1
Q
The value of trade passing through the borders of all countries exceeds the amount of goods and services they produce.
Select one:
True
False
A
False
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2
Q
The ability of a nation to produce a good more efficiently than any other nation is called its comparative advantage.
Select one:
True
False
A
False
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3
Q
Both absolute and comparative advantage theories assume that \_\_\_\_\_\_\_\_ is the only resource used in the production process.Select one:a. capitalb. labor c. landd. equipment
A
b. labor
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4
Q
One of the major pillars upon which the practice of mercantilism rested was \_\_\_\_\_\_\_\_.Select one:a. excessive importsb. trade surpluses c. economies of scaled. pricing mechanism
A
b. trade surpluses
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5
Q
The measures of a nation's well-being other than the financial wealth accumulated through exports are irrelevant according to \_\_\_\_\_\_\_\_.Select one:a. new trade theoryb. factor proportions theoryc. mercantilism d. absolute advantage theory
A
c. mercantilism
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6
Q
Trade in services tends to be relatively more important for the world’s richest countries.
Select one:
True
False
A
True
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7
Q
Which element of national competitive advantage theory divides resources into two groups: basic and advanced?
Select one:
a. factor conditions
b. firm, strategy, structure, and rivalry
c. related and supporting industries
d. demand conditions
A
a. factor conditions
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8
Q
Most of the world’s merchandise trade is composed of trade in agricultural products.
Select one:
True
False
A
False
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9
Q
The theories of comparative and absolute advantage assume that specialization in the production of one particular good results in efficiency gains.
Select one:
True
False
A
False
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10
Q
Which of the following statements is incorrect with regard to the importance of colonies for mercantilist nations?
Select one:
a. They served as a source of profits for mercantilist powers.
b. They served as markets for higher-priced finished goods.
c. They served as a source of military protection.
d. They served as sources of inexpensive raw materials.
A
c. They served as a source of military protection.
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11
Q
The new trade theory is mainly at odds with the \_\_\_\_\_\_\_\_ theory.Select one:a. factor proportions b. national competitive advantagec. international product life cycled. comparative advantage
A
a. factor proportions
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12
Q
Most of the world merchandise trade is composed of trade in \_\_\_\_\_\_\_\_.Select one:a. agricultural productsb. servicesc. mineralsd. manufactured goods
A
d. manufactured goods
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13
Q
Walmart has been very successful in the U.S. market, so much so that it is now considering entering the global market.
Select one:
True
False
A
False
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14
Q
Scenario: Better Mousetrap Inc.
Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U.S. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues.
Wallace expects that markets abroad will soon become fully aware of the existence of the product and its benefits. Which of the following life cycle stages will the product be a part of during that period?Select one:a. product decline stageb. standardized product stagec. maturing product stage d. new product stage
A
c. maturing product stage
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15
Q
National competitive advantage theory states that a nation’s competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.
Select one:
True
False
A
True
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16
Q
Much production in the world today closely resembles what is predicted by the \_\_\_\_\_\_\_\_.Select one:a. international product life cycleb. theory of comparative advantage c. theory of factor proportionsd. new trade theory
A
b. theory of comparative advantage
17
Q
The theory of absolute advantage measures a nation’s wealth by the standard of living of its people.
Select one:
True
False
A
True
18
Q
Country A produces a ton of coffee using one unit of resources. Country B produces two tons of coffee using one unit of resources. Which of the following is true regarding Country A and Country B?
Select one:
a. Both Country A and Country B have an absolute advantage in producing coffee.
b. Country A has an absolute advantage in producing coffee.
c. Neither Country A nor Country B has an absolute advantage in producing coffee.
d. Country B has an absolute advantage in producing coffee.
A
d. Country B has an absolute advantage in producing coffee.
19
Q
Today, countries seen by others as trying to maintain a trade surplus and expand their national treasures at the expense of other nations are accused of practicing \_\_\_\_\_\_\_\_.Select one:a. social stratificationb. economic nationalism c. anti-mercantilismd. totalitarianism
A
b. economic nationalism
20
Q
The smallest portion of the total world trade comprises trade between \_\_\_\_\_\_\_\_.Select one:a. low-income and middle-income nations b. high-income and middle-income nationsc. developed countriesd. First World member countries
A
a. low-income and middle-income nations
21
Q
Mercantilist countries used to amass wealth by acquiring less-developed territories around the world.
Select one:
True
False
A
True
22
Q
As US firms expand trade with Asia and more managers without prior international experience begin interacting with Asian consumers, clients, partners and others, they should take great care to express all important issues in very clear. detailed legal documents to avoid possible cross-cultural misunderstandings.
Select one:
True
False
A
False
23
Q
In the maturing product stage of the international product life cycle theory, production facilities are introduced in countries with the highest demand.
Select one:
True
False
A
True
24
Q
The ability of a nation to produce a good more efficiently than any other nation is called its comparative advantage.
Select one:
True
False
A
False
25
Q
During which stage of the international product life cycle theory does demand rise and remain sustained for a fairly lengthy period of time?Select one:a. standardized product stageb. maturing product stage c. new product staged. product decline stage
A
b. maturing product stage
26
Q
The theories of comparative and absolute advantage assume that specialization in the production of one particular good results in efficiency gains.
Select one:
True
False
A
False
27
Q
The international product life cycle theory was developed by \_\_\_\_\_\_\_\_.Select one:a. Michael Porterb. Karl Marxc. Milton Friedmand. Raymond Vernon
A
d. Raymond Vernon
28
Q
Scenario: Foodland and Drinkland
Two countries, Foodland and Drinkland, produce food and drinks. In Foodland, one resource unit produces 20 tons of food and one resource unit produces 10 tons of drinks. In Drinkland, one resource unit produces 12 tons of food and one resource unit produces 24 tons of drinks.
Which of the following statements is true of the above scenario?
Select one:
a. Drinkland cannot trade with Foodland because trade is too expensive.
b. Foodland has a comparative advantage in producing drinks.
c. Foodland should stop producing food and just produce drinks.
d. Drinkland has an absolute advantage in producing drinks.
A
d. Drinkland has an absolute advantage in producing drinks.
29
Q
The Leontief paradox describes evidence ________.
Select one:
a. contrary to the predictions of the factor proportions theory
b. in support of the predictions of the mercantilist theory
c. that the assumptions of the new trade theory are invalid
d. that the assumptions of international product life cycle theory are invalid
A
a. contrary to the predictions of the factor proportions theory
30
Q
Companies that belong to a nation’s internationally competitive industries exist in isolation from supporting industries.
Select one:
True
False
A
False
31
Q
Trade between most nations is presently characterized by a certain degree of isolationism.
Select one:
True
False
A
False
32
Q
Factor proportions theory was developed by \_\_\_\_\_\_\_\_.Select one:a. Heckscher and Smithb. Heckscher and Ohlin c. Smith and Ricardod. Ricardo and Ohlin
A
b. Heckscher and Ohlin
Certainly! It seems you're diving into international trade concepts. These ideas form the backbone of global commerce and economic theories. Let's break down each question:
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The value of trade surpassing the value of goods and services produced: This statement reflects the significance of trade in the global economy. Countries often engage in trade to access resources, products, and services they might not produce efficiently or at all.
-
Comparative advantage: This refers to a nation's ability to produce goods more efficiently than other nations. It's a crucial concept in trade as it determines specialization and trade patterns among countries.
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Factors used in production: Both absolute and comparative advantage theories assume that labor is the primary resource used in the production process. This highlights the significance of workforce efficiency in trade theories.
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Mercantilism: This historical economic theory rested heavily on the notion of trade surpluses as a foundation for a nation's prosperity. It emphasized amassing wealth through exporting more than importing.
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Views on well-being in mercantilism: Mercantilism believed that a nation's financial wealth accumulated through exports was paramount, considering other measures of well-being as irrelevant.
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Importance of trade in services for richer nations: True. Wealthier countries often rely more on services, showcasing the evolving nature of economies.
-
Factor conditions in national competitive advantage: This theory categorizes resources into basic and advanced categories, emphasizing their significance in a nation's competitiveness.
-
Composition of world merchandise trade: It's mostly composed of manufactured goods, dispelling the notion that agricultural products dominate trade.
-
Specialization and efficiency gains: Both comparative and absolute advantage theories believe that specialization in producing a particular good leads to efficiency gains.
-
Importance of colonies in mercantilist nations: They served as markets for higher-priced finished goods and sources of profits, rather than primarily as sources of military protection.
-
New trade theory's opposition: It mainly contrasts with the factor proportions theory.
-
World merchandise trade composition: Majorly comprises trade in manufactured goods, emphasizing industrialized products' dominance.
-
Walmart's global expansion: Considering its success in the US market, entering the global market might not be an immediate priority for Walmart.
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Product life cycle stages: The product in question, experiencing significant sales in the US and likely gaining awareness abroad, would be in the maturing product stage.
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National competitive advantage and innovation: True. This theory links a nation's competitiveness to its capacity for industry innovation and enhancement.
-
Production resembling the theory of comparative advantage: Much of the world's production aligns with the predictions of the comparative advantage theory, emphasizing efficiency in trade.
-
Absolute advantage measuring a nation's wealth: True. It does measure a nation's wealth through the standard of living of its people, showcasing its focus on productivity and efficiency.
-
Absolute advantage in coffee production: Country B has an absolute advantage in producing coffee as it can produce more coffee with the same amount of resources compared to Country A.
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Accusation against nations seeking trade surplus: Economic nationalism is the accusation, indicating prioritizing national wealth over global trade relationships.
-
Smallest portion of total world trade: It involves trade between low-income and middle-income nations, highlighting the disparity in global trade dynamics.
-
Mercantilist nations' wealth accumulation: True. Historically, these nations expanded wealth through acquiring less developed territories.
-
Importance of detailed legal documents in cross-cultural interactions: False. While clear documentation is crucial, overly detailed legalities might hinder effective communication due to cultural differences.
-
Production facility introduction in maturing product stage: True. During this stage, production facilities are established in countries with high demand.
-
Comparative advantage definition: False. Comparative advantage refers to a nation's ability to produce goods more efficiently, not just more efficiently than any other nation.
-
Sustained demand in the maturing product stage: True. This stage experiences prolonged and stable demand for the product.
-
Specialization resulting in efficiency gains: False. Both comparative and absolute advantage theories advocate for efficiency gains through specialization.
-
Developer of the international product life cycle theory: Raymond Vernon formulated this theory, highlighting product life stages and their impact on trade.
-
Comparative advantage in production: Drinkland has an absolute advantage in producing drinks, showcasing its efficiency in drink production compared to Foodland.
-
Leontief paradox evidence: It contradicts the predictions of the factor proportions theory, challenging the assumptions about resource distribution and trade patterns.
-
Isolation of internationally competitive industries: False. These industries often depend on and interact with supporting industries.
-
Present characterization of trade: False. Most nations today exhibit interdependence and engagement in global trade rather than isolationism.
-
Developer of factor proportions theory: Heckscher and Ohlin developed this theory, emphasizing the role of factors like labor and capital in trade dynamics.
These concepts form a robust framework for understanding the intricacies of international trade and economic theories. If you have any specific questions or need further explanations, feel free to ask!
