’ll
slip off and leave me at the eleventh hour.”
She laughed softly, a little tenderly. The warmth of his affection
seemed to enfold her in such a new security that she could not
understand what seemed to be, on his part, a haunting fear.
“I’m not like that, Arthur. I’ve always tried to be rather a loyal person,
dear; but I don’t like haste—in weddings!”
“But you must in ours,” he pleaded. “The ship can sail so much
sooner. I mean that it shall never sail without you, Diane! You don’t
want to make me more unhappy than I am?”
She withdrew herself a little from his embrace, looking up into his
face with serious eyes.
“Are you unhappy?” Then something that she saw there moved her
deeply. “Arthur, you’re not well! What’s wrong? Tell me!”
He hesitated; then he thought of using her evident anxiety to further
his purpose.
“I’m sick for the sea, dear, and to be off again—finishing the work.
Every day of delay tells on me; but I vow I sha’n’t go without you!”
She looked at him then, a light in her eyes, the charm of her face, so
delicate, so elusive, lending it a peculiar softness and glow.
“I don’t want you to go without me; but you must give me a little time.
Why, Arthur, I was working on wedding-finery when you came in!”
she admitted with a shy little laugh, glancing at the mass of fluff and
lace in the basket beside her.
“You don’t need it. You’re too charming for finery. Diane”—he caught
her hands again and drew her, half resisting, toward him—“make it
Wednesday at the latest!”
She shook her head.
“Shocking! I couldn’t!”
Then something in his look, in the troubled, handsome face bending
toward her, swept away her scruples. If she meant to marry him at
all, why quibble for delay, why beg off? She softened, and he read
her yielding in her eyes.
“Wednesday?” he repeated eagerly.
“Wednesday week,” she corrected.
Nor could he coax her to advance that day. She declared that she
was ashamed of such haste. They might as well run away and be
done with it!
“That would be heavenly—no fuss, no feathers! I’m ready. Will you
come, Diane? There’s a parson across the road!”
She smiled absently, her eyes still on his face.
“Arthur, you’re not well, or you’re worried,” she declared irrelevantly.
“Won’t you tell me? I can see that there’s something on your mind.”
He was startled, and reddened under her look.
“There’s nothing on my mind now, except Wednesday week!” he
protested steadily. “That’s far enough off to weigh upon me, isn’t it?”
She shook her head, not altogether reassured. She began to feel
vaguely that there was something between them, an impenetrable
veil which seemed to screen his inner self, and that not even the love
which he protested with such passion could dispel that impalpable
reserve; but a certain pride in her kept her from pursuing her
questions, and she let the matter drop.
XV
In the hastened preparations for the wedding, Fanny Price came
over to give her help. She and Diane directed the cards of invitation,
and sorted out and arranged the presents that were to be displayed
to the few intimates who could now witness the ceremony.
“You certainly have some lovely things,” was Fanny’s comment; “but
it’s strange, isn’t it, the way people’s minds seem to run to oyster-
forks? You’ve got eighteen dozen.”
Diane laughed.
“At least I can serve oysters! Here’s a beautiful fish-knife and fork,
too. Perhaps they connect us with things from the sea because
Arthur’s going to sail so soon!”
“I should think you were going to marry Neptune. Here are some
fish-plates!”
“They ought to have added something especially for the expedition!”
Fanny occupied herself in arranging the silver.
“Aren’t you a little afraid of it, Diane? The thought of that frozen
solitude frightens me. I’ve no courage!”
Diane made no immediate reply, and Fanny, giving her a sidelong
look, discovered that she had stopped work and was looking out of
the window with an absent air, her face quite colorless. The girl’s
heart beat fast with a sensation almost of anger. She was sure, with
her keen, girlish insight into such things, that at the moment Diane
was thinking, not of Faunce, but of Overton.
Fanny’s heart leaped up in defense of her hero. She remembered
him at her own fireside, with no eyes, no thought, for any one except
Diane. She made a deliberate tinkle in spreading out more spoons
and ladles.

(Download PDF) International Trade 3rd Edition Feenstra Test Bank Full Chapter

Uploaded by

Copyright:

Available Formats

(Download PDF) International Trade 3rd Edition Feenstra Test Bank Full Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

(Download PDF) International Trade 3rd Edition Feenstra Test Bank Full Chapter

Uploaded by

Copyright:

Available Formats

International Trade 3rd Edition Feenstra

International Trade 3rd Edition Feenstra Solutions

International Trade 4th Edition Feenstra Test Bank

International Trade 4th Edition Feenstra Solutions

International Economics 3rd Edition Feenstra Test Bank

International Logistics Management of International

Essentials of International Economics 3rd Edition

International Economics 4th Edition Feenstra Test Bank

International Macroeconomics 4th Edition Feenstra Test

1 Suppose that imports and exports in an industry are $100 million

2 The ____________ model best explains intra­industry trade.

3 To analyze intra­industry trade, we must bring in imperfect

5 The cross­trade of very similar products exported and imported

6 A differentiated product is one that:

is slightly different from the competitor's product, although it

7 “Differentiated” is another word for:

8 What will happen when a firm raises the price of a differentiated

9 Which of the following features is characteristic of monopolistic

10 Which of the following is NOT characteristic of a monopolistically

11 Increasing returns to scale occurs when a firm's:

average costs of production increase as its output increases.

average fixed costs increase as its output increases.

12 A feature of imperfect competition is _________, which means

13 Which of the following is the term describing very similar

14 Intra­industry trade refers:

to imports and exports within the same industry.

15 What term is used to describe situations where countries

16 Equilibrium in a monopoly occurs when:

the monopolist has driven out all competitors.

17 For a monopolistic competitor, marginal revenue at its short­run

18 A monopolist maximizes its profits by selling up to the point

19 The price charged by a monopoly firm is the market price

20 A monopolistic competitive firm:

will always earn monopoly profits.

21 A duopoly is a market structure in which:

two consumers buy the product.

22 If there is a duopoly and the products are identical

23 In a duopoly where products are differentiated and firms charge

24 In a duopoly, each firm faces:

a more elastic demand curve if it raises its price.

25 Which of the following is NOT an assumption of monopolistic

Each firm faces a perfectly elastic demand curve.

26 The demand curve facing a monopolistic competitor:

27 To analyze monopolistic competition in trade, we make several

28 Which of the following is NOT a characteristic of monopolistic

29 Which of the following is NOT an assumption for monopolistic

30 When average costs of production are falling, average cost:

is higher than marginal cost.

31 When there are increasing returns to scale, average costs must

33 Which of the following will NOT cause increasing returns to scale

34 A firm's average costs will be falling whenever its:

marginal costs are positive.

36 Consider the following cost information for a monopolist: its MR

37 At its current production level, a monopolist's marginal revenue

38 A monopolistic competitor has fixed costs of $100 and marginal

39 A monopolistic competitor has fixed costs of $100 and marginal

41 If a firm has an average total cost of $55 and an average fixed

42 If a firm has a total fixed cost of $75 and an average variable

43 In the long run, profits in a monopolistic competition market are

2 The ____________ model best explains intraindustry trade.

3 To analyze intraindustry trade, we must bring in imperfect

5 The crosstrade of very similar products exported and imported

14 Intraindustry trade refers:

17 For a monopolistic competitor, marginal revenue at its shortrun

Reference: Ref 61

Reference: Ref 61

55 Which of the following describes the longrun situation in a

64 In longrun equilibrium with trade, losses from import

94 U.S. unemployment as a result of freetrade agreements such as

99 The index of intraindustry trade is calculated as:

100 Suppose that industry X and industry Y have intraindustry