Exam 5: International Trade and Factor-Mobility Theory

What is the difference between the free trade theories of absolute advantage and comparative advantage? How can free trade improve global efficiency?

In a short essay,discuss the four stages of the international product life cycle.

Eight of the top 10 exporting and importing countries are countries with ________.

Most world trade takes place ________.

Assume the following conditions: In the United States it takes 4 units of resources to produce a ton of potatoes and 5 to produce a ton of coal.In Canada it takes 6 units of resources to produce a ton of potatoes and 10 to produce a ton of coal.According to the theory of comparative advantage,________.

The comparative advantage theory holds that a country will gain from trade even though it can produce all goods more efficiently than other countries.

All the following are reasons for the lower international mobility of people than capital EXCEPT which one?

Between now and 2050,countries undergoing a simultaneous population reduction and an increased percentage of retirees in the population most likely will need more ________.

Understanding trade theories helps companies know if they will need to compete against goods and services produced abroad.

Comparative advantage differs from absolute advantage in that the former ________,whereas the latter ________.

Research shows that urbanization leads to higher productivity.Which of the following is the LEAST likely reason for this?

The theory of absolute advantage holds that there are advantages to trade because different countries can produce different goods more efficiently than others.

Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft?

According to the diamond of national advantage theory,the domestic existence of all four conditions best explains ________.

Under mercantilism,governments sought to influence trade by ________.

The four favorable domestic conditions of the diamond of national advantage help to explain how and where globally competitive companies develop and sustain themselves.

The factor proportions theory holds that countries should improve their competitiveness by importing capital and skilled employees from abroad.

Tests to substantiate the factor proportions theory have had mixed results most likely because ________.

The free trade theories of specialization primarily assume that ________.

According to the PLC theory,developing countries have their best production advantage in which stage of the product life cycle?