Exam 6: International Trade Theory

Diminishing returns show that it is feasible for a country to specialize to the degree suggested by the simple Ricardian model.

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

Identify a major flaw associated with mercantilism.

A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.

According to Ricardo's theory of comparative advantage,countries shall not produce a good even if they have an absolute advantage in its production.

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

What will happen,according to Paul Samuelson's critique,if a rich country enters into a free trade agreement with a poor country?

Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.

How does the Heckscher-Ohlin theory explain international trade?

Heckscher-Ohlin theory stresses that comparative advantage arises from differences in productivity.

What are first-mover advantages?

A capital intensive country exports products that are capital intensive.This is an example of Leontief Paradox.

Some of the arguments made by the product life-cycle theory seems ethnocentric and increasingly dated when viewed from an Asian or European perspective.

Which of the following is a major limitation of the simple Ricardian model of comparative advantage?

What is the main principle of mercantilism?

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

Economies of scale are unit cost reductions associated with a large scale of output.

Explain Smith's theory of absolute advantage.

Company A entered the production of office software before its competitors.Because of this,the company's products are more familiar among and favored by customers.This situation exemplifies the _____.