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 […]
QUESTION Which of the following is true of the four attributes that make Porter’s diamond? A. Absence of any single attribute does not impact effectiveness of the diamond. B. The effect of one attribute is contingent on the state of others. C. The diamond is not a mutually reinforcing system. D. Chance events, such as […]
QUESTION Which of the following formed the crux of Porter’s study of national competitive advantage? A. Identifying the various stages of the life cycle of a product B. Determining why a country achieves international success in a particular industry C. Determining how trade barriers affect the prices of products in the international market D. Determining […]
QUESTION Which of the following theories states that in those industries where the output required to attain economies of scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises? A. Heckscher-Ohlin B. Comparative advantage C. Product life-cycle D. New trade E. Absolute […]
QUESTION According to the new trade theory, which of the following is most likely to be a result of market expansion due to trade? A. A wide variety of products is produced at greater unit costs than in the absence of trade. B. As the variety of products increases, demand for individual products decreases, leading […]
