Question 1

Which of the following is a drawback of the product life-cycle theory?

Accepted Answer

A)  Its relevance in the modern world seems limited.
B)  It makes many simplifying assumptions.
C)  It fails to explain the pattern of international trade during the period of American global dominance.
D)  It fails to explain what happens when a product's market in the United States and other advanced nations matures.
E)  It fails to account for diminishing returns.F) C) and E)
G) A) and B)

Question 2

One of the rebuttals to Samuelson's critique of the free trade model is that

Accepted Answer

A)  the United States' ability to achieve constant returns to specialization is unparalleled.
B)  the strict immigration policies of the United States help insulate the economy from inward migration.
C)  introducing trade barriers may in fact be beneficial to developed nations to some extent.
D)  developing nations are unlikely to upgrade the skill level of their workforce rapidly enough.
E)  the developing nations are unlikely to run into diminishing returns in a near future.F) A) and D)
G) B) and D)

Question 3

According to the product life-cycle theory,the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries.Which of the following is most likely to be a consequence of these trends?

Accepted Answer

A)  U.S.imports become less capital-intensive than U.S.exports.
B)  The pattern of international trade is affected by differences in factor endowments rather than differences in productivity.
C)  Over time,the United States switches from being an exporter of a product to an importer of the product.
D)  The wage rates in the United States decrease.
E)  Developing nations fail to upgrade their skill levels to compete with advanced countries.F) A) and B)
G) A) and C)

Question 4

Which of the following helps a firm to preempt available demand,gain cost advantages related to volume,and build an enduring brand ahead of later competitors?

Accepted Answer

A)  monopolistic practices
B)  comparative advantages
C)  absolute advantages
D)  first-mover advantages
E)  mercantilismF) D) and E)
G) A) and D)

Question 5

Vernon theorizes that as the market in the United States and other advanced nations matures

Accepted Answer

A)  it necessitates exports from the United States to those countries.
B)  it is no longer worthwhile for foreign producers to produce for their home markets.
C)  it obviates the need to look for low-cost production sites in other countries.
D)  the product becomes more standardized,and price becomes the main competitive weapon.
E)  the resources used in production begin to become scarce.F) A) and E)
G) C) and D)

Question 6

Diminishing returns to specialization occur when

Accepted Answer

A)  resources can move freely from the production of one good to another within a country.
B)  more units of resources are required to produce each additional unit.
C)  the cost of producing goods reduces substantially with increase in number of goods produced.
D)  the quality of resources comes down as a result of producing more goods.
E)  the quality of goods produced per unit of resource begins to improve.F) D) and E)
G) C) and E)

Question 7

Discuss the policy implications of Porter's theory of national competitive advantage.

Accepted Answer

Porter's theory of national competitive ...

Question 8

Factor endowments are unit cost reductions associated with a large scale of output.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a reason for diminishing rather than constant returns to specialization?

Accepted Answer

A)  All resources are of the same quality.
B)  Resources can shift from the production of one good to another seamlessly.
C)  Each country has a fixed stock of resources.
D)  Different goods use different resources in different proportions.
E)  Trade does not affect the distribution of income within a country.F) A) and D)
G) C) and D)

Question 10

Which of the following factor endowments would be classified as a basic factor by Michael Porter?

Accepted Answer

A)  communication infrastructure
B)  research facilities
C)  natural resources
D)  skilled labor
E)  technological know-howF) B) and E)
G) C) and D)

Question 11

Outline the relationship between economies of scale,first-mover advantages,and the pattern of trade as indicated by new trade theory.

Accepted Answer

One of the themes in new trade theory is...

Question 12

The first theory of international trade that emerged in England asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following are unit cost reductions associated with a large scale of output?

Accepted Answer

A)  comparative advantages
B)  factor endowments
C)  economies of scale
D)  diminishing returns
E)  absolute advantagesF) A) and B)
G) All of the above

Question 14

Which of the following was a pervasive finding of Porter's study?

Accepted Answer

A)  Successful industries within a country tend to be grouped into clusters of related industries.
B)  Trade increases the specialization of production within an industry.
C)  The pattern of trade we observe in the world economy may be the result of first-mover advantages.
D)  Purchasing power parity of a country determines its demand conditions.
E)  Differences in technology may lead to differences in productivity,which in turn,drives international trade patterns.F) A) and D)
G) All of the above

Question 15

When a company in the country of the Republic of Congolia created a brand new high technology product,the demand for the product in the Republic of Congolia was high but very low or non-existent elsewhere.Thus the company decided not to locate manufacturing facilities elsewhere and simply meet the small foreign demand via exports.The theory that best explains the company's policy is

Accepted Answer

A)  product life cycle theory.
B)  mercantilism.
C)  the Leontief paradox.
D)  Heckscher-Ohlin theory.
E)  free trade theory.F) A) and D)
G) C) and E)

Question 16

India specializes in business process outsourcing and does this more efficiently than any other country.It buys agricultural commodities,which it produces less efficiently than outsourcing activities,from the U.S.,even though it produces these agricultural commodities more efficiently than the U.S.Which of the following theories of international trade supports India's decision to buy agricultural commodities from the U.S.?

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 B)
G) None of the above

Question 17

According to the Heckscher-Ohlin theory,the pattern of international trade is determined by differences in

Accepted Answer

A)  labor productivity.
B)  diminishing returns.
C)  factor endowments.
D)  management practices.
E)  trade barriers.F) A) and E)
G) D) and E)

Question 18

On which of the following observations was Raymond Vernon's product life-cycle theory based?

Accepted Answer

A)  The wealth and size of the U.S.market gave U.S.firms a strong incentive to develop new consumer products.
B)  The high cost of U.S.labor gave U.S.firms an incentive to develop cost-saving process innovations.
C)  The United States developed a very large proportion of the world's new products for most of the twentieth century and sold them first in the U.S.market.
D)  The United States exports goods that heavily use skilled labor and imports heavy manufacturing products that use large amounts of capital.
E)  The United States has long been a substantial exporter of agricultural goods,reflecting in part its unusual abundance of arable land.F) A) and B)
G) B) and E)

Question 19

The government of Murinca does not attempt to influence through quotas or duties what its citizens can buy from another country,or what they can produce and sell to another country.Which of the following terms best represents the situation in Murinca?

Accepted Answer

A)  socialism
B)  positive-sum game
C)  free trade
D)  absolute advantage
E)  zero-sum gameF) A) and D)
G) A) and E)

Question 20

How does the theory of comparative advantage suggest that trade is a positive-sum game to a greater degree than the theory of absolute advantage?

Accepted Answer

The basic message of the theory of compa...

Exam 6: International Trade Theory

According to the Heckscher-Ohlin theory,the pattern of international trade is determined by differences in

Correct Answer
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Discuss the policy implications of Porter's theory of national competitive advantage.

Correct Answer
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Porter's theory of national competitive ...
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Factor endowments are unit cost reductions associated with a large scale of output.

Correct Answer
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Outline the relationship between economies of scale,first-mover advantages,and the pattern of trade as indicated by new trade theory.

Correct Answer
verified
One of the themes in new trade theory is...
View Answer

Which of the following was a pervasive finding of Porter's study?

Correct Answer
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Which of the following helps a firm to preempt available demand,gain cost advantages related to volume,and build an enduring brand ahead of later competitors?

Correct Answer
verified

Which of the following is a drawback of the product life-cycle theory?

Correct Answer
verified

Which of the following are unit cost reductions associated with a large scale of output?

Correct Answer
verified

On which of the following observations was Raymond Vernon's product life-cycle theory based?

Correct Answer
verified

Diminishing returns to specialization occur when

Correct Answer
verified

According to the product life-cycle theory,the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries.Which of the following is most likely to be a consequence of these trends?

Correct Answer
verified

Which of the following factor endowments would be classified as a basic factor by Michael Porter?

Correct Answer
verified

Vernon theorizes that as the market in the United States and other advanced nations matures

Correct Answer
verified

The first theory of international trade that emerged in England asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Correct Answer
verified

How does the theory of comparative advantage suggest that trade is a positive-sum game to a greater degree than the theory of absolute advantage?

Correct Answer
verified
The basic message of the theory of compa...
View Answer

Which of the following is a reason for diminishing rather than constant returns to specialization?

Correct Answer
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The government of Murinca does not attempt to influence through quotas or duties what its citizens can buy from another country,or what they can produce and sell to another country.Which of the following terms best represents the situation in Murinca?

Correct Answer
verified

One of the rebuttals to Samuelson's critique of the free trade model is that

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exam 6: International Trade Theory

According to the Heckscher-Ohlin theory,the pattern of international trade is determined by differences in

Correct AnswerverifiedShow Answer

Discuss the policy implications of Porter's theory of national competitive advantage.

Correct AnswerverifiedPorter's theory of national competitive ...View AnswerShow Answer

Factor endowments are unit cost reductions associated with a large scale of output.

Correct AnswerverifiedShow Answer

Outline the relationship between economies of scale,first-mover advantages,and the pattern of trade as indicated by new trade theory.

Correct AnswerverifiedOne of the themes in new trade theory is...View AnswerShow Answer

Which of the following was a pervasive finding of Porter's study?

Correct AnswerverifiedShow Answer

Which of the following helps a firm to preempt available demand,gain cost advantages related to volume,and build an enduring brand ahead of later competitors?

Correct AnswerverifiedShow Answer

Which of the following is a drawback of the product life-cycle theory?

Correct AnswerverifiedShow Answer

Which of the following are unit cost reductions associated with a large scale of output?

Correct AnswerverifiedShow Answer

On which of the following observations was Raymond Vernon's product life-cycle theory based?

Correct AnswerverifiedShow Answer

Diminishing returns to specialization occur when

Correct AnswerverifiedShow Answer

According to the product life-cycle theory,the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries.Which of the following is most likely to be a consequence of these trends?

Correct AnswerverifiedShow Answer

Which of the following factor endowments would be classified as a basic factor by Michael Porter?

Correct AnswerverifiedShow Answer

Vernon theorizes that as the market in the United States and other advanced nations matures

Correct AnswerverifiedShow Answer

The first theory of international trade that emerged in England asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

Correct AnswerverifiedShow Answer

How does the theory of comparative advantage suggest that trade is a positive-sum game to a greater degree than the theory of absolute advantage?

Correct AnswerverifiedThe basic message of the theory of compa...View AnswerShow Answer

Which of the following is a reason for diminishing rather than constant returns to specialization?

Correct AnswerverifiedShow Answer

The government of Murinca does not attempt to influence through quotas or duties what its citizens can buy from another country,or what they can produce and sell to another country.Which of the following terms best represents the situation in Murinca?

Correct AnswerverifiedShow Answer

One of the rebuttals to Samuelson's critique of the free trade model is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
Porter's theory of national competitive ...
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Correct Answer
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Correct Answer
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One of the themes in new trade theory is...
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The basic message of the theory of compa...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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