QUESTION The economic and strategic advantages that accrue to early entrants in an industry are called: A. first-mover advantages. B. comparative advantages. C. absolute advantages. D. economies of scale. E. factor endowments. ANSWER A
Date: September 3rd, 2020
QUESTION Vernon predicts that as the demand for a new product starts to grow in other advanced countries, in the long run: A. the cost of labor in these advanced countries begins to increase. B. it becomes profitable for foreign firms to invest in production facilities in the United States. C. the firms in the […]
Date: September 3rd, 2020
QUESTION Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages? A. Increasing returns to specialization B. A positive-sum game due to lack of competition C. The ability to capture scale economies ahead of later entrants D. Absolute advantage and higher efficiency E. The […]
Date: September 3rd, 2020
QUESTION Vernon theorizes that as the market in the United States and other advanced nations matures: A. it necessitates exports from the United States to those countries. B. it is no longer worthwhile for foreign producers to produce for their home markets. C. it obviates the need to look for low-cost production sites in other […]
Date: September 3rd, 2020
QUESTION Which of the following is a drawback of the product life-cycle theory? A. Its relevance in the modern world seems limited. B. It makes many simplifying assumptions. C. It fails to explain the pattern of international trade during the period of American global dominance. D. It fails to explain what happens when a product’s […]
Date: September 3rd, 2020
QUESTION According to Vernon, which of the following influences the movement of the locus of global production from advanced countries to developing countries? A. Cost considerations B. Factor endowments C. Domestic competition D. Supporting industries E. Firm structure ANSWER A
Date: September 3rd, 2020
QUESTION According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends? A. U.S. imports become less capital-intensive than U.S. exports. B. The […]
Date: September 3rd, 2020
QUESTION Which of the following theories began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade? A. Comparative advantage B. Heckscher-Ohlin C. New trade D. Product life-cycle E. Absolute advantage ANSWER C
Date: September 3rd, 2020
QUESTION Which of the following is true of the relationship between trade and economic growth? A. Countries open to international trade display higher growth rates than those that close their economies to trade. B. Within a group of developing countries, closed economies grow faster than open economies. C. The Leontief paradox notes that adopting an […]
Date: September 3rd, 2020
QUESTION U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance of capital in the country. What is this phenomenon that runs contrary to the prediction of the Heckscher-Ohlin theory called? A. A zero-sum game B. The Leontief paradox C. A positive-sum game D. Samuelson’s critique E. A first-mover advantage ANSWER B
Date: September 3rd, 2020
