Question 1

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

Accepted Answer

A)  It would concentrate its productive activities mostly in developing countries.
B)  It would concentrate its productive activities in its home country.
C)  It would disperse its productive activities to those countries where they can be performed most efficiently.
D)  It would disperse its productive activities across all countries that serve as its market.
E)  It would concentrate its productive activities mostly in developed countries.F) B) and C)
G) A) and C)

Question 2

From a profit perspective based on the various international theories, how would a business go about choosing locations for its various productive activities?

Accepted Answer

From a profit perspective, it makes sens...

Question 3

Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?

Accepted Answer

A)  Comparative advantage
B)  Heckscher-Ohlin
C)  New trade
D)  Product life-cycle
E)  Absolute advantageF) A) and B)
G) None of the above

Question 4

According to the new trade theory:

Accepted Answer

A)  the ability to capture first-mover advantages is restricted in a world that disallows trade.
B)  differences in labor productivity between nations underlie the notion of comparative advantage.
C)  a country may predominate in the export of a good because it has firms that were among the first to produce that good.
D)  to ensure economic progress, countries should implement several trade barriers.
E)  different goods use resources in different proportions and this leads to constant returns to specialization.F) A) and B)
G) B) and D)

Question 5

Limits on imports are often in the interests of domestic consumers, but not domestic producers.

Accepted Answer

A) True 
 B)False

Question 6

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following components of Porter's diamond is particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality?

Accepted Answer

A)  Basic factor endowments
B)  Advanced factor endowments
C)  Firm strategy
D)  Demand conditions
E)  Supporting industriesF) A) and B)
G) B) and D)

Question 8

Which of the following factors is taken into consideration by David Ricardo's theory of comparative advantage in order to explain the pattern of international trade?

Accepted Answer

A)  Absolute advantage of a country with reference to natural resources
B)  The proportions in which the factors of production are available
C)  International differences in labor productivity
D)  The ability of firms to cope with late-mover disadvantages
E)  The ability of firms to capture first-mover advantagesF) A) and E)
G) A) and D)

Question 9

The new trade theory is at variance with which of the following theories, which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture?

Accepted Answer

A)  Heckscher-Ohlin
B)  Product life-cycle
C)  Comparative advantage
D)  Absolute advantage
E)  National competitive advantageF) B) and C)
G) C) and E)

Question 10

Cadmia and Rhodia specialize in the production of textiles and agricultural products respectively. They are the best at their respective specializations. Cadmia trades textiles with Rhodia in exchange for agricultural products. Which of the following is illustrated by this form of trade between Cadmia and Rhodia?

Accepted Answer

A)  Product life-cycle theory
B)  Heckscher-Ohlin theory
C)  The concept of absolute advantage
D)  Mercantilism
E)  Theory of national competitive advantageF) A) and B)
G) C) and D)

Question 11

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

Accepted Answer

A)  Ethnocentrism
B)  Capitalism
C)  Collectivism
D)  Mercantilism
E)  SocialismF) A) and C)
G) A) and D)

Question 12

An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:

Accepted Answer

A)  the volume of a country's imports increases as an indirect consequence of mercantilism.
B)  the exclusion of government influence in matters pertaining to trade is not ideal.
C)  in the long run, no country could sustain a surplus on the balance of trade.
D)  it was not backed by either sound political principles or social ideologies.
E)  trade is a zero-sum game rather than a positive-sum game as postulated by the theory.F) A) and E)
G) A) and C)

Question 13

Smith, Ricardo, and Heckscher-Ohlin suggested that a country's economy would gain only if its citizens buy products that are made in that country.

Accepted Answer

A) True 
 B)False

Question 14

Discuss Adam Smith's concept of absolute advantage.

Accepted Answer

According to Smith, countries should spe...

Question 15

Which of the following predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce?

Accepted Answer

A)  Mercantilism
B)  The theory of absolute advantage
C)  The Heckscher-Ohlin theory
D)  The theory of comparative advantage
E)  Samuelson's critiqueF) B) and E)
G) A) and C)

Question 16

Which of the following suggests that trade is a positive-sum game in which all participating countries fetch economic gains?

Accepted Answer

A)  The Heckscher-Ohlin theory
B)  Mercantilism
C)  The theory of comparative advantage
D)  Leontief's paradox
E)  The Samuelson critiqueF) A) and D)
G) All of the above

Question 17

Free trade is likely to increase a country's stock of resources and the efficiency with which it utilizes those resources.

Accepted Answer

A) True 
 B)False

Question 18

Factor endowments refer to the extent to which free trade impacts the wealth of a country.

Accepted Answer

A) True 
 B)False

Question 19

Briefly describe the new trade theory.

Accepted Answer

The new trade theory began to emerge in ...

Question 20

Describe the shortcomings of the product life-cycle theory.

Accepted Answer

Viewed from an Asian or European perspec...

Exam 6: International Trade Theory

Describe the shortcomings of the product life-cycle theory.

Correct Answer
verified
Viewed from an Asian or European perspec...
View Answer

Which of the following components of Porter's diamond is particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality?

Correct Answer
verified

Free trade is likely to increase a country's stock of resources and the efficiency with which it utilizes those resources.

Correct Answer
verified

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

Correct Answer
verified

The new trade theory is at variance with which of the following theories, which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture?

Correct Answer
verified

Smith, Ricardo, and Heckscher-Ohlin suggested that a country's economy would gain only if its citizens buy products that are made in that country.

Correct Answer
verified

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

Correct Answer
verified

Discuss Adam Smith's concept of absolute advantage.

Correct Answer
verified
According to Smith, countries should spe...
View Answer

An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:

Correct Answer
verified

Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?

Correct Answer
verified

Which of the following factors is taken into consideration by David Ricardo's theory of comparative advantage in order to explain the pattern of international trade?

Correct Answer
verified

Limits on imports are often in the interests of domestic consumers, but not domestic producers.

Correct Answer
verified

Which of the following predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce?

Correct Answer
verified

Which of the following suggests that trade is a positive-sum game in which all participating countries fetch economic gains?

Correct Answer
verified

According to the new trade theory:

Correct Answer
verified

Correct Answer
verified

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

Correct Answer
verified

Briefly describe the new trade theory.

Correct Answer
verified
The new trade theory began to emerge in ...
View Answer

Factor endowments refer to the extent to which free trade impacts the wealth of a country.

Correct Answer
verified

From a profit perspective based on the various international theories, how would a business go about choosing locations for its various productive activities?

Correct Answer
verified
From a profit perspective, it makes sens...
View Answer

Exam 6: International Trade Theory

Describe the shortcomings of the product life-cycle theory.

Correct AnswerverifiedViewed from an Asian or European perspec...View AnswerShow Answer

Which of the following components of Porter's diamond is particularly important in shaping the attributes of domestically made products and in creating pressures for innovation and quality?

Correct AnswerverifiedShow Answer

Free trade is likely to increase a country's stock of resources and the efficiency with which it utilizes those resources.

Correct AnswerverifiedShow Answer

If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses?

Correct AnswerverifiedShow Answer

The new trade theory is at variance with which of the following theories, which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture?

Correct AnswerverifiedShow Answer

Smith, Ricardo, and Heckscher-Ohlin suggested that a country's economy would gain only if its citizens buy products that are made in that country.

Correct AnswerverifiedShow Answer

Which of the following asserts that countries should simultaneously encourage exports and discourage imports?

Correct AnswerverifiedShow Answer

Discuss Adam Smith's concept of absolute advantage.

Correct AnswerverifiedAccording to Smith, countries should spe...View AnswerShow Answer

An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that:

Correct AnswerverifiedShow Answer

Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade?

Correct AnswerverifiedShow Answer

Which of the following factors is taken into consideration by David Ricardo's theory of comparative advantage in order to explain the pattern of international trade?

Correct AnswerverifiedShow Answer

Limits on imports are often in the interests of domestic consumers, but not domestic producers.

Correct AnswerverifiedShow Answer

Which of the following predicts that countries will export those goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce?

Correct AnswerverifiedShow Answer

Which of the following suggests that trade is a positive-sum game in which all participating countries fetch economic gains?

Correct AnswerverifiedShow Answer

According to the new trade theory:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

Correct AnswerverifiedShow Answer

Briefly describe the new trade theory.

Correct AnswerverifiedThe new trade theory began to emerge in ...View AnswerShow Answer

Factor endowments refer to the extent to which free trade impacts the wealth of a country.

Correct AnswerverifiedShow Answer

From a profit perspective based on the various international theories, how would a business go about choosing locations for its various productive activities?

Correct AnswerverifiedFrom a profit perspective, it makes sens...View AnswerShow Answer

Correct Answer
verified
Viewed from an Asian or European perspec...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
According to Smith, countries should spe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The new trade theory began to emerge in ...
View Answer

Correct Answer
verified

Correct Answer
verified
From a profit perspective, it makes sens...
View Answer