ECON 335 MIDTERM 2 LATEST 2026-2027 ACCURATE SUMMER-FALL EXAM (NEW EXAM) (25pages)

1. Intraindustry trade refers to international trade of products made within the same industry. 2. Intraindustry trade is characterized by what two features of the industry and market? Economies of scale and differentiated products 3. One reason that a large share of the trade between high-income industrial economies is intraindustry trade is because It allows firms to take advantage of internal economies of scale. 4. Strategic trade policy is concerned with capturing excess profits from foreign producers. 5. Which of the following is NOT a problem in the implementation of industrial policies? A) Choosing the industry to target B) Knowing the optimum amount of resources to provide the targeted industry C) The encouragement of rent seeking by firms in other industries D) The benefits are partly captured by foreign firms. E) All of the above are problems. 6. Two areas where the United States maintains considerable industrial support are A) manufacturing and education. B) housing and manufacturing. C) banking and retail sales. D) manufacturing and retail sales. E) agriculture and defense. 7. Which of the following is NOT true about the Grubel-Lloyd (GL) index given by the equation: GLi = 1 - ? Xi +Mi If either X < M> 1. 8. An internal economies of scale is defined as A) one whose size or scale effects are not located in the firm, but in the industry. B) one with falling costs over a specific level of output. C) one with falling costs over a relatively large range of output. D) one with falling costs over a relatively large range of output, but definite declining