QUESTION 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? A. Trade barriers B. Vigorous domestic rivalry C. Purchasing power parity D. The availability of a captive market E. First-mover advantages ANSWER B
QUESTION If a company were to draw from the ideas proposed in the various theories of international trade, from a profit perspective, how would it go about selecting locations for its businesses? A. It would concentrate its productive activities mostly in developing countries. B. It would concentrate its productive activities in its home country. C. […]
QUESTION One of the suggestions of the new trade theory is that: 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. […]
QUESTION Which of the following was a pervasive finding of Porter’s study? A. Successful industries within a country tend to be grouped into clusters of related industries. B. Trade increases the specialization of production within an industry. C. The pattern of trade we observe in the world economy may be the result of first-mover advantages. […]
QUESTION Which of the following is an empirically supported prediction of the new trade theory? A. Trade increases the specialization of production within an industry. B. Nations benefit from trade only when they differ in factor endowments. C. Government intervention and strategic trade policies are more likely to harm international trade than is free trade. […]
QUESTION Which of the following helps a firm to preempt available demand, gain cost advantages related to volume, and build an enduring brand ahead of later competitors? A. Monopolistic practices B. Comparative advantages C. Absolute advantages D. First-mover advantages E. Mercantilism ANSWER D
QUESTION Which of the following theories supports government intervention and strategic trade policy? A. Theory of absolute advantage B. Theory of comparative advantage C. Heckscher-Ohlin theory D. New trade theory E. Poduct life-cycle theory ANSWER D
QUESTION Subsidies are a trade policy instrument. Indicate whether the statement is true or false. ANSWER TRUE Trade policy uses seven main instruments: tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies, and antidumping duties.
QUESTION Which of the following creates a barrier to subsequent entries in an industry dominated by first movers? A. The laissez-faire stance toward trade adopted by first movers B. Implementation of policies to maximize imports and minimize exports C. Specializing in the production of goods for which firms have an comparative advantage D. The ability […]
QUESTION By lowering production costs, subsidies help foreign competitors gain export markets. Indicate whether the statement is true or false. ANSWER FALSE By lowering production costs, subsidies help domestic producers in two ways: (1) competing against foreign imports and (2) gaining export markets.
