Question 1

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 E)
G) A) and B)

Question 2

Porter argues that an absence of domestic rivalry is vital to the creation and persistence of international competitive advantage in an industry.

Accepted Answer

A) True 
 B)False

Question 3

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Accepted Answer

A) True 
 B)False

Question 4

Vernon argues that early in the life cycle of a typical new product, while demand is starting to grow rapidly in the United States, demand in other advanced countries:

Accepted Answer

A)  remains limited to high-income groups.
B)  necessitates production of that product in those countries.
C)  necessitates outsourcing of production to low-cost locations.
D)  raises the cost of production in the United States.
E)  causes a shift in the position of the United States from that of an exporter to an importer.F) All of the above
G) C) and D)

Question 5

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

Question 6

A certain amount of friction is involved when resources are required to move from one economic activity to another.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

Porter emphasizes the role home demand p...

Question 8

One of the suggestions of the new trade theory is that:

Accepted Answer

A)  differences in technology leads to differences in productivity, which in turn, drives international trade patterns.
B)  nations may benefit from trade irrespective of resource endowments or technology.
C)  the demand for most new products tends to be based on nonprice factors.
D)  globally dispersed production reduces the production costs of mature products.
E)  comparative advantage does not arrive from a difference in factor endowments but from a difference in productivity.F) A) and B)
G) B) and E)

Question 9

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

Accepted Answer

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

Question 10

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) C) and E)
G) B) and D)

Question 11

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 12

Australia is a major producer of agricultural and dairy products and exports coffee, tea, spices, and milk products to the United States. 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 13

Discuss Paul Samuelson's critique of free trade.

Accepted Answer

Paul Samuelson's critique looks at what ...

Question 14

Porter, in his diamond model, suggested that there is a strong association between which of the following 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) B) and C)
G) A) and B)

Question 15

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

Accepted Answer

Porter's theory of national competitive ...

Question 16

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) B) and D)
G) A) and E)

Question 17

Vernon argues that pioneering firms in the United States kept production facilities closer to the market and centers of decision making because:

Accepted Answer

A)  of the uncertainty and risks inherent in introducing new products.
B)  they believed that foreign production facilities were inferior in technical skills.
C)  they believed that U.S. labor costs were much lower than those in foreign markets.
D)  the U.S. government was critical of outsourcing production to other countries.
E)  of the high trade barriers implemented by several Asian and European countries.F) A) and E)
G) A) and D)

Question 18

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 19

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 20

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) B) and C)
G) A) and D)

Exam 6: International Trade Theory

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

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

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Correct Answer
verified

One of the suggestions of the new trade theory is that:

Correct Answer
verified

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

Correct Answer
verified

Vernon argues that early in the life cycle of a typical new product, while demand is starting to grow rapidly in the United States, demand in other advanced countries:

Correct Answer
verified

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

Correct Answer
verified
Porter's theory of national competitive ...
View Answer

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

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

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

A certain amount of friction is involved when resources are required to move from one economic activity to another.

Correct Answer
verified

Correct Answer
verified

A zero-sum game is a situation in which:

Correct Answer
verified

Discuss Paul Samuelson's critique of free trade.

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

Vernon argues that pioneering firms in the United States kept production facilities closer to the market and centers of decision making because:

Correct Answer
verified

Porter argues that an absence of domestic rivalry is vital to the creation and persistence of international competitive advantage in an industry.

Correct Answer
verified

Exam 6: International Trade Theory

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

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

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Correct AnswerverifiedShow Answer

One of the suggestions of the new trade theory is that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Vernon argues that early in the life cycle of a typical new product, while demand is starting to grow rapidly in the United States, demand in other advanced countries:

Correct AnswerverifiedShow Answer

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

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

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 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

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

A certain amount of friction is involved when resources are required to move from one economic activity to another.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A zero-sum game is a situation in which:

Correct AnswerverifiedShow Answer

Discuss Paul Samuelson's critique of free trade.

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

Vernon argues that pioneering firms in the United States kept production facilities closer to the market and centers of decision making because:

Correct AnswerverifiedShow Answer

Porter argues that an absence of domestic rivalry is vital to the creation and persistence of international competitive advantage in an industry.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
Porter's theory of national competitive ...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
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