Exam 6: International Trade Theory

A country's balance-of-payments accounts keep track of the

________ argued that countries should specialize in the production of goods for which they have an absolute advantage.

Some of the arguments made by the product life-cycle theory seem ethnocentric and increasingly dated when viewed from an Asian or European perspective.

What are the assumptions that we make when we discuss a simple Ricardian model to support free trade?

The theory of comparative advantage suggests that trade is a ________ game in which all countries that participate realize economic gains.

The commercial aircraft industry can support only a limited number of firms, largely because the existence of established firms would make it difficult to be competitive. This is a basic tenet of

Explain Ricardo's theory of comparative advantage.

Company A entered the production of office software before its competitors. Because of this, the company's products are more familiar among and favored by customers. This situation exemplifies the

Mercantilist doctrine advocates unrestricted free trade between countries.

The theories of international trade claim that promoting free trade is generally in the best interests of

The ________ theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products had been developed by U.S. firms and sold first in the U.S. market.

Porter contends that government

A key assumption in the Heckscher-Ohlin theory is that technologies are the same across countries.

Explain the dynamic gains that are generated by opening an economy to trade.

Which of the following factors, according to Porter, is most likely to give a country competitive advantage over another country?

A capital-intensive country exports products that are capital intensive. Which theory is this an example of?

According to Ricardo's theory of comparative advantage, a country should produce goods

From a profit perspective, it makes sense for firms to disperse their productive activities to those countries where they can be performed most efficiently.

The ________ theory argues that the pattern of international trade is determined by differences in factor endowments.

Which of the following is the reason most economists prefer Heckscher-Ohlin theory to Ricardo's theory?