The document discusses the factor-price equalization theory and the effects of transportation costs on international trade. It states that differences in transportation costs affect the volume and composition of trade between nations but do not impact comparative advantage. Transportation costs and barriers cannot prevent product prices from equalizing across countries. The document also notes that the global economy has become less transport intensive over time as transportation costs have declined in the US, making imports more competitive in US markets.

1. Which of the following statements about the factor-price equalization theory and the effects of
transportation costs are correct? Check all that apply. Differences in transportation costs do not
affect the comparative advantage of trading nations. Transportation costs and other trade barriers
cannot prevent product prices from equalizing. Differences in transportation costs across
countries affect the volume and composition of trade. A product will be traded internationally as
long as the importing country is willing to pay more than the exporter's cost to produce the good
plus the cost to transport it. Which of the following statements about transportation costs are
correct? Check all that apply. The global economy has become much less transport intensive
than it once was. International transportation costs decline only in the United States. Since the
1960 s, transportation costs have been rising everywhere in the world. World output has shifted
into goods whose value is unrelated to their size and weight, and thus less transportation is
required for every dollar's worth of exports or imports. In the United States, the decline in the
relative cost of international transportation has made imports more competitive in U.S. markets.