Question 1

Comparative advantage differs from absolute advantage in that the former ________, whereas the latter ________.

Accepted Answer

A) holds that countries should specialize their production; does not 
B) holds that trade should be kept as nearly in balance as possible; says countries should seek a favorable balance of trade 
C) bases trade on natural advantages; bases trade on acquired advantage 
D) states that there is a basis of trade even if one country can produce everything more efficiently than another country; does not deal with this issue 
A) holds that countries should specialize their production; does not 
B) holds that trade should be kept as nearly in balance as possible; says countries should seek a favorable balance of trade 
C) bases trade on natural advantages; bases trade on acquired advantage 
D) states that there is a basis of trade even if one country can produce everything more efficiently than another country; does not deal with this issue

Question 2

The existence of the four favorable conditions of the diamond of national advantage does not guarantee that an industry will develop in a given locale.

Accepted Answer

A) True 
 B)False

Question 3

In a short essay, discuss the theory of absolute advantage and the reasons a country's efficiency improves based on this theory.

Accepted Answer

The theory of absolute advantage holds t

Question 4

All countries face the questions of what, how much, and with whom they should import and export.How they answer these questions primarily affects whether ________.

Accepted Answer

A) nontradable goods become tradable 
B) products go through a lengthy life cycle 
C) companies adhere to laissez-faire export policies 
D) a company's present production location will be competitive 
A) nontradable goods become tradable 
B) products go through a lengthy life cycle 
C) companies adhere to laissez-faire export policies 
D) a company's present production location will be competitive

Question 5

Analysts conclude that the finite supply of natural resources will most likely ________.

Accepted Answer

A) cause a higher proportion of world trade to occur among developed countries 
B) cause a higher proportion of world trade to occur among developing countries 
C) serve as an advantage for developing countries in their sales to developed countries 
D) create a greater portion of world trade in the form of services 
A) cause a higher proportion of world trade to occur among developed countries 
B) cause a higher proportion of world trade to occur among developing countries 
C) serve as an advantage for developing countries in their sales to developed countries 
D) create a greater portion of world trade in the form of services

Question 6

The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________.

Accepted Answer

A) depend more on production of nontradable goods and services 
B) encourage urbanization in emerging countries that lack infrastructure 
C) establish facilities in dispersed locations to hinder domestic competition 
D) take advantage of wage and skill differences among countries 
A) depend more on production of nontradable goods and services 
B) encourage urbanization in emerging countries that lack infrastructure 
C) establish facilities in dispersed locations to hinder domestic competition 
D) take advantage of wage and skill differences among countries

Question 7

According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________.

Accepted Answer

A) the country will forgo producing its less efficient output in order to produce its more efficient output 
B) workers become more efficient through specialization 
C) economies of scale will reduce cost 
D) there will be more incentive to develop cost-saving technologies 
A) the country will forgo producing its less efficient output in order to produce its more efficient output 
B) workers become more efficient through specialization 
C) economies of scale will reduce cost 
D) there will be more incentive to develop cost-saving technologies

Question 8

Under mercantilism, colonial powers sought to run trade surpluses with their colonies by preventing the colonies from manufacturing.

Accepted Answer

A) True 
 B)False

Question 9

Countries with large land areas are generally less dependent on trade than countries with small land areas.

Accepted Answer

A) True 
 B)False

Question 10

Assume the following conditions: In the United States it takes 4 units of resources to produce a ton of potatoes and 5 to produce a ton of coal.In Canada it takes 6 units of resources to produce a ton of potatoes and 10 to produce a ton of coal.According to the theory of comparative advantage, ________.

Accepted Answer

A) there would be no basis for trade 
B) the United States should import potatoes from Canada and export coal to Canada 
C) the United States should export both potatoes and coal to Canada 
D) the United States should export potatoes to Canada and import coal from Canada 
A) there would be no basis for trade 
B) the United States should import potatoes from Canada and export coal to Canada 
C) the United States should export both potatoes and coal to Canada 
D) the United States should export potatoes to Canada and import coal from Canada

Question 11

According to the product life cycle (PLC)theory of trade, most new products are produced in countries where wage rates are low.

Accepted Answer

A) True 
 B)False

Question 12

The finite nature of natural resources should work as a disadvantage for the export prices of developing countries.

Accepted Answer

A) True 
 B)False

Question 13

Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft?

Accepted Answer

A) Buyers procure similar products for replacement parts. 
B) Transportation costs and cultural differences limit exporters. 
C) Companies differentiate products to appeal to different consumers. 
D) Bilateral trading agreements require this interchange for a number of products. 
A) Buyers procure similar products for replacement parts. 
B) Transportation costs and cultural differences limit exporters. 
C) Companies differentiate products to appeal to different consumers. 
D) Bilateral trading agreements require this interchange for a number of products.

Question 14

All of the following are examples of international labor mobility EXCEPT ________.

Accepted Answer

A) a manager assigned by an MNE to work short-term abroad 
B) a refugee who takes up employment in another country 
C) a college student on a study abroad program 
D) an illegal immigrant working in another country 
A) a manager assigned by an MNE to work short-term abroad 
B) a refugee who takes up employment in another country 
C) a college student on a study abroad program 
D) an illegal immigrant working in another country

Question 15

A strategic trade policy is one that develops industries to lessen dependence on foreign military goods.

Accepted Answer

A) True 
 B)False

Question 16

What assumptions underlie the theories of specialization in international trade? What are the limitations of these assumptions?

Accepted Answer

The assumptions that underlie the theori

Question 17

Which one of the following is a primary assumption of the free trade theories of specialization?

Accepted Answer

A) Domestic resources are unable to move from the production of one good to another. 
B) Countries have objectives other than economic efficiency. 
C) Specialization triggers unemployment. 
D) Resources are immobile internationally. 
A) Domestic resources are unable to move from the production of one good to another. 
B) Countries have objectives other than economic efficiency. 
C) Specialization triggers unemployment. 
D) Resources are immobile internationally.

Question 18

The most internationally mobile factor of production is ________.

Accepted Answer

A) labor 
B) management 
C) long-term capital 
D) short-term capital 
A) labor 
B) management 
C) long-term capital 
D) short-term capital

Question 19

According to the PLC theory, what is the most likely reason that companies manufacture products in locations with high labor rates during the introductory stage of a product's life cycle?

Accepted Answer

A) Doing so allows use of long production runs using capital-intensive methods. 
B) Many consumers are willing to pay high costs for the newest products. 
C) Transportation costs are reduced by focusing on markets in developed countries. 
D) Import restrictions prevent production in countries other than the ones making product innovations. 
A) Doing so allows use of long production runs using capital-intensive methods. 
B) Many consumers are willing to pay high costs for the newest products. 
C) Transportation costs are reduced by focusing on markets in developed countries. 
D) Import restrictions prevent production in countries other than the ones making product innovations.

Question 20

What is the country similarity theory? According to this theory, what factors affect trade patterns?

Accepted Answer

Observations of trade patterns reveal th

Comparative advantage differs from absolute advantage in that the former , whereas the latter .

The existence of the four favorable conditions of the diamond of national advantage does not guarantee that an industry will develop in a given locale.

In a short essay, discuss the theory of absolute advantage and the reasons a country's efficiency improves based on this theory.

All countries face the questions of what, how much, and with whom they should import and export.How they answer these questions primarily affects whether ________.

Analysts conclude that the finite supply of natural resources will most likely ________.

The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________.

According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________.

Under mercantilism, colonial powers sought to run trade surpluses with their colonies by preventing the colonies from manufacturing.

Countries with large land areas are generally less dependent on trade than countries with small land areas.

According to the product life cycle (PLC)theory of trade, most new products are produced in countries where wage rates are low.

The finite nature of natural resources should work as a disadvantage for the export prices of developing countries.

Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft?

All of the following are examples of international labor mobility EXCEPT ________.

A strategic trade policy is one that develops industries to lessen dependence on foreign military goods.

What assumptions underlie the theories of specialization in international trade? What are the limitations of these assumptions?

Which one of the following is a primary assumption of the free trade theories of specialization?

The most internationally mobile factor of production is ________.

According to the PLC theory, what is the most likely reason that companies manufacture products in locations with high labor rates during the introductory stage of a product's life cycle?

What is the country similarity theory? According to this theory, what factors affect trade patterns?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

The Determination of Exchange Rates

Global Capital Markets

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting and Finance Issues

International Human Resource Management

Filters

Exam 6: International Trade and Factor-Mobility Theory

Comparative advantage differs from absolute advantage in that the former ________, whereas the latter ________.

The existence of the four favorable conditions of the diamond of national advantage does not guarantee that an industry will develop in a given locale.

In a short essay, discuss the theory of absolute advantage and the reasons a country's efficiency improves based on this theory.

All countries face the questions of what, how much, and with whom they should import and export.How they answer these questions primarily affects whether ________.

Analysts conclude that the finite supply of natural resources will most likely ________.

The premise that there will be more finely tuned specialization of production among countries is most likely based on the idea that companies will ________.

According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________.

Under mercantilism, colonial powers sought to run trade surpluses with their colonies by preventing the colonies from manufacturing.

Countries with large land areas are generally less dependent on trade than countries with small land areas.

According to the product life cycle (PLC)theory of trade, most new products are produced in countries where wage rates are low.

The finite nature of natural resources should work as a disadvantage for the export prices of developing countries.

Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft?

All of the following are examples of international labor mobility EXCEPT ________.

A strategic trade policy is one that develops industries to lessen dependence on foreign military goods.

What assumptions underlie the theories of specialization in international trade? What are the limitations of these assumptions?

Which one of the following is a primary assumption of the free trade theories of specialization?

The most internationally mobile factor of production is ________.

According to the PLC theory, what is the most likely reason that companies manufacture products in locations with high labor rates during the introductory stage of a product's life cycle?

What is the country similarity theory? According to this theory, what factors affect trade patterns?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

The Determination of Exchange Rates

Global Capital Markets

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting and Finance Issues

International Human Resource Management

Filters

Comparative advantage differs from absolute advantage in that the former , whereas the latter .