Question 1

India is the largest exporter of information technology services to the U.S.In turn,the U.S.exported $3 billion worth of aircraft to India.Which of the following is illustrated by this form of trade between India and the U.S.?

Accepted Answer

A)  product life-cycle theory
B)  Heckscher-Ohlin theory
C)  absolute advantage
D)  mercantilism
E)  theory of national competitive advantageF) C) and E)
G) C) and D)

Question 2

The Republic of Argonia,owing to its vast resources of arable land and fresh water,is an agrarian nation.It exports agricultural products and in turn imports products that it does not produce such as oil,machinery,computers,and electronic devices.The result is that it spends more on imports than it gains from exports.Which of the following theories prohibits such international trade?

Accepted Answer

A)  new trade theory
B)  product life-cycle theory
C)  mercantilism
D)  Heckscher-Ohlin theory
E)  theory of national competitive advantageF) C) and D)
G) B) and E)

Question 3

Which of the following is true of the four attributes that make Porter's diamond?

Accepted Answer

A)  Absence of any single attribute does not impact effectiveness of the diamond.
B)  The effect of one attribute is contingent on the state of others.
C)  The diamond is not a mutually reinforcing system.
D)  Chance events,such as major innovations,do not affect Porter's diamond.
E)  Only in the absence of one of the four attributes can government policies influence Porter's diamond.F) A) and B)
G) A) and D)

Question 4

New trade theory argues that,through its impact on economies of scale,trade can

Accepted Answer

A)  increase the average costs of goods.
B)  enable the global market to support a wide range of enterprises.
C)  negatively affect the first-mover advantage for all products.
D)  increase the variety of goods available to consumers.
E)  prevent diminishing of returns and promote constant returns to specialization.F) D) and E)
G) A) and C)

Question 5

A zero-sum game is a situation in which

Accepted Answer

A)  the market mechanism determines what a country imports and what it exports.
B)  a country engages in international trade even for products it is able to produce for itself.
C)  an economic gain by one country results in an economic loss by another.
D)  limits on imports are often in the interests of domestic producers,but not domestic consumers.
E)  one country has an absolute advantage in the production of all goods.F) A) and B)
G) A) and C)

Question 6

In Malopia,it takes 10 units of resources to increase its output of cocoa from 12 tons to 13 tons,but 11 units of resources to increase output from 13 tons to 14 tons,and 12 units of resources to increase output from 14 tons and 15 tons,and so on.Malopia's problem is an example of

Accepted Answer

A)  comparative advantage.
B)  diminishing returns to specialization.
C)  absolute advantage.
D)  mercantilism.
E)  Porter's diamond model.F) A) and C)
G) A) and E)

Question 7

Which of the following statements best indicates Samuelson's criticism of free trade?

Accepted Answer

A)  Dynamic gains lead to a universally beneficial outcome for all countries.
B)  Offshoring service jobs that were traditionally mobile will increase the market clearing wage rate.
C)  Free trade has historically been beneficial only to developing countries.
D)  By importing cheap goods from a poor country a rich country may not be able to produce a net gain if the dynamic effect of free trade is to lower real wage rates in the rich country.
E)  Trade changes a country's stock of resources and the efficiency with which it utilizes those resources.F) A) and C)
G) A) and D)

Question 8

Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by the firms situated in Germany and sold first in the German market.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

How does Porter's theory predict patterns in international trade? Do his predictions turn out to be accurate in a real-world scenario?

Accepted Answer

According to Porter's model of internati...

Question 11

Mercantilism viewed trade as a zero-sum game.Discuss Adam Smith's and David Ricardo's stand on this view.Also discuss the phenomenon of neo-mercantilism.

Accepted Answer

Mercantilism viewed trade as a zero-sum ...

Question 12

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

Accepted Answer

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

Question 13

Which of the following is true of factor endowments according to Porter?

Accepted Answer

A)  Basic factors,unlike advanced factors,are the most significant for competitive advantage.
B)  Basic factors can be upgraded by nations,while advanced factors are endowed by nature.
C)  The initial advantage provided by advanced factors is extended by investment in basic factors.
D)  Disadvantages in basic factors can create pressures to invest in advanced factors.
E)  Advanced factors include climate,location,and demographics.F) D) and E)
G) C) and E)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Vernon predicts that as the demand for a new product starts to grow in other advanced countries,in the long run

Accepted Answer

A)  the cost of labor in these advanced countries begins to increase.
B)  it becomes profitable for foreign firms to invest in production facilities in the United States.
C)  the firms in the United States begin to gain an absolute advantage.
D)  it begins to limit the potential for exports from the United States.
E)  the same product will begin to command a higher price.F) D) and E)
G) A) and B)

Question 16

Individual firms should invest substantial financial resources in trying to build a first-mover advantage,even if that means several years of losses before a new venture becomes profitable.

Accepted Answer

A) True 
 B)False

Question 17

Palladia specializes in the production of beef and produces beef more efficiently than any other country.It buys wheat,which it produces less efficiently than beef,from Rhodia,even though it produces wheat more efficiently than Rhodia.Which of the following theories of international trade supports Palladia's decision to buy wheat from Rhodia?

Accepted Answer

A)  Samuelson critique
B)  mercantilism
C)  Ricardo's theory of comparative advantage
D)  Adam Smith's theory of absolute advantage
E)  Leontief paradoxF) A) and C)
G) C) and D)

Question 18

While Vernon's theory is useful for explaining the pattern of international trade in the modern world,its relevance during the period of American global dominance seemed more limited.

Accepted Answer

A) True 
 B)False

Question 19

Briefly describe new trade theory.

Accepted Answer

The new trade theory began to emerge in ...

Question 20

Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages?

Accepted Answer

A)  increasing returns to specialization
B)  positive-sum game due to lack of competition
C)  ability to capture scale economies ahead of later entrants
D)  absolute advantage and higher efficiency
E)  ability to specialize in the production of a particular productF) A) and B)
G) None of the above

Exam 6: International Trade Theory

How does Porter's theory predict patterns in international trade? Do his predictions turn out to be accurate in a real-world scenario?

Correct Answer
verified
According to Porter's model of internati...
View Answer

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

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

Vernon predicts that as the demand for a new product starts to grow in other advanced countries,in the long run

Correct Answer
verified

Which of the following is true of the four attributes that make Porter's diamond?

Correct Answer
verified

Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by the firms situated in Germany and sold first in the German market.

Correct Answer
verified

Mercantilism viewed trade as a zero-sum game.Discuss Adam Smith's and David Ricardo's stand on this view.Also discuss the phenomenon of neo-mercantilism.

Correct Answer
verified
Mercantilism viewed trade as a zero-sum ...
View Answer

Correct Answer
verified

Correct Answer
verified

New trade theory argues that,through its impact on economies of scale,trade can

Correct Answer
verified

In Malopia,it takes 10 units of resources to increase its output of cocoa from 12 tons to 13 tons,but 11 units of resources to increase output from 13 tons to 14 tons,and 12 units of resources to increase output from 14 tons and 15 tons,and so on.Malopia's problem is an example of

Correct Answer
verified

Which of the following statements best indicates Samuelson's criticism of free trade?

Correct Answer
verified

While Vernon's theory is useful for explaining the pattern of international trade in the modern world,its relevance during the period of American global dominance seemed more limited.

Correct Answer
verified

Which of the following is true of factor endowments according to Porter?

Correct Answer
verified

Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages?

Correct Answer
verified

Briefly describe new trade theory.

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

India is the largest exporter of information technology services to the U.S.In turn,the U.S.exported $3 billion worth of aircraft to India.Which of the following is illustrated by this form of trade between India and the U.S.?

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

A zero-sum game is a situation in which

Correct Answer
verified

Individual firms should invest substantial financial resources in trying to build a first-mover advantage,even if that means several years of losses before a new venture becomes profitable.

Correct Answer
verified

Exam 6: International Trade Theory

How does Porter's theory predict patterns in international trade? Do his predictions turn out to be accurate in a real-world scenario?

Correct AnswerverifiedAccording to Porter's model of internati...View AnswerShow Answer

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

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

Vernon predicts that as the demand for a new product starts to grow in other advanced countries,in the long run

Correct AnswerverifiedShow Answer

Which of the following is true of the four attributes that make Porter's diamond?

Correct AnswerverifiedShow Answer

Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by the firms situated in Germany and sold first in the German market.

Correct AnswerverifiedShow Answer

Mercantilism viewed trade as a zero-sum game.Discuss Adam Smith's and David Ricardo's stand on this view.Also discuss the phenomenon of neo-mercantilism.

Correct AnswerverifiedMercantilism viewed trade as a zero-sum ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

New trade theory argues that,through its impact on economies of scale,trade can

Correct AnswerverifiedShow Answer

In Malopia,it takes 10 units of resources to increase its output of cocoa from 12 tons to 13 tons,but 11 units of resources to increase output from 13 tons to 14 tons,and 12 units of resources to increase output from 14 tons and 15 tons,and so on.Malopia's problem is an example of

Correct AnswerverifiedShow Answer

Which of the following statements best indicates Samuelson's criticism of free trade?

Correct AnswerverifiedShow Answer

While Vernon's theory is useful for explaining the pattern of international trade in the modern world,its relevance during the period of American global dominance seemed more limited.

Correct AnswerverifiedShow Answer

Which of the following is true of factor endowments according to Porter?

Correct AnswerverifiedShow Answer

Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages?

Correct AnswerverifiedShow Answer

Briefly describe new trade theory.

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

India is the largest exporter of information technology services to the U.S.In turn,the U.S.exported $3 billion worth of aircraft to India.Which of the following is illustrated by this form of trade between India and the U.S.?

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

A zero-sum game is a situation in which

Correct AnswerverifiedShow Answer

Individual firms should invest substantial financial resources in trying to build a first-mover advantage,even if that means several years of losses before a new venture becomes profitable.

Correct AnswerverifiedShow Answer

Correct Answer
verified
According to Porter's model of internati...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Mercantilism viewed trade as a zero-sum ...
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
The new trade theory began to emerge in ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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