International Trade 4th Edition by Feenstra – Test Bank

International Trade 4th Edition by Feenstra – Test Bank

Chapter 07

1. The provision of a service or input component part that is assembled into a final good at another location is known as:
A) barter.
B) component trade.
C) intermediate trade.
D) offshoring.

2. Intel produces microchips in China and Costa Rica using subsidiaries that it owns. Mattel, in contrast, contracts with firms in several different countries to produce the Barbie doll, which it then imports to the United States. Which of the following statements about the two companies is correct?
A) Intel is involved in foreign offshoring and Mattel is involved in foreign outsourcing.
B) Intel and Mattel are both involved in foreign outsourcing.
C) Intel and Mattel are both involved in foreign offshoring.
D) Intel is involved in foreign outsourcing, and Mattel is involved in foreign offshoring.

3. Though offshoring and outsourcing are technically different, Feenstra and Taylor use the term offshoring to include:
A) both offshoring and outsourcing activities.
B) only offshoring activities.
C) only outsourcing activities.
D) neither offshoring nor outsourcing activities.

4. An example of offshoring is when:
A) Boeing contracts with companies across the world to manufacture components for its 787 Dreamliner aircraft.
B) Boeing assembles its 787 Dreamliner in Everett, Washington.
C) Boeing contracts with another American company to construct sections of the 787 Dreamliner’s fuselage in Charleston, South Carolina.
D) Boeing sends workers to Japan to learn the technology to assemble its 787 Dreamliner.

5. How does the offshoring model differ from the type of trade analyzed with the Ricardian and Heckscher–Ohlin trade models?
A) There is no difference since the offshoring, Ricardian, and Heckscher–Ohlin trade models can be used to analyze offshoring.
B) The Ricardian and Heckscher–Ohlin trade models can only analyze trade in finished products.
C) The Ricardian model can be used to analyze offshoring while the Heckscher–Ohlin model only analyzes trade in finished products.
D) The Heckscher–Ohlin model can be used to analyze offshoring while the Ricardian model only analyzes trade in finished products

6. The offshoring model is mainly useful to:
A) study only changes in returns to capital in capital-abundant and labor-abundant countries.
B) study changes in returns to both capital and labor in capital-abundant and labor-abundant countries.
C) study changes in wage payments to low-skilled workers in capital-abundant and labor-abundant countries.
D) study changes in wage payments to both high-skilled and low-skilled workers in capital-abundant and labor-abundant countries.

7. Some U.S. companies are choosing to move some operations back to the United States because lower costs of communication within the U.S. allow them to make quick changes to design and production. This phenomenon is called:
A) insourcing.
B) offshoring.
C) onshoring.
D) retrenching.

8. The most important reason why firms consider offshoring is to decrease their:
A) labor costs.
B) transportation costs.
C) construction costs.
D) “trade costs.”

9. Which of the following is an example of offshoring?
A) Intel undertakes direct foreign investment in China to produce computer chips for the Chinese market.
B) Ford establishes a factory in Germany to produce automobiles for the European market.
C) General Motors moves assembly operations for Chevrolets from Detroit to its plant in Mexico.
D) Nike closes its Indonesian factory and moves production to the United States to produce tennis shoes for the U.S. market.