Question 1

Which of the following is a major benefit of engaging in free trade?

Accepted Answer

A)  It helps to reduce the financial volatility in global markets. 
B)  It helps the countries protect the jobs that are available to their citizens. 
C)  It gives countries access to products that they cannot produce. 
D)  It allows the governments to exert more control on businesses. 
A)  It helps to reduce the financial volatility in global markets. 
B)  It helps the countries protect the jobs that are available to their citizens. 
C)  It gives countries access to products that they cannot produce. 
D)  It allows the governments to exert more control on businesses. C

Question 2

Which of the following is a major flaw associated with mercantilism?

Accepted Answer

A)  Mercantilists do not support government intervention in trade. 
B)  Mercantilists view trade as a zero-sum game. 
C)  Mercantilists recommend policies to maximize imports. 
D)  Mercantilists recommend countries to maintain a negative trade balance. 
A)  Mercantilists do not support government intervention in trade. 
B)  Mercantilists view trade as a zero-sum game. 
C)  Mercantilists recommend policies to maximize imports. 
D)  Mercantilists recommend countries to maintain a negative trade balance. B

Question 3

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

Accepted Answer

The theories of Smith,Ricardo,and Heckscher-Ohlin form part of the case for unrestricted free trade.The argument for unrestricted free trade is that both import controls and export incentives (such as subsidies)are self-defeating and result in wasted resources.Both the new trade theory and Porter's theory of national competitive advantage can be interpreted as justifying some limited government intervention to support the development of certain export-oriented industries.

Question 4

Explain how the principle of diminishing returns weakens the Ricardian model.

Accepted Answer

Diminishing returns show that it is not

Question 5

New trade theory suggests that nations cannot benefit from trade when they do not differ in resource endowments or technology.

Accepted Answer

A) True 
 B)False

Question 6

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 whic

Question 7

Porter's theory of national competitive advantage recommends unrestricted free trade between countries.

Accepted Answer

A) True 
 B)False

Question 8

Textile industry in a nation is characterized by vigorous domestic rivalry.Which of the following observations of this nation's international competency is most likely to be true?

Accepted Answer

A)  The nation will have access to such basic factors of textile industry as natural resources. 
B)  The nation's textile firms will have a competitive advantage in international trade. 
C)  The domestic customers of the textile firms will be less demanding. 
D)  The nation's textile industry will lack the advanced factors that are necessary to be internationally competent. 
A)  The nation will have access to such basic factors of textile industry as natural resources. 
B)  The nation's textile firms will have a competitive advantage in international trade. 
C)  The domestic customers of the textile firms will be less demanding. 
D)  The nation's textile industry will lack the advanced factors that are necessary to be internationally competent.

Question 9

The theory of comparative advantage provides strong rationale for supporting the idea of _____.

Accepted Answer

A)  business nationalism 
B)  free trade 
C)  protectionism 
D)  governmental intervention in trade 
A)  business nationalism 
B)  free trade 
C)  protectionism 
D)  governmental intervention in trade

Question 10

David Ricardo's theory of comparative advantage explains international trade in terms of international differences in political environments.

Accepted Answer

A) True 
 B)False

Question 11

Diminishing returns to specialization occurs when _____.

Accepted Answer

A)  each additional unit is produced with lesser number of laborers 
B)  a nation's gross domestic product declines for a few years 
C)  production possibility frontier appears as a rectangle 
D)  more units of resources are required to produce each additional unit 
A)  each additional unit is produced with lesser number of laborers 
B)  a nation's gross domestic product declines for a few years 
C)  production possibility frontier appears as a rectangle 
D)  more units of resources are required to produce each additional unit

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

What are the sources of economies of scale?

Accepted Answer

Economies of scale are unit cost reducti

Question 15

Which of the following statements is true of the Leontief Paradox?

Accepted Answer

A)  It shows an anomaly that occurs when a nation has high domestic demand for a product. 
B)  It explains the relationship between domestic demand and comparative advantage. 
C)  It disproved Ricardo's theory of comparative advantage. 
D)  It raised questions about the validity of the Heckscher-Ohlin theory. 
A)  It shows an anomaly that occurs when a nation has high domestic demand for a product. 
B)  It explains the relationship between domestic demand and comparative advantage. 
C)  It disproved Ricardo's theory of comparative advantage. 
D)  It raised questions about the validity of the Heckscher-Ohlin theory.

Question 16

Which of the following theories stress the role of luck,entrepreneurship,and innovation in the production and export of a good or service by the firms in a country?

Accepted Answer

A)  Product life-cycle theory 
B)  Ricardo's theory 
C)  Theory of comparative advantage 
D)  New trade theory 
A)  Product life-cycle theory 
B)  Ricardo's theory 
C)  Theory of comparative advantage 
D)  New trade theory

Question 17

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

Accepted Answer

First,free trade might increase a countr

Question 18

Which of the following is a statement that supports the theory of comparative advantage?

Accepted Answer

A)  International trade is a zero-sum gain where one nation's gain is another's loss. 
B)  Domestic industries are at risk when a country engages in free trade. 
C)  A country should maintain trade surplus to succeed in global trade. 
D)  Global production is greater with free trade than it is with restricted trade. 
A)  International trade is a zero-sum gain where one nation's gain is another's loss. 
B)  Domestic industries are at risk when a country engages in free trade. 
C)  A country should maintain trade surplus to succeed in global trade. 
D)  Global production is greater with free trade than it is with restricted trade.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following terms refers to the unit cost reductions associated with large sized outputs?

Accepted Answer

A)  Absolute advantage of production 
B)  Economies of scale 
C)  Constant marginal returns 
D)  Diminishing marginal returns 
A)  Absolute advantage of production 
B)  Economies of scale 
C)  Constant marginal returns 
D)  Diminishing marginal returns

Which of the following is a major benefit of engaging in free trade?

Which of the following is a major flaw associated with mercantilism?

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

Explain how the principle of diminishing returns weakens the Ricardian model.

New trade theory suggests that nations cannot benefit from trade when they do not differ in resource endowments or technology.

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

Porter's theory of national competitive advantage recommends unrestricted free trade between countries.

Textile industry in a nation is characterized by vigorous domestic rivalry.Which of the following observations of this nation's international competency is most likely to be true?

The theory of comparative advantage provides strong rationale for supporting the idea of _____.

David Ricardo's theory of comparative advantage explains international trade in terms of international differences in political environments.

Diminishing returns to specialization occurs when _____.

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

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.

What are the sources of economies of scale?

Which of the following statements is true of the Leontief Paradox?

Which of the following theories stress the role of luck,entrepreneurship,and innovation in the production and export of a good or service by the firms in a country?

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

Which of the following is a statement that supports the theory of comparative advantage?

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

Which of the following terms refers to the unit cost reductions associated with large sized outputs?

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

Which of the following is a major benefit of engaging in free trade?

Which of the following is a major flaw associated with mercantilism?

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

Explain how the principle of diminishing returns weakens the Ricardian model.

New trade theory suggests that nations cannot benefit from trade when they do not differ in resource endowments or technology.

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

Porter's theory of national competitive advantage recommends unrestricted free trade between countries.

Textile industry in a nation is characterized by vigorous domestic rivalry.Which of the following observations of this nation's international competency is most likely to be true?

The theory of comparative advantage provides strong rationale for supporting the idea of _____.

David Ricardo's theory of comparative advantage explains international trade in terms of international differences in political environments.

Diminishing returns to specialization occurs when _____.

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

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.

What are the sources of economies of scale?

Which of the following statements is true of the Leontief Paradox?

Which of the following theories stress the role of luck,entrepreneurship,and innovation in the production and export of a good or service by the firms in a country?

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

Which of the following is a statement that supports the theory of comparative advantage?

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

Which of the following terms refers to the unit cost reductions associated with large sized outputs?

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