Exam 5: International Trade Theory

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 -Based on the above scenario,which of the following statements is true?

Factor proportions theory was developed by ________.

The ________ theory states that countries produce and export goods that require resources available in abundance and import goods that require resources in short supply.

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

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

One of the major pillars upon which the practice of mercantilism rested was ________.

The factor proportions theory of international trade was developed by Wassily Leontief.

During which stage of the product life cycle are companies looking for low-cost production bases in developing nations to supply a growing worldwide market?

Nations following the theory of ________ believed that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors.

The theories of comparative advantage and absolute advantage assume that countries are driven only by the maximization of production and consumption.

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

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

________ refers to the purchase,sale,or exchange of goods and services across national borders.

Discuss the limitations of the international product life cycle theory.How well does the theory explain current trade patterns?

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. -Jack has always handled product returns on a case-by-case basis,but he is often unprepared to deal with too many cases of returns.Which of the following would most likely help Jack increase his repeat business?

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)________.

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

The condition that results when the value of a country's imports is greater than the value of its exports is called ________.

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

Trade between most nations is presently characterized by a certain degree of isolationism.