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.
QUESTION 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? A. Heckscher-Ohlin B. Product life-cycle C. Comparative advantage D. Absolute advantage E. National competitive […]
QUESTION The new trade theory diverts from its advocacy of free trade by suggesting that: 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 […]
QUESTION Which of the following is one of the four factors included in Porter’s diamond? A. Purchasing power parity B. Gross national income C. Economies of scale D. Firm strategy, structure, and rivalry E. Gross domestic product ANSWER D
QUESTION According to Porter’s diamond, what are factor endowments? 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 […]
