Question 1

According to Ricardo's theory of comparative advantage,a country should produce goods _____.

Accepted Answer

A)  for which it has access to raw materials 
B)  that it produces most efficiently 
C)  that have the highest domestic demand 
D)  for which it has an absolute advantage 
A)  for which it has access to raw materials 
B)  that it produces most efficiently 
C)  that have the highest domestic demand 
D)  for which it has an absolute advantage

Question 2

How does the Heckscher-Ohlin theory explain international trade?

Accepted Answer

The Heckscher-Ohlin theory emphasizes th

Question 3

The product life-cycle theory argues that the developing nations will not produce a product if the product is highly standardized.

Accepted Answer

A) True 
 B)False

Question 4

The production possibility frontier will be convex if constant return to specialization is observed.

Accepted Answer

A) True 
 B)False

Question 5

Wal-Mart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors.This allows Wal-Mart to offer greater discounts to its customers.In this case,Wal-Mart benefits from _____.

Accepted Answer

A)  first mover advantage 
B)  constant marginal returns 
C)  economies of scale 
D)  absolute advantage of production 
A)  first mover advantage 
B)  constant marginal returns 
C)  economies of scale 
D)  absolute advantage of production

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 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

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 11

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 12

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

Accepted Answer

By constant returns to specialization we

Question 13

Which of the following accounts records transactions that involve the purchase or sale of assets?

Accepted Answer

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

Question 14

What are factor endowments?

Accepted Answer

Factor endowments refer to the extent to

Question 15

Explain Smith's theory of absolute advantage.

Accepted Answer

A country has an absolute advantage in t

Question 16

Identify a major flaw associated with mercantilism.

Accepted Answer

The flaw with mercantilism was

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

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.

According to Ricardo's theory of comparative advantage,a country should produce goods _____.

How does the Heckscher-Ohlin theory explain international trade?

The product life-cycle theory argues that the developing nations will not produce a product if the product is highly standardized.

The production possibility frontier will be convex if constant return to specialization is observed.

Wal-Mart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors.This allows Wal-Mart to offer greater discounts to its customers.In this case,Wal-Mart benefits from _____.

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

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

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?

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

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

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

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

Which of the following accounts records transactions that involve the purchase or sale of assets?

What are factor endowments?

Explain Smith's theory of absolute advantage.

Identify a major flaw associated with mercantilism.

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

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

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

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 6: International Trade Theory

According to Ricardo's theory of comparative advantage,a country should produce goods _____.

How does the Heckscher-Ohlin theory explain international trade?

The product life-cycle theory argues that the developing nations will not produce a product if the product is highly standardized.

The production possibility frontier will be convex if constant return to specialization is observed.

Wal-Mart makes bulk purchases from its vendors and hence it is able to get better deals than its competitors.This allows Wal-Mart to offer greater discounts to its customers.In this case,Wal-Mart benefits from _____.

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

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

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?

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

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

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

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

Which of the following accounts records transactions that involve the purchase or sale of assets?

What are factor endowments?

Explain Smith's theory of absolute advantage.

Identify a major flaw associated with mercantilism.

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

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

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

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters