Exam 3: The Theory of Trade and Investment

The countries of Honduras and Belize engage in trade of bananas and sugar cane. Although Honduras has an absolute advantage in the production of both bananas and sugar cane,it is relatively more efficient in the production of bananas. Therefore,Honduras exports bananas to Belize and imports sugar cane from Belize. This example demonstrates the:

After successfully selling a patented cookware product for two years,the Selzon Company has learned that several competitors with slight variations of this product have emerged in the market place. This particular cookware item is likely in what stage of the product cycle?

All of the following are circumstances involving imperfect competition in strategic trade EXCEPT:

Internal economies of scale occur when the cost per unit increases as the firm grows in scope.

Describe strategic trade theory and the four specific circumstances involving imperfect competition.

________ is a policy for economic growth adopted by many developing countries that involves the systematic encouragement of domestic production of goods formerly imported.

________ analysis is a method for estimating market activities and potential that measures the factor inflows into production and the resultant outflow of products.

Product cycle theory is most appropriate for technology-based products.

The first choice in the foreign direct investment decision is whether to produce at home and export to foreign markets,or to produce abroad.

According to Michael Porter,a nation's competitiveness depends on the capacity of its industry to:

The final decision in the foreign direct investment decision is whether to:

Which of the following IS NOT included in Porter's "diamond of national advantage"?

____________ is the effort to build unique differences or improvements into products.

Contrary to popular belief,it is the ______ that initiates trade and the _______ that accepts goods from trade domestically and internationally.

__________ are critical masses of unusual competitive success in particular fields.

The ability of multinational firms to be successfully rests on their ability to gain an advantage. This demonstrates imperfections in:

According to factor proportion trade theory,a country that is relatively labor abundant should specialize in the production of relatively labor-intensive goods.It should then export those labor-intensive goods in exchange for capital-intensive goods.

The product cycle theory is most appropriate for which product?

___________ is the effort to build unique differences or improvements into products.

Competitive clusters are critical masses of unusual competitive success in particular fields or industries.