Question 1

Cost savings that come from learning by doing is referred to as:

Accepted Answer

A)  economies of scale.
B)  first-mover advantage.
C)  learning effects.
D)  factor endowments.
E)  late-mover advantageF) B) and E)
G) C) and D)

Question 2

_______ is the basic message of the theory of comparative advantage.

Accepted Answer

A)  Potential world production is greater with unrestricted free trade than it is with restricted trade.
B)  Potential world production is not significantly affected by trade policy.
C)  Potential world production is greater with restricted trade.
D)  It makes sense for a country to specialize in the production of those goods that it produces most efficiently and to buy the goods that it products less efficiently from other countries, unless this means buying goods from other countries that it could produce more efficiently itself.
E)  None of these answers is correct.F) All of the above
G) C) and D)

Question 3

The new trade theorists argue that the United States leads in exports of commercial jet aircraft not because it is better endowed with the factors of production required to manufacture aircraft, but because:

Accepted Answer

A)  U.S.built commercial jet aircraft have the best safety record
B)  the U.S.commercial jet aircraft industry has a lower wage rate than foreign competitors
C)  the World Trade Organization has given preferential treatment to the U.S.commercial jet aircraft industry
D)  one of the first movers in the industry was DeHavilland
E)  one of the first movers was BoeingF) B) and E)
G) B) and D)

Question 4

Describe the central tenant of the product life-cycle theory.

Accepted Answer

Proposed by Raymond Vernon, the product ...

Question 5

In his 1776 landmark book, The Wealth of Nations, __________ attacked the mercantilist assumption that trade is a zero-sum game.

Accepted Answer

A)  Geert Hofstede
B)  Max Weber
C)  Michael Porter
D)  Adam Smith
E)  David RicardoF) B) and C)
G) A) and B)

Question 6

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

Accepted Answer

A)  Heckscher-Cormier
B)  Ricardo-Olin
C)  Heckscher-Olin
D)  Carrier-Roller
E)  Smith-RicardoF) D) and E)
G) A) and B)

Question 7

The theory of __________, developed by Michael Porter, focuses on the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.

Accepted Answer

A)  new trade
B)  absolute advantage
C)  comparative advantage
D)  national competitive advantage
E)  factor endowmentsF) A) and E)
G) C) and E)

Question 8

_______, by its choice of policies, can detract from or improve national advantage.

Accepted Answer

A)  A company
B)  Government
C)  A market
D)  Individuals.
E)  ShareholdersF) A) and B)
G) B) and C)

Question 9

Economies of scale and learning effects both increase the efficiency of resource utilization, therefore increasing

Accepted Answer

A)  costs.
B)  capital.
C)  factor endowments.
D)  productivity.
E)  profitabilityF) A) and B)
G) A) and C)

Question 10

The Heckscher-Olin theory argues that the pattern of international trade is determined by differences in:

Accepted Answer

A)  productivity
B)  political interests
C)  factor endowments
D)  national priorities
E)  first mover advantagesF) A) and B)
G) B) and D)

Question 11

_______ is/are unit cost reductions associated with a large scale of output.

Accepted Answer

A)  Product life-cycle
B)  Economies of scale
C)  Learning effects
D)  First-mover advantage
E)  Late-mover volumesF) B) and C)
G) B) and D)

Question 12

The Heckscher-Ohlin theory would predict that the United States should be a primary importer of capital goods.

Accepted Answer

A) True 
 B)False

Question 13

Governments often ease the transition toward free trade by _______ those who lose their jobs as a result.

Accepted Answer

A)  offering welfare to
B)  creating new jobs for
C)  giving government jobs to
D)  putting up temporary trade barriers
E)  helping to retrainF) B) and C)
G) A) and B)

Question 14

Nokia success is hard to understand when you realize that their domestic base is a country of 5 million people with a GNI less than that of Ontario.What are the reasons for Nokia's success?

Accepted Answer

The student should refer to Porter's dia...

Question 15

Porter argued that in regard to factor endowments, __________ factors are the most significant for competitive advantage in his study dealing with the competitive advantage of nations.

Accepted Answer

A)  standard
B)  basic
C)  advanced
D)  complementary
E)  exclusiveF) C) and D)
G) B) and D)

Question 16

When a country is more efficient than any other country in producing a product, it has absolute advantage in the production of that product

Accepted Answer

A) True 
 B)False

Question 17

As the market in the U.S.and other advanced nations matures, the product becomes more standardized and price becomes:

Accepted Answer

A)  governmentally regulated.
B)  greater.
C)  unimportant.
D)  the main competitive weapon.
E)  more differentiatedF) D) and E)
G) A) and D)

Question 18

One of the limitations to the theory of comparative advantage is that resources do not always move easily from one economic activity to another and the process creates:

Accepted Answer

A)  inflation.
B)  friction and human suffering.
C)  new government regulations and higher taxes.
D)  new product development.
E)  excessive transportation costs and retraining concernsF) C) and D)
G) B) and D)

Question 19

The flaw with mercantilism was that it viewed trade as a __________.

Accepted Answer

A)  zero-sum game
B)  economic necessity
C)  non essential economic activity
D)  threat to a government's independence
E)  luxury for consumersF) A) and C)
G) C) and D)

Question 20

Which of the following international management scholars first argued that countries differ in their ability to produce goods efficiently?

Accepted Answer

A)  David Ricardo
B)  Eli Heckscher
C)  Michael Porter
D)  Adam Smith
E)  Raymond VernonF) A) and B)
G) A) and C)

Exam 5: International Trade Theories

The Heckscher-Olin theory argues that the pattern of international trade is determined by differences in:

Correct AnswerverifiedShow Answer

Describe the central tenant of the product life-cycle theory.

Correct AnswerverifiedProposed by Raymond Vernon, the product ...View AnswerShow Answer

_______, by its choice of policies, can detract from or improve national advantage.

Correct AnswerverifiedShow Answer

Economies of scale and learning effects both increase the efficiency of resource utilization, therefore increasing

Correct AnswerverifiedShow Answer

The theory of __________, developed by Michael Porter, focuses on the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products.

Correct AnswerverifiedShow Answer

Which of the following international management scholars first argued that countries differ in their ability to produce goods efficiently?

Correct AnswerverifiedShow Answer

The new trade theorists argue that the United States leads in exports of commercial jet aircraft not because it is better endowed with the factors of production required to manufacture aircraft, but because:

Correct AnswerverifiedShow Answer

_______ is the basic message of the theory of comparative advantage.

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theory would predict that the United States should be a primary importer of capital goods.

Correct AnswerverifiedShow Answer

In his 1776 landmark book, The Wealth of Nations, __________ attacked the mercantilist assumption that trade is a zero-sum game.

Correct AnswerverifiedShow Answer

Porter argued that in regard to factor endowments, __________ factors are the most significant for competitive advantage in his study dealing with the competitive advantage of nations.

Correct AnswerverifiedShow Answer

_______ is/are unit cost reductions associated with a large scale of output.

Correct AnswerverifiedShow Answer

One of the limitations to the theory of comparative advantage is that resources do not always move easily from one economic activity to another and the process creates:

Correct AnswerverifiedShow Answer

When a country is more efficient than any other country in producing a product, it has absolute advantage in the production of that product

Correct AnswerverifiedShow Answer

Cost savings that come from learning by doing is referred to as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Nokia success is hard to understand when you realize that their domestic base is a country of 5 million people with a GNI less than that of Ontario.What are the reasons for Nokia's success?

Correct AnswerverifiedThe student should refer to Porter's dia...View AnswerShow Answer

Governments often ease the transition toward free trade by _______ those who lose their jobs as a result.

Correct AnswerverifiedShow Answer

As the market in the U.S.and other advanced nations matures, the product becomes more standardized and price becomes:

Correct AnswerverifiedShow Answer

The flaw with mercantilism was that it viewed trade as a __________.

Correct AnswerverifiedShow Answer

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The student should refer to Porter's dia...
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