Question 1

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

Accepted Answer

A)   It would concentrate its productive activities mostly in developing countries.
B)   It would concentrate its productive activities in its home country.
C)   It would disperse its productive activities to those countries where they can be performed most efficiently.
D)   It would disperse its productive activities across all countries that serve as its market.
E)   It would concentrate its productive activities mostly in developed countries.

Question 2

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

Accepted Answer

A) True 
 B)False

Question 3

Define economies of scale and provide an example.

Accepted Answer

Economies of scale are unit cost reducti...

Question 4

In Latuna, it takes 10 resources to produce 1 ton of coffee and 13.5 resources to produce 1 ton of wheat. In South Narnia, it takes 40 resources to produce 1 ton of coffee and 12 resources to produce 1 ton of wheat. Latuna has a comparative advantage over South Narnia in

Accepted Answer

A)   both coffee and wheat.
B)   coffee
C)   wheat
D)   both coffee and wheat if combined.
E)   neither coffee nor wheat.

Question 5

The nation of Tazia exports agricultural products and in turn imports products that it does not produce such as computers and electronic devices. As a result, it spends more on imports than it gains from exports. Which perspective would frown on this form of international trade?

Accepted Answer

A)   new trade theory
B)   product life-cycle theory
C)   mercantilism
D)   Heckscher-Ohlin theory
E)   theory of national competitive advantage

Question 6

According to the product life-cycle theory, while demand for new products is starting to grow rapidly in the United States, demand in other advanced countries

Accepted Answer

A)   remains limited to high-income groups.
B)   necessitates production of that product in those countries.
C)   necessitates outsourcing of production to low-cost locations.
D)   raises the cost of production in the United States.
E)   causes a shift in the position of the United States from that of an exporter to an importer.

Question 7

Free trade exists when there is no government influence on what citizens can buy from another country or sell to another country.

Accepted Answer

A) True 
 B)False

Question 8

Mercantilism asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Accepted Answer

A) True 
 B)False

Question 9

Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. The United States is the world's third largest supplier of machinery and exports heavy machinery to Australia. Adam Smith would say this exchange occurs because

Accepted Answer

A)   tariff barriers determine the flow of goods and services between nations.
B)   countries are simultaneously encouraging exports and discouraging imports.
C)   first entrants to the industry ensure their nations have the first-mover advantages.
D)   nations with an absolute advantage in producing certain goods trade them for goods produced by other countries
E)   gold and silver are the mainstays of national wealth and essential to vigorous commerce.

Question 10

The theory of free trade is enhanced by the idea that resources typically move easily from one economic activity to another and allow nations to adapt quickly.

Accepted Answer

A) True 
 B)False

Question 11

The country of Dalima has long been a substantial exporter of seafood, reflecting its unusual abundance of coastal waters; in contrast, its continental neighbor, Bundeeza, has excelled in the export of goods produced in labor-intensive manufacturing industries. Based on this information, the export policies of the two countries is best explained by

Accepted Answer

A)   mercantilism.
B)   theory of absolute advantage.
C)   Heckscher-Ohlin theory.
D)   theory of comparative advantage.
E)   Samuelson's critique.

Question 12

Vernon theorizes that as the market in the United States and other advanced nations matures, ________ becomes the main competitive weapon.

Accepted Answer

A)   placement
B)   standardization
C)   marketing
D)   price
E)   customization

Question 13

The new trade theory diverts from its advocacy of free trade by suggesting that

Accepted Answer

A)   the price of a new product increases along with the increase in the popularity of the product.
B)   nations benefit from trade even in the absence of resource endowments and technology.
C)   there is an economic rationale for a proactive trade policy.
D)   the role of luck, entrepreneurship, and innovation is important in giving a firm first-mover advantages.
E)   market expansion leads to better realization of economies of scale.

Question 14

The country of Zeran specializes in the production of beef and produces beef more efficiently than any other country. It buys soybeans, which it produces less efficiently than beef, from Canta, even though it produces soybeans more efficiently than Canta. Which theory of international trade supports Zeran's decision to buy wheat from Canta?

Accepted Answer

A)   Samuelson critique
B)   mercantilism
C)   Ricardo's theory of comparative advantage
D)   Adam Smith's theory of absolute advantage
E)   Leontief's paradox

Question 15

A neo-mercantilist strategy would promote

Accepted Answer

A)   the equal distribution of exports and imports.
B)   boosting exports and limiting imports.
C)   boosting both imports and exports.
D)   limiting both imports and exports.
E)   boosting imports and limiting exports.

Question 16

Porter, in his diamond model, suggested that there is a strong association between ________ and the creation and persistence of competitive advantage in an industry.

Accepted Answer

A)   trade barriers
B)   vigorous domestic rivalry
C)   purchasing power parity
D)   the availability of a captive market
E)   first-mover advantages

Question 17

Describe the shortcomings of the product life-cycle theory in today's trading climate.

Accepted Answer

Viewed from an Asian or European perspec...

Question 18

New trade theory dictates that trade offers an opportunity for mutual gain when countries do not differ in their resource endowments or technology because trade

Accepted Answer

A)   results in a contraction of the size of the markets of individual firms.
B)   allows for production of products at higher prices.
C)   increases the variety of goods available to consumers and lowers the costs of those goods.
D)   allows countries to attain self-sufficiency in the production of all goods.
E)   guarantees first-mover advantages to all the countries that engage in trade.

Question 19

According to the product life-cycle theory, the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Accepted Answer

A) True 
 B)False

Question 20

The economic and strategic advantages that accrue to early entrants in an industry are called

Accepted Answer

A)   first-mover advantages.
B)   comparative advantages.
C)   absolute advantages.
D)   economies of scale.
E)   factor endowments.

Exam 6: International Trade Theory

The theory of free trade is enhanced by the idea that resources typically move easily from one economic activity to another and allow nations to adapt quickly.

Correct Answer
verified

Correct Answer
verified

Mercantilism asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Correct Answer
verified

The new trade theory diverts from its advocacy of free trade by suggesting that

Correct Answer
verified

Correct Answer
verified

The economic and strategic advantages that accrue to early entrants in an industry are called

Correct Answer
verified

In Latuna, it takes 10 resources to produce 1 ton of coffee and 13.5 resources to produce 1 ton of wheat. In South Narnia, it takes 40 resources to produce 1 ton of coffee and 12 resources to produce 1 ton of wheat. Latuna has a comparative advantage over South Narnia in

Correct Answer
verified

Free trade exists when there is no government influence on what citizens can buy from another country or sell to another country.

Correct Answer
verified

Porter, in his diamond model, suggested that there is a strong association between ________ and the creation and persistence of competitive advantage in an industry.

Correct Answer
verified

Vernon theorizes that as the market in the United States and other advanced nations matures, ________ becomes the main competitive weapon.

Correct Answer
verified

Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. The United States is the world's third largest supplier of machinery and exports heavy machinery to Australia. Adam Smith would say this exchange occurs because

Correct Answer
verified

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

Correct Answer
verified

According to the product life-cycle theory, while demand for new products is starting to grow rapidly in the United States, demand in other advanced countries

Correct Answer
verified

According to the product life-cycle theory, the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Correct Answer
verified

The nation of Tazia exports agricultural products and in turn imports products that it does not produce such as computers and electronic devices. As a result, it spends more on imports than it gains from exports. Which perspective would frown on this form of international trade?

Correct Answer
verified

A neo-mercantilist strategy would promote

Correct Answer
verified

Define economies of scale and provide an example.

Correct Answer
verified
Economies of scale are unit cost reducti...
View Answer

Describe the shortcomings of the product life-cycle theory in today's trading climate.

Correct Answer
verified
Viewed from an Asian or European perspec...
View Answer

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

Correct Answer
verified

New trade theory dictates that trade offers an opportunity for mutual gain when countries do not differ in their resource endowments or technology because trade

Correct Answer
verified

Exam 6: International Trade Theory

The theory of free trade is enhanced by the idea that resources typically move easily from one economic activity to another and allow nations to adapt quickly.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Mercantilism asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Correct AnswerverifiedShow Answer

The new trade theory diverts from its advocacy of free trade by suggesting that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The economic and strategic advantages that accrue to early entrants in an industry are called

Correct AnswerverifiedShow Answer

In Latuna, it takes 10 resources to produce 1 ton of coffee and 13.5 resources to produce 1 ton of wheat. In South Narnia, it takes 40 resources to produce 1 ton of coffee and 12 resources to produce 1 ton of wheat. Latuna has a comparative advantage over South Narnia in

Correct AnswerverifiedShow Answer

Free trade exists when there is no government influence on what citizens can buy from another country or sell to another country.

Correct AnswerverifiedShow Answer

Porter, in his diamond model, suggested that there is a strong association between ________ and the creation and persistence of competitive advantage in an industry.

Correct AnswerverifiedShow Answer

Vernon theorizes that as the market in the United States and other advanced nations matures, ________ becomes the main competitive weapon.

Correct AnswerverifiedShow Answer

Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. The United States is the world's third largest supplier of machinery and exports heavy machinery to Australia. Adam Smith would say this exchange occurs because

Correct AnswerverifiedShow Answer

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

Correct AnswerverifiedShow Answer

According to the product life-cycle theory, while demand for new products is starting to grow rapidly in the United States, demand in other advanced countries

Correct AnswerverifiedShow Answer

According to the product life-cycle theory, the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Correct AnswerverifiedShow Answer

The nation of Tazia exports agricultural products and in turn imports products that it does not produce such as computers and electronic devices. As a result, it spends more on imports than it gains from exports. Which perspective would frown on this form of international trade?

Correct AnswerverifiedShow Answer

A neo-mercantilist strategy would promote

Correct AnswerverifiedShow Answer

Define economies of scale and provide an example.

Correct AnswerverifiedEconomies of scale are unit cost reducti...View AnswerShow Answer

Describe the shortcomings of the product life-cycle theory in today's trading climate.

Correct AnswerverifiedViewed from an Asian or European perspec...View AnswerShow Answer

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

Correct AnswerverifiedShow Answer

New trade theory dictates that trade offers an opportunity for mutual gain when countries do not differ in their resource endowments or technology because trade

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
Economies of scale are unit cost reducti...
View Answer

Correct Answer
verified
Viewed from an Asian or European perspec...
View Answer

Correct Answer
verified

Correct Answer
verified