Question 1

David Ricardo's theory of comparative advantage explains global trade in terms of the _____.

Accepted Answer

A)   first mover advantage that certain countries and firms enjoy
B)   geographical differences between various countries
C)   international differences in labor productivity
D)   late mover advantage that certain countries and firms possessE) A) and C)
F) All of the above

Question 2

A country has an absolute advantage in the production of a product when it _____.

Accepted Answer

A)   has the capability to produce the product within its boundaries
B)   is more efficient than any other country in producing it
C)   has the largest domestic demand for the product
D)   has access to the raw materials needed to produce the productE) A) and B)
F) None of the above

Question 3

Explain how the rivalry within an industry affects international competence.

Accepted Answer

Porter's second point is that there is a...

Question 4

Which of the following is the main principle of mercantilism?

Accepted Answer

A)   Protection of domestic industries is not essential for a nation's welfare.
B)   Government intervention is not required in global trade.
C)   Countries should encourage absolute free trade.
D)   It is in a country's best interests to maintain a trade surplus.E) B) and C)
F) All of the above

Question 5

Country X,a poor country,invents a revolutionary electronic product.The country markets this new product in other poor countries to garner large profits.This occurrence is against the idea of _____.

Accepted Answer

A)   product life-cycle theory
B)   Ricardo's theory
C)   theory of absolute advantage
D)   theory of comparative advantageE) B) and C)
F) A) and B)

Question 6

Explain the Paul Samuelson's critique.

Accepted Answer

Paul Samuelson's critique looks at what ...

Question 7

Resources always move easily from one economic activity to another.

Accepted Answer

A) True 
 B)False

Question 8

First-mover advantages are the economic and strategic advantages that accrue to early entrants into an industry.

Accepted Answer

A) True 
 B)False

Question 9

A rich country improves its productivity by engaging in free trade with a poor country.This situation supports Paul Samuelson's critique.

Accepted Answer

A) True 
 B)False

Question 10

What are factor endowments?

Accepted Answer

Factor endowments refer to the extent to...

Question 11

The theories of Smith and Ricardo show that countries should not engage in international trade for products that it is able to produce for itself.

Accepted Answer

A) True 
 B)False

Question 12

The theories of international trade claim that promoting free trade is generally in the best interests of an individual firm,although it may not always be in the best interest of a country.

Accepted Answer

A) True 
 B)False

Question 13

According to Paul Samuelson's critique,a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.

Accepted Answer

A) True 
 B)False

Question 14

Adam smith argued that countries should specialize in the production of goods for which they have an absolute advantage.

Accepted Answer

A) True 
 B)False

Question 15

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 advantageE) C) and D)
F) None of the above

Question 16

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 17

Identify the theory that predicts that countries will export those goods that make intensive use of factors that are locally abundant.

Accepted Answer

A)   Theory of comparative advantage
B)   Ricardo theory
C)   New trade theory
D)   Heckscher-Ohlin theoryE) C) and D)
F) All of the above

Question 18

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

Accepted Answer

A)   Comparative advantage theory
B)   Ricardo's theory
C)   New trade theory
D)   Heckscher-Ohlin theoryE) B) and D)
F) All of the above

Question 19

Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.

Accepted Answer

Perhaps the most contentious implication...

Question 20

A country's balance-of-payments accounts keep track of the _____.

Accepted Answer

A)   basic factor endowments and advanced factor endowments that the nation possesses
B)   payments to and receipts from other countries for a particular time period
C)   income taxes paid by domestic firms and the spending on the firms
D)   total value of taxes paid by domestic firms and the spending on the firmsE) None of the above
F) B) and C)

Exam 6: International Trade Theory

The theories of international trade claim that promoting free trade is generally in the best interests of an individual firm,although it may not always be in the best interest of a country.

Correct AnswerverifiedShow Answer

A country's balance-of-payments accounts keep track of the _____.

Correct AnswerverifiedShow Answer

First-mover advantages are the economic and strategic advantages that accrue to early entrants into an industry.

Correct AnswerverifiedShow Answer

David Ricardo's theory of comparative advantage explains global trade in terms of the _____.

Correct AnswerverifiedShow Answer

Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.

Correct AnswerverifiedPerhaps the most contentious implication...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

What are factor endowments?

Correct AnswerverifiedFactor endowments refer to the extent to...View AnswerShow Answer

Explain the Paul Samuelson's critique.

Correct AnswerverifiedPaul Samuelson's critique looks at what ...View AnswerShow Answer

A rich country improves its productivity by engaging in free trade with a poor country.This situation supports Paul Samuelson's critique.

Correct AnswerverifiedShow Answer

A country has an absolute advantage in the production of a product when it _____.

Correct AnswerverifiedShow Answer

Resources always move easily from one economic activity to another.

Correct AnswerverifiedShow Answer

Explain how the rivalry within an industry affects international competence.

Correct AnswerverifiedPorter's second point is that there is a...View AnswerShow Answer

Country X,a poor country,invents a revolutionary electronic product.The country markets this new product in other poor countries to garner large profits.This occurrence is against the idea of _____.

Correct AnswerverifiedShow Answer

According to Paul Samuelson's critique,a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The theories of Smith and Ricardo show that countries should not engage in international trade for products that it is able to produce for itself.

Correct AnswerverifiedShow Answer

Adam smith argued that countries should specialize in the production of goods for which they have an absolute advantage.

Correct AnswerverifiedShow Answer

Which of the following is the main principle of mercantilism?

Correct AnswerverifiedShow Answer

Identify the theory that predicts that countries will export those goods that make intensive use of factors that are locally abundant.

Correct AnswerverifiedShow Answer

Which of the following is a theory that can be used to justify limited government intervention to support the development of certain export-oriented industries?

Correct AnswerverifiedShow Answer

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Perhaps the most contentious implication...
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Factor endowments refer to the extent to...
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Paul Samuelson's critique looks at what ...
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Porter's second point is that there is a...
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