Question 1

According to Vernon,which of the following factors obviates the need for pioneering U.S.firms to look for low-cost production sites in other countries?

Accepted Answer

A)  The uncertainties and risks inherent in introducing new products are very low.
B)  The demand for most new products tends to be based mainly on price.
C)  U.S.labor costs are relatively low compared to global standards.
D)  Firms can charge relatively high prices for new products.
E)  The production of innovative products in other advanced countries limits the potential for exports from the United States.F) B) and E)
G) All of the above D

Question 2

According to Porter's diamond,what are factor endowments?

Accepted Answer

A)  position of a nation regarding the components of production necessary to compete in a given industry
B)  presence or absence of related industries that are internationally competitive
C)  conditions governing how companies are created,organized,and managed and the nature of domestic rivalry
D)  nature of home demand for the industry's product or service
E)  economic and strategic advantages that accrue to early entrants into an industryF) A) and C)
G) B) and C)

Question 3

According to the product life-cycle theory,the high cost of U.S.labor gave U.S.firms an incentive to

Accepted Answer

A)  lower costs of services to offset a fall in demand.
B)  develop cost-saving process innovations.
C)  invite foreign direct investment in domestic industries.
D)  embrace and promote open market capitalism.
E)  import new consumer products and export agricultural products.F) A) and B)
G) D) and E) B

Question 4

The new trade theory diverts from its advocacy of free trade by suggesting that

Accepted Answer

A)  the price of a new product increases along with the increase in the popularity of the product.
B)  nations benefit from trade even in the absence of resource endowments and technology.
C)  there is an economic rationale for a proactive trade policy.
D)  the role of luck,entrepreneurship,and innovation is important in giving a firm first-mover advantages.
E)  market expansion leads to better realization of economies of scale.F) B) and C)
G) A) and C)

Question 5

Australia is a major producer of agricultural and dairy products and exports coffee,tea,spices,and milk products to the United States.The United States is the world's third largest supplier of machinery and exports heavy machinery to Australia.What explains the trade equation between Australia and the United States?

Accepted Answer

A)  Tariff barriers determine the flow of goods and services between nations.
B)  Countries are simultaneously encouraging exports and discouraging imports.
C)  First entrants to the industry ensure their nations have the first-mover advantages.
D)  Nations with an absolute advantage in producing certain goods trade them for goods produced by other countries.
E)  Gold and silver are the mainstays of national wealth and essential to vigorous commerce.F) B) and D)
G) A) and B)

Question 6

Porter,in his diamond model,suggested that there is a strong association between _____ and the creation and persistence of competitive advantage in an industry.

Accepted Answer

A)  trade barriers
B)  vigorous domestic rivalry
C)  purchasing power parity
D)  the availability of a captive market
E)  first-mover advantagesF) A) and C)
G) B) and D)

Question 7

Describe the shortcomings of the product life-cycle theory.

Accepted Answer

Viewed from an Asian or European perspec...

Question 8

Which of the following theories supports government intervention and strategic trade policy?

Accepted Answer

A)  theory of absolute advantage
B)  theory of comparative advantage
C)  Heckscher-Ohlin theory
D)  new trade theory
E)  product life-cycle theoryF) All of the above
G) A) and E)

Question 9

According to Adam Smith,countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries.

Accepted Answer

A) True 
 B)False

Question 10

Briefly explain how demand conditions shape the environment in which local firms compete.

Accepted Answer

Porter emphasizes the role home demand p...

Question 11

According to new trade theory,which of the following is most likely to be a result of market expansion due to trade?

Accepted Answer

A)  A wide variety of products is produced at greater unit costs than in the absence of trade.
B)  As the variety of products increases,demand for individual products decreases,leading to non-realization of economies of scale.
C)  Each nation may specialize in producing a narrower range of products,importing goods that it does not make.
D)  The ability to capture first-mover advantages is restricted in a world that allows trade.
E)  When countries do not differ in their resource endowments or technology,trade does not offer mutual benefits.F) A) and B)
G) B) and E)

Question 12

According to new trade theory,trade,through its impact on economies of scale,is most likely to

Accepted Answer

A)  reduce the volume of the goods produced.
B)  decrease the variety of goods available to consumers.
C)  decrease the average costs of goods.
D)  inhibit first-mover advantages in all industries.
E)  benefit only nations that differ in resource endowments or technology.F) All of the above
G) A) and B)

Question 13

According to the product life-cycle theory,the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Accepted Answer

A) True 
 B)False

Question 14

Discuss Paul Samuelson's critique of free trade.

Accepted Answer

Paul Samuelson's critique looks at what ...

Question 15

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) A) and C)
G) B) and E)

Question 16

While the country of New Zafariland specializes in dairy products,its geographical neighbor,Zwansea specializes in heavy machinery.New Zafariland exports dairy to Zwansea,which in turn exports heavy machinery to New Zafariland.According to the theory of comparative advantage,this mutually beneficial trade relationship best illustrates

Accepted Answer

A)  the significance of trade barriers.
B)  a positive-sum game.
C)  a first-mover advantage.
D)  the advantages of mercantilism.
E)  a zero-sum game.F) A) and B)
G) C) and D)

Question 17

Michael Porter argues that advanced factors are the most significant for competitive advantage.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is one of the four factors included in Porter's diamond?

Accepted Answer

A)  purchasing power parity
B)  gross national income
C)  economies of scale
D)  firm strategy,structure,and rivalry
E)  gross domestic productF) A) and B)
G) A) and E)

Question 19

According to the product life cycle theory,as demand for a product starts to grow in other advanced countries,potential for exports from the United States will gradually increase.

Accepted Answer

A) True 
 B)False

Question 20

Consider two countries Daria and Atlantis.Daria is a major producer of wheat and rice while Atlantis specializes in the production of fertilizers and manufacturing equipment.Engaging in free trade benefits both countries since Daria is an agrarian nation and Atlantis lacks arable land.This follows the theory of comparative advantage,and we can say that engaging in free trade benefits all countries that participate in it.Which of the following is an inaccurate assumption on which this conclusion is based?

Accepted Answer

A)  We have assumed a simple world in which there are only two countries.
B)  We have assumed the prices of resources and exchange rates in the two countries are dynamic.
C)  We have assumed there are barriers to the movement of resources from the production of one good to another within the same country.
D)  We have assumed that agrarian nations do not specialize in producing fertilizers.
E)  We have assumed diminishing returns to specialization.F) C) and D)
G) B) and E) A

Exam 6: International Trade Theory

According to Vernon,which of the following factors obviates the need for pioneering U.S.firms to look for low-cost production sites in other countries?

Correct Answer
verified
D

According to Porter's diamond,what are factor endowments?

Correct Answer
verified

According to the product life-cycle theory,the high cost of U.S.labor gave U.S.firms an incentive to

Correct Answer
verified
B

The new trade theory diverts from its advocacy of free trade by suggesting that

Correct Answer
verified

Correct Answer
verified

Porter,in his diamond model,suggested that there is a strong association between _____ and the creation and persistence of competitive advantage in an industry.

Correct Answer
verified

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 theories supports government intervention and strategic trade policy?

Correct Answer
verified

According to Adam Smith,countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries.

Correct Answer
verified

Briefly explain how demand conditions shape the environment in which local firms compete.

Correct Answer
verified
Porter emphasizes the role home demand p...
View Answer

According to new trade theory,which of the following is most likely to be a result of market expansion due to trade?

Correct Answer
verified

According to new trade theory,trade,through its impact on economies of scale,is most likely to

Correct Answer
verified

According to the product life-cycle theory,the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Correct Answer
verified

Discuss Paul Samuelson's critique of free trade.

Correct Answer
verified
Paul Samuelson's critique looks at what ...
View 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 Answer
verified

Correct Answer
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Michael Porter argues that advanced factors are the most significant for competitive advantage.

Correct Answer
verified

Which of the following is one of the four factors included in Porter's diamond?

Correct Answer
verified

According to the product life cycle theory,as demand for a product starts to grow in other advanced countries,potential for exports from the United States will gradually increase.

Correct Answer
verified

Correct Answer
verified
A

Exam 6: International Trade Theory

According to Vernon,which of the following factors obviates the need for pioneering U.S.firms to look for low-cost production sites in other countries?

Correct AnswerverifiedD

According to Porter's diamond,what are factor endowments?

Correct AnswerverifiedShow Answer

According to the product life-cycle theory,the high cost of U.S.labor gave U.S.firms an incentive to

Correct AnswerverifiedB

The new trade theory diverts from its advocacy of free trade by suggesting that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Porter,in his diamond model,suggested that there is a strong association between _____ and the creation and persistence of competitive advantage in an industry.

Correct AnswerverifiedShow Answer

Describe the shortcomings of the product life-cycle theory.

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

Which of the following theories supports government intervention and strategic trade policy?

Correct AnswerverifiedShow Answer

According to Adam Smith,countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries.

Correct AnswerverifiedShow Answer

Briefly explain how demand conditions shape the environment in which local firms compete.

Correct AnswerverifiedPorter emphasizes the role home demand p...View AnswerShow Answer

According to new trade theory,which of the following is most likely to be a result of market expansion due to trade?

Correct AnswerverifiedShow Answer

According to new trade theory,trade,through its impact on economies of scale,is most likely to

Correct AnswerverifiedShow Answer

According to the product life-cycle theory,the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Correct AnswerverifiedShow Answer

Discuss Paul Samuelson's critique of free trade.

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

Correct AnswerverifiedShow Answer

Michael Porter argues that advanced factors are the most significant for competitive advantage.

Correct AnswerverifiedShow Answer

Which of the following is one of the four factors included in Porter's diamond?

Correct AnswerverifiedShow Answer

According to the product life cycle theory,as demand for a product starts to grow in other advanced countries,potential for exports from the United States will gradually increase.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

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D

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B

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

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Correct Answer
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Porter emphasizes the role home demand p...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Paul Samuelson's critique looks at what ...
View Answer

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A