Exam 5: International Trade Theory

Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U.S. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues. -Wallace expects that markets abroad will soon become fully aware of the existence of the product and its benefits.Which of the following life cycle stages will the product be a part of during that period?

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Question 1

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Discuss the dangers of trade dependency.

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Question 2

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The dangers of trade dependency become apparent when a nation experiences economic recession or political turmoil,which then also harms dependent nations.Trade dependency is a concern in Mexico,which for 30 years was a favorite destination for the investments of U.S.companies.Mexican factories assemble all sorts of products headed for the U.S.market,including refrigerators,mobile phones,and many types of garments.But a weak education system,corruption,an outdated infrastructure,and drug-related violence are forcing some companies to abandon Mexico for locations in Asia and Europe.This move has left many Mexicans unemployed.Although trade dependency was a blessing for Mexico for years,it is now feeling the pain as some companies shift jobs out of the country.The best way for Mexico to cope with its dependency on the United States is to improve its competitiveness and make it the preferred destination among all emerging markets.

The smallest portion of the total world trade comprises trade between ________.

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Question 3

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An absolute advantage is the economic and strategic advantage gained by being the first company to enter an industry.

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Question 4

To complete his business bookkeeping work each month,a business owner spends about 20 hours and in the process,has to give up $900 in income.If he hired a bookkeeper to do the work,the job would be completed in 15 hours and would cost him $600.Should the owner hire the bookkeeper or continue to do the work himself?

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Question 5

The ________ theory states that a country's export eventually becomes its import.

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Question 6

Which of the following refers to the ability of a nation to produce a good more efficiently than any other nation?

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Question 7

When there are gains to be had by both countries that are party to an exchange,international trade is considered a(n)________.

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Question 8

The value of trade passing through the borders of all countries always exceeds the amount of goods and services they produce.

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Question 9

Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U.S. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues. -Wallace's executive team reviews the stages of the international product life cycle to understand better what to expect when the product is sold overseas.Since there is virtually no export market for the product at present,the product is most likely in which of the following stages of the international product life cycle?

(Multiple Choice)

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Question 10

In the ________ of the international product life cycle,competition from other companies selling similar products pressures companies to lower prices in order to maintain sales levels.

(Multiple Choice)

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Question 11

If these two countries were to gain from trading with each other,this would support the notion that trade is a ________.

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Question 12

A majority of the total world merchandise trade occurs among ________.

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Question 13

How does the theory of comparative advantage differ from the factor proportions theory? Include a description of the factor proportions theory in your answer.

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Question 14

National competitive advantage theory states that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.

(True/False)

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Question 15

Discuss the factor proportions theory and describe the evidence on this theory.

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Question 16

Trade deficit occurs when the value of a country's exports is greater than the value of its imports.

(True/False)

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Question 17

Explain how the national competitive advantage theory supports and builds upon the factor proportions theory.

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Question 18

The condition that results when a nation's exports are greater than its imports is called ________.

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Question 19

Which of the following is an argument offered by the new trade theory?

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Question 20

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Discuss the dangers of trade dependency.

The smallest portion of the total world trade comprises trade between ________.

An absolute advantage is the economic and strategic advantage gained by being the first company to enter an industry.

The ________ theory states that a country's export eventually becomes its import.

Which of the following refers to the ability of a nation to produce a good more efficiently than any other nation?

When there are gains to be had by both countries that are party to an exchange,international trade is considered a(n)________.

The value of trade passing through the borders of all countries always exceeds the amount of goods and services they produce.

In the ________ of the international product life cycle,competition from other companies selling similar products pressures companies to lower prices in order to maintain sales levels.

If these two countries were to gain from trading with each other,this would support the notion that trade is a ________.

A majority of the total world merchandise trade occurs among ________.

How does the theory of comparative advantage differ from the factor proportions theory? Include a description of the factor proportions theory in your answer.

National competitive advantage theory states that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.

Discuss the factor proportions theory and describe the evidence on this theory.

Trade deficit occurs when the value of a country's exports is greater than the value of its imports.

Explain how the national competitive advantage theory supports and builds upon the factor proportions theory.

The condition that results when a nation's exports are greater than its imports is called ________.

Which of the following is an argument offered by the new trade theory?

Globalization

Cross-Cultural Business

Political Economy and Ethics

Economic Development of Nations

Political Economy of Trade

Foreign Direct Investment

Regional Economic Integration

International Financial Markets

International Monetary System

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

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