Question 1

Heckscher-Ohlin theory stresses that comparative advantage arises from differences in productivity.

Accepted Answer

A) True 
 B)False  False

Question 2

Economies of scale have a number of sources, including the ability

Accepted Answer

A)  to average out the variable costs of production. 
B)  of large-volume producers to utilize specialized employees and equipment. 
C)  to adjust the scale of production based upon product saturation in the marketplace. 
D)  to utilize nonspecialized employees interchangeably. 
A)  to average out the variable costs of production. 
B)  of large-volume producers to utilize specialized employees and equipment. 
C)  to adjust the scale of production based upon product saturation in the marketplace. 
D)  to utilize nonspecialized employees interchangeably. B

Question 3

What are the four attributes that are discussed in Porter's diamond?

Accepted Answer

The four factors are:
(1) Factor endowments-a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry.
(2) Demand conditions-the nature of home demand for the industry's product or service.
(3) Relating and supporting industries-the presence or absence of supplier industries and related industries that are internationally competitive.
(4) Firm strategy, structure, and rivalry-the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry.

Question 4

Identify the theory that supports the view that, in some cases, countries export for the reason that the world market can support only a limited number of firms.

Accepted Answer

A)  Heckscher-Ohlin theory 
B)  Smith's theory 
C)  Ricardo's theory 
D)  new trade theory 
A)  Heckscher-Ohlin theory 
B)  Smith's theory 
C)  Ricardo's theory 
D)  new trade theory

Question 5

Which of the following is one of the four attributes present in Porter's diamond?

Accepted Answer

A)  economies of scale 
B)  factor endowments 
C)  structural innovation 
D)  procedural innovation 
A)  economies of scale 
B)  factor endowments 
C)  structural innovation 
D)  procedural innovation

Question 6

Which of the following balance-of-payment accounts records onetime changes in the stock of assets?

Accepted Answer

A)  capital account 
B)  current account 
C)  financial account 
D)  monetary account 
A)  capital account 
B)  current account 
C)  financial account 
D)  monetary account

Question 7

Identify a major disadvantage of the product life-cycle theory.

Accepted Answer

Viewed from an Asian or European perspec

Question 8

Which of the following is the main principle of mercantilism?

Accepted Answer

A)  Protection of domestic industries is not essential for a nation's welfare. 
B)  Government intervention is not required in global trade. 
C)  Countries should encourage absolute free trade. 
D)  It is in a country's best interests to maintain a trade surplus. 
A)  Protection of domestic industries is not essential for a nation's welfare. 
B)  Government intervention is not required in global trade. 
C)  Countries should encourage absolute free trade. 
D)  It is in a country's best interests to maintain a trade surplus.

Question 9

________ are unit cost reductions associated with a large scale of output.

Accepted Answer

A)  Current account deficits 
B)  Economies of scale 
C)  Current account surpluses 
D)  Factor endowments 
A)  Current account deficits 
B)  Economies of scale 
C)  Current account surpluses 
D)  Factor endowments

Question 10

One of the advantages of being the first mover in a market is

Accepted Answer

A)  there is little risk involved. 
B)  to benefit from a higher cost structure. 
C)  the ability to capture scale economies ahead of later entrants. 
D)  local governments are more favorable to the first movers. 
A)  there is little risk involved. 
B)  to benefit from a higher cost structure. 
C)  the ability to capture scale economies ahead of later entrants. 
D)  local governments are more favorable to the first movers.

Question 11

The simple model of free trade assumed away transportation costs between countries.

Accepted Answer

A) True 
 B)False

Question 12

China has the infrastructure and the skilled labor that has enabled it to become a world manufacturing leader. This relates to which of Porter's attributes of a nation?

Accepted Answer

A)  firm strategy, structure, and rivalry 
B)  related and supporting industries 
C)  demand conditions 
D)  factor endowments 
A)  firm strategy, structure, and rivalry 
B)  related and supporting industries 
C)  demand conditions 
D)  factor endowments

Question 13

Porter's theory of national competitive advantage recommends unrestricted free trade between countries.

Accepted Answer

A) True 
 B)False

Question 14

Explain Smith's theory of absolute advantage.

Accepted Answer

A country has an absolute advantage in t

Question 15

Identify the theory that argues that advanced nations have an incentive to develop new consumer products and hence such nations always tend to create a good or service for the first time.

Accepted Answer

A)  absolute advantage 
B)  Ricardo 
C)  product life-cycle 
D)  Heckscher-Ohlin 
A)  absolute advantage 
B)  Ricardo 
C)  product life-cycle 
D)  Heckscher-Ohlin

Question 16

Which of the following statements is true of the Leontief paradox?

Accepted Answer

A)  It shows an anomaly that occurs when a nation has high domestic demand for a product. 
B)  It explains the relationship between domestic demand and comparative advantage. 
C)  It disproved Ricardo's theory of comparative advantage. 
D)  It raised questions about the validity of the Heckscher-Ohlin theory. 
A)  It shows an anomaly that occurs when a nation has high domestic demand for a product. 
B)  It explains the relationship between domestic demand and comparative advantage. 
C)  It disproved Ricardo's theory of comparative advantage. 
D)  It raised questions about the validity of the Heckscher-Ohlin theory.

Question 17

Which of the following is a statement that supports the theory of comparative advantage?

Accepted Answer

A)  International trade is a zero-sum gain where one nation's gain is another's loss. 
B)  Domestic industries are at risk when a country engages in free trade. 
C)  A country should maintain a trade surplus to succeed in global trade. 
D)  Global production is greater with free trade than it is with restricted trade. 
A)  International trade is a zero-sum gain where one nation's gain is another's loss. 
B)  Domestic industries are at risk when a country engages in free trade. 
C)  A country should maintain a trade surplus to succeed in global trade. 
D)  Global production is greater with free trade than it is with restricted trade.

Question 18

The theories of Smith and Ricardo show that a country should engage in international trade, even for products that it is able to produce for itself.

Accepted Answer

A) True 
 B)False

Question 19

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

Accepted Answer

A) True 
 B)False

Question 20

New trade theorists stress the role of luck in giving a firm first-mover advantages.

Accepted Answer

A) True 
 B)False

Heckscher-Ohlin theory stresses that comparative advantage arises from differences in productivity.

Economies of scale have a number of sources, including the ability

What are the four attributes that are discussed in Porter's diamond?

Identify the theory that supports the view that, in some cases, countries export for the reason that the world market can support only a limited number of firms.

Which of the following is one of the four attributes present in Porter's diamond?

Which of the following balance-of-payment accounts records onetime changes in the stock of assets?

Identify a major disadvantage of the product life-cycle theory.

Which of the following is the main principle of mercantilism?

________ are unit cost reductions associated with a large scale of output.

One of the advantages of being the first mover in a market is

The simple model of free trade assumed away transportation costs between countries.

China has the infrastructure and the skilled labor that has enabled it to become a world manufacturing leader. This relates to which of Porter's attributes of a nation?

Porter's theory of national competitive advantage recommends unrestricted free trade between countries.

Explain Smith's theory of absolute advantage.

Identify the theory that argues that advanced nations have an incentive to develop new consumer products and hence such nations always tend to create a good or service for the first time.

Which of the following statements is true of the Leontief paradox?

Which of the following is a statement that supports the theory of comparative advantage?

The theories of Smith and Ricardo show that a country should engage in international trade, even for products that it is able to produce for itself.

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

New trade theorists stress the role of luck in giving a firm first-mover advantages.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 6: International Trade Theory

Heckscher-Ohlin theory stresses that comparative advantage arises from differences in productivity.

Economies of scale have a number of sources, including the ability

What are the four attributes that are discussed in Porter's diamond?

Identify the theory that supports the view that, in some cases, countries export for the reason that the world market can support only a limited number of firms.

Which of the following is one of the four attributes present in Porter's diamond?

Which of the following balance-of-payment accounts records onetime changes in the stock of assets?

Identify a major disadvantage of the product life-cycle theory.

Which of the following is the main principle of mercantilism?

________ are unit cost reductions associated with a large scale of output.

One of the advantages of being the first mover in a market is

The simple model of free trade assumed away transportation costs between countries.

China has the infrastructure and the skilled labor that has enabled it to become a world manufacturing leader. This relates to which of Porter's attributes of a nation?

Porter's theory of national competitive advantage recommends unrestricted free trade between countries.

Explain Smith's theory of absolute advantage.

Identify the theory that argues that advanced nations have an incentive to develop new consumer products and hence such nations always tend to create a good or service for the first time.

Which of the following statements is true of the Leontief paradox?

Which of the following is a statement that supports the theory of comparative advantage?

The theories of Smith and Ricardo show that a country should engage in international trade, even for products that it is able to produce for itself.

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

New trade theorists stress the role of luck in giving a firm first-mover advantages.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters