Question 1

How does the Heckscher-Ohlin theory explain international trade?

Accepted Answer

The Heckscher-Ohlin theory emphasizes th

Question 2

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

Accepted Answer

A)  New trade 
B)  Leontief Paradox 
C)  Porter Diamond Model 
D)  Heckscher-Ohlin 
A)  New trade 
B)  Leontief Paradox 
C)  Porter Diamond Model 
D)  Heckscher-Ohlin

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

1. We have assumed a simple world in whi

Question 5

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

Accepted Answer

By constant returns to specialization we

Question 6

What are the four attributes that are discussed in Porter's diamond?

Accepted Answer

The four factors are:
(1) Factor endowme

Question 7

The variety of goods that a country can produce is limited by the size of the market in industries where _____ are important.

Accepted Answer

A)  factor endowments 
B)  current account deficits 
C)  economies of scale 
D)  current account surpluses 
A)  factor endowments 
B)  current account deficits 
C)  economies of scale 
D)  current account surpluses

Question 8

A country has an absolute advantage in the production of a product when it:

Accepted Answer

A)  has the capability to produce the product within its boundaries. 
B)  is more efficient than any other country in producing it. 
C)  has the largest domestic demand for the product. 
D)  has access to the raw materials needed to produce the product. 
A)  has the capability to produce the product within its boundaries. 
B)  is more efficient than any other country in producing it. 
C)  has the largest domestic demand for the product. 
D)  has access to the raw materials needed to produce the product.

Question 9

Which of the following is a major disadvantage of the product life-cycle theory introduced by Vernon?

Accepted Answer

A)  The theory's arguments seem ethnocentric and increasingly dated. 
B)  The theory failed to explain the dominance of developed nations. 
C)  The theory applies only when a poor nation invents a new product. 
D)  The theory cannot be used to explain the production of luxury products. 
A)  The theory's arguments seem ethnocentric and increasingly dated. 
B)  The theory failed to explain the dominance of developed nations. 
C)  The theory applies only when a poor nation invents a new product. 
D)  The theory cannot be used to explain the production of luxury products.

Question 10

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

Accepted Answer

A)  Natural resources 
B)  Climate 
C)  Skilled labor 
D)  Demographics 
A)  Natural resources 
B)  Climate 
C)  Skilled labor 
D)  Demographics

Question 11

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 12

Porter contends that government:

Accepted Answer

A)  can influence the domestic demand conditions and the domestic rivalry components of the diamond, but not the other two components. 
B)  can influence each of the four components of the diamond either positively or negatively. 
C)  can influence the factor endowments and the related and supporting industries components of the diamond, but not the other two components. 
D)  has little or no effect on the four components that shape the environment in which firms compete. 
A)  can influence the domestic demand conditions and the domestic rivalry components of the diamond, but not the other two components. 
B)  can influence each of the four components of the diamond either positively or negatively. 
C)  can influence the factor endowments and the related and supporting industries components of the diamond, but not the other two components. 
D)  has little or no effect on the four components that shape the environment in which firms compete.

Question 13

_____ supports the idea that countries should export more than what 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 14

Economies of scale have a number of sources, including the ability:

Accepted Answer

A)  to average out the variable costs of production. 
B)  of large-volume producers to utilize specialized employees and equipment. 
C)  to adjust the scale of production based upon product saturation in the marketplace. 
D)  of to utilize non-specialized employees interchangeably. 
A)  to average out the variable costs of production. 
B)  of large-volume producers to utilize specialized employees and equipment. 
C)  to adjust the scale of production based upon product saturation in the marketplace. 
D)  of to utilize non-specialized employees interchangeably.

Question 15

Ricardo's theory makes fewer simplifying assumptions compared to Heckscher-Ohlin theory.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following balance-of-payment accounts records one-time changes in the stock of assets?

Accepted Answer

A)  Capital account 
B)  Current account 
C)  Financial account 
D)  Monetary account 
A)  Capital account 
B)  Current account 
C)  Financial account 
D)  Monetary account

Question 17

Factor endowments refer to the extent to which a country is gifted with such resources as land, labor, and capital.

Accepted Answer

A) True 
 B)False

Question 18

Explain how the theories of trade differ in terms of their support to governmental intervention.

Accepted Answer

The theories of Smith, Ricardo, and Heck

Question 19

According to the new trade theory, firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.

Accepted Answer

A) True 
 B)False

Question 20

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

How does the Heckscher-Ohlin theory explain international trade?

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

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

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

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

What are the four attributes that are discussed in Porter's diamond?

The variety of goods that a country can produce is limited by the size of the market in industries where _____ are important.

A country has an absolute advantage in the production of a product when it:

Which of the following is a major disadvantage of the product life-cycle theory introduced by Vernon?

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

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

Porter contends that government:

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

Economies of scale have a number of sources, including the ability:

Ricardo's theory makes fewer simplifying assumptions compared to Heckscher-Ohlin theory.

Which of the following balance-of-payment accounts records one-time changes in the stock of assets?

Factor endowments refer to the extent to which a country is gifted with such resources as land, labor, and capital.

Explain how the theories of trade differ in terms of their support to governmental intervention.

According to the new trade theory, firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.

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

Globalization

National Differences in Political Economy, 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 Trade Pacts Give the Mexican Auto Industry an Edge

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 RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 6: International Trade Theory

How does the Heckscher-Ohlin theory explain international trade?

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

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

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

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

What are the four attributes that are discussed in Porter's diamond?

The variety of goods that a country can produce is limited by the size of the market in industries where _____ are important.

A country has an absolute advantage in the production of a product when it:

Which of the following is a major disadvantage of the product life-cycle theory introduced by Vernon?

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

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

Porter contends that government:

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

Economies of scale have a number of sources, including the ability:

Ricardo's theory makes fewer simplifying assumptions compared to Heckscher-Ohlin theory.

Which of the following balance-of-payment accounts records one-time changes in the stock of assets?

Factor endowments refer to the extent to which a country is gifted with such resources as land, labor, and capital.

Explain how the theories of trade differ in terms of their support to governmental intervention.

According to the new trade theory, firms that establish a first-mover advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.

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

Globalization

National Differences in Political Economy, 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 Trade Pacts Give the Mexican Auto Industry an Edge

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 RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters