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Exam 5: International Trade Theory

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Question 41

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The focus of factor proportions theory is on the ________.

A) productivity of the production process
B) cost-effectiveness of the production process
C) use of depleting production factors
D) use of expensive production factors

E) B) and D)
F) None of the above

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Question 42

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The theory of comparative advantage was proposed by ________.

A) David Ricardo
B) Adam Smith
C) Bertil Ohlin
D) Raymond Vernon

E) A) and B)
F) All of the above

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Question 43

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In which stage of the international product life cycle does the innovating firm's country become a net importer of the product?

Discuss the limitations of the international product life cycle theory.How well does the theory explain current trade patterns?

Explain how the theory of absolute advantage conflicts with the theory of mercantilism.

Who proposed the theory of absolute advantage?

According to the international product life cycle theory,the innovating firm's country is primarily an exporter of the product in all three stages.

According to Michael Porter,advanced factors account for the sustained competitive advantage a country enjoys in a product.

Nations following the theory of ________ believed that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors.

Which factors of production did Leontief focus on?

Explain the theory of comparative advantage using an example,and describe its assumptions and limitations.

When a country is not able to produce a good more efficiently than other nations,but produces the good more efficiently than it does any other good,it is said to have a(n) ________.

The theory of absolute advantage destroys the mercantilist idea that international trade is a zero-sum game.

The international product life cycle theory was developed by ________.

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. -National competitive advantage theory states that a nation's competitiveness in an industry depends on ________.

Discuss the three essential pillars of the theory of mercantilism.

Factor proportions theory states that a country will produce and export those goods that require resources abundantly available within the country.

The international product life cycle theory was put forth for ________.

Another term for neomercantilism is ________.

According to the Porter diamond,which of the following is an example of an advanced factor?