Question 1

The principle of mercantilism views trade as a(n) ________ game.

Accepted Answer

A)  advantage 
B)  positive-sum 
C)  zero-sum 
D)  negative-sum 
A)  advantage 
B)  positive-sum 
C)  zero-sum 
D)  negative-sum

Question 2

According to Ricardo's theory of comparative advantage, countries should

Accepted Answer

A)  specialize in the production of those goods that it produces most efficiently. 
B)  specialize in the production of those goods that their competitors in the world market currently have monopolies on. 
C)  produce all the products for which they have an absolute advantage. 
D)  produce only the products for which they have an absolute advantage. 
A)  specialize in the production of those goods that it produces most efficiently. 
B)  specialize in the production of those goods that their competitors in the world market currently have monopolies on. 
C)  produce all the products for which they have an absolute advantage. 
D)  produce only the products for which they have an absolute advantage.

Question 3

Which of the following terms refers to a nation's position in factors of production, such as skilled labor or the infrastructure necessary to compete in a given industry?

Accepted Answer

A)  current accounts 
B)  factor endowments 
C)  national balance 
D)  national accounts 
A)  current accounts 
B)  factor endowments 
C)  national balance 
D)  national accounts

Question 4

Which of the following is a major benefit of engaging in free trade?

Accepted Answer

A)  It helps to reduce the financial volatility in global markets. 
B)  It helps countries protect the jobs that are available to their citizens. 
C)  It gives countries access to products that they cannot produce. 
D)  It allows governments to exert more control on businesses. 
A)  It helps to reduce the financial volatility in global markets. 
B)  It helps countries protect the jobs that are available to their citizens. 
C)  It gives countries access to products that they cannot produce. 
D)  It allows governments to exert more control on businesses.

Question 5

Which of the following is true regarding Porter's diamond theory?

Accepted Answer

A)  It predicts that countries should be importing products from those industries where all four components of the diamond are favorable. 
B)  Porter's theory has been proven to be an accurate predictor of the importing and exporting patterns of countries. 
C)  It predicts that countries should be exporting products from those industries where all four components of the diamond are those areas where the components are not favorable. 
D)  Porter's theory has not been subjected to detailed empirical testing, so we do not know if it is correct. 
A)  It predicts that countries should be importing products from those industries where all four components of the diamond are favorable. 
B)  Porter's theory has been proven to be an accurate predictor of the importing and exporting patterns of countries. 
C)  It predicts that countries should be exporting products from those industries where all four components of the diamond are those areas where the components are not favorable. 
D)  Porter's theory has not been subjected to detailed empirical testing, so we do not know if it is correct.

Question 6

Briefly differentiate between constant returns to specialization and diminishing returns to specialization.

Accepted Answer

By constant returns to specialization, w

Question 7

________ supports the idea that countries should export more than they import.

Accepted Answer

A)  Absolute advantage 
B)  Mercantilism 
C)  The world market theory 
D)  New trade theory 
A)  Absolute advantage 
B)  Mercantilism 
C)  The world market theory 
D)  New trade theory

Question 8

Explain how the rivalry within an industry affects international competence.

Accepted Answer

Porter's second point is that there is a

Question 9

How does the Heckscher-Ohlin theory explain international trade?

Accepted Answer

The Heckscher-Ohlin theory emphasizes th

Question 10

Apple's iPhone was unique when it first came out, with many features that no other phones had. As such, it enjoyed great success and dominated the cell phone market. This demonstrates the first-mover advantage.

Accepted Answer

A) True 
 B)False

Question 11

If, for example, the textile industry in a nation is characterized by vigorous domestic rivalry, which of the following observations of this nation's international competency is most likely to be true?

Accepted Answer

A)  The nation will have access to such basic factors of the textile industry as natural resources. 
B)  The nation's textile firms will have a competitive advantage in international trade. 
C)  The domestic customers of the textile firms will be less demanding. 
D)  The nation's textile industry will lack the advanced factors that are necessary to be internationally competent. 
A)  The nation will have access to such basic factors of the textile industry as natural resources. 
B)  The nation's textile firms will have a competitive advantage in international trade. 
C)  The domestic customers of the textile firms will be less demanding. 
D)  The nation's textile industry will lack the advanced factors that are necessary to be internationally competent.

Question 12

According to Paul Samuelson's critique, a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.

Accepted Answer

A) True 
 B)False

Question 13

Identify the theory that predicts that countries will export those goods that make intensive use of factors that are locally abundant.

Accepted Answer

A)  theory of comparative advantage 
B)  Ricardo theory 
C)  new trade theory 
D)  Heckscher-Ohlin theory 
A)  theory of comparative advantage 
B)  Ricardo theory 
C)  new trade theory 
D)  Heckscher-Ohlin theory

Question 14

Diminishing returns to specialization occur when

Accepted Answer

A)  each additional unit is produced with lesser number of laborers. 
B)  a nation's gross domestic product declines for a few years. 
C)  production possibility frontier appears as a rectangle. 
D)  more units of resources are required to produce each additional unit. 
A)  each additional unit is produced with lesser number of laborers. 
B)  a nation's gross domestic product declines for a few years. 
C)  production possibility frontier appears as a rectangle. 
D)  more units of resources are required to produce each additional unit.

Question 15

Which of the following theories suggests that first-mover advantage is significant in the export of a good?

Accepted Answer

A)  product life-cycle theory 
B)  Ricardo's theory 
C)  new trade theory 
D)  theory of comparative advantage 
A)  product life-cycle theory 
B)  Ricardo's theory 
C)  new trade theory 
D)  theory of comparative advantage

Question 16

Professor Baldwin believes that early in the life cycle of a U.S. product, demand in other advanced countries is limited to high-income groups. Consequently, it is seldom worthwhile for firms in those countries to start producing the product. This view conforms to

Accepted Answer

A)  the product life-cycle theory. 
B)  Ricardo's theory. 
C)  the theory of absolute advantage. 
D)  the theory of comparative advantage. 
A)  the product life-cycle theory. 
B)  Ricardo's theory. 
C)  the theory of absolute advantage. 
D)  the theory of comparative advantage.

Question 17

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

Accepted Answer

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

Question 18

David Ricardo's theory of comparative advantage explains global trade in terms of the

Accepted Answer

A)  first-mover advantage that certain countries and firms enjoy. 
B)  geographical differences between various countries. 
C)  international differences in labor productivity. 
D)  late-mover advantage that certain countries and firms possess. 
A)  first-mover advantage that certain countries and firms enjoy. 
B)  geographical differences between various countries. 
C)  international differences in labor productivity. 
D)  late-mover advantage that certain countries and firms possess.

Question 19

According to Adam Smith, a country should specialize in the production of a good when it has

Accepted Answer

A)  an absolute advantage in the production of the good. 
B)  a strong domestic demand for the good. 
C)  the ability to help country increase its national output. 
D)  the necessary raw materials for production. 
A)  an absolute advantage in the production of the good. 
B)  a strong domestic demand for the good. 
C)  the ability to help country increase its national output. 
D)  the necessary raw materials for production.

Question 20

Resources always move easily from one economic activity to another.

Accepted Answer

A) True 
 B)False

The principle of mercantilism views trade as a(n) ________ game.

According to Ricardo's theory of comparative advantage, countries should

Which of the following terms refers to a nation's position in factors of production, such as skilled labor or the infrastructure necessary to compete in a given industry?

Which of the following is a major benefit of engaging in free trade?

Which of the following is true regarding Porter's diamond theory?

Briefly differentiate between constant returns to specialization and diminishing returns to specialization.

________ supports the idea that countries should export more than they import.

Explain how the rivalry within an industry affects international competence.

How does the Heckscher-Ohlin theory explain international trade?

Apple's iPhone was unique when it first came out, with many features that no other phones had. As such, it enjoyed great success and dominated the cell phone market. This demonstrates the first-mover advantage.

If, for example, the textile industry in a nation is characterized by vigorous domestic rivalry, which of the following observations of this nation's international competency is most likely to be true?

According to Paul Samuelson's critique, a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.

Identify the theory that predicts that countries will export those goods that make intensive use of factors that are locally abundant.

Diminishing returns to specialization occur when

Which of the following theories suggests that first-mover advantage is significant in the export of a good?

Professor Baldwin believes that early in the life cycle of a U.S. product, demand in other advanced countries is limited to high-income groups. Consequently, it is seldom worthwhile for firms in those countries to start producing the product. This view conforms to

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

David Ricardo's theory of comparative advantage explains global trade in terms of the

According to Adam Smith, a country should specialize in the production of a good when it has

Resources always move easily from one economic activity to another.

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

The principle of mercantilism views trade as a(n) ________ game.

According to Ricardo's theory of comparative advantage, countries should

Which of the following terms refers to a nation's position in factors of production, such as skilled labor or the infrastructure necessary to compete in a given industry?

Which of the following is a major benefit of engaging in free trade?

Which of the following is true regarding Porter's diamond theory?

Briefly differentiate between constant returns to specialization and diminishing returns to specialization.

________ supports the idea that countries should export more than they import.

Explain how the rivalry within an industry affects international competence.

How does the Heckscher-Ohlin theory explain international trade?

Apple's iPhone was unique when it first came out, with many features that no other phones had. As such, it enjoyed great success and dominated the cell phone market. This demonstrates the first-mover advantage.

If, for example, the textile industry in a nation is characterized by vigorous domestic rivalry, which of the following observations of this nation's international competency is most likely to be true?

According to Paul Samuelson's critique, a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.

Identify the theory that predicts that countries will export those goods that make intensive use of factors that are locally abundant.

Diminishing returns to specialization occur when

Which of the following theories suggests that first-mover advantage is significant in the export of a good?

Professor Baldwin believes that early in the life cycle of a U.S. product, demand in other advanced countries is limited to high-income groups. Consequently, it is seldom worthwhile for firms in those countries to start producing the product. This view conforms to

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

David Ricardo's theory of comparative advantage explains global trade in terms of the

According to Adam Smith, a country should specialize in the production of a good when it has

Resources always move easily from one economic activity to another.

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