Exam 5: International Trade

Discuss the volume of international trade,and explain the role government and chance play in the growth of international trade.

The theory of absolute advantage measures a nation's wealth by determining the ________.

Explain the factor proportions theory and discuss why it is at odds with the new trade theory.

Scenario: Foodland and Drinkland Two countries,Foodland and Drinkland,produce food and drinks.In Foodland,one resource unit produces 20 tons of food and one resource unit produces 10 tons of drinks.In Drinkland,one resource unit produces 12 tons of food and one resource unit produces 24 tons of drinks. Food Drinks Foodland 20 10 Drinkland 12 24 -A third country,Funland,also produces food and drinks.In Funland,one resource unit produces 8 tons of food and 6 tons of drinks.Which of the following is true about Funland,Foodland,and Drinkland?

Who proposed the theory of absolute advantage?

The theory of absolute advantage measures a nation's wealth by the standard of living of its people.

When a country's currency is weak relative to other nations,domestic products are more expensive than imports.

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. -Eventually,Wallace expects that domestic production of the mousetrap will cease altogether.This would happen in the ________ stage of the product life cycle.

According to the theory of ________,trade is beneficial even if one country is less efficient in the production of two goods,as long as it is less inefficient in the production of one of the goods.

Country A produces a ton of coffee using one unit of resources.Country B produces two tons of coffee using one unit of resources.Which of the following is true regarding Country A and Country B?

The theory of absolute advantage destroys the mercantilist idea that international trade is a ________.

The theory of comparative advantage was proposed by ________.

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

Explain how the theory of absolute advantage conflicts with the theory of mercantilism.

During which of the following stages of the international product life cycle theory does high purchasing power and buyer demand in an industrialized nation encourage a company to design and introduce a product concept?

During which stage of the international product life cycle theory does demand rise and remain sustained for a fairly lengthy period of time?

Much production in the world today closely resembles what is predicted by the ________.

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

When a country is not able to produce a good more efficiently than other nations,but produces the good more efficiently than it does any other good,it is said to have a(n)________.

Which of the following is an assumption made by the comparative advantage theory?