QUESTION The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation. It exports agricultural products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from […]
QUESTION Considered to be the first theory of international trade, the principal assertion of mercantilism is that: A. countries differ in their ability to produce goods efficiently. B. gold and silver are the mainstays of a country’s wealth and essential to vigorous commerce. C. countries should specialize in the production of goods for which they […]
QUESTION According to Michael Porter, government can influence each of the four components of Porter’s diamond—either positively or negatively. Indicate whether the statement is true or false. ANSWER TRUE Porter contends that government can influence each of the four components of Porter’s diamond—either positively or negatively. Factor endowments can be affected by subsidies, policies […]
QUESTION Which of the following is in a country’s best interests, according to the main tenet of mercantilism? A. Importing products from developing rather than developed countries B. Importing products even if they are efficiently produced at home C. Importing less specialized goods rather than attempting to make them at home D. Minimizing exports and […]
QUESTION Michael Porter argues that advanced factors are the most significant for competitive advantage. Indicate whether the statement is true or false. ANSWER TRUE Michael Porter argues that advanced factors are the most significant for competitive advantage. The benefits of investments in advanced factors of production by related and supporting industries can spill over […]
QUESTION Neo-mercantilists equate political power with economic power and economic power with: A. corruption. B. a balance-of-trade surplus. C. regional dominance. D. a trade monopoly. E. capitalism. ANSWER B
QUESTION Porter argues that an absence of domestic rivalry is vital to the creation and persistence of international competitive advantage in an industry. Indicate whether the statement is true or false. ANSWER FALSE Porter argues that there is a strong association between vigorous domestic rivalry and the creation and persistence of competitive advantage in […]
QUESTION A zero-sum game is a situation in which: A. the market mechanism determines what a country imports and what it exports. B. a country engages in international trade even for products it is able to produce for itself. C. an economic gain by one country results in an economic loss by another. D. limits […]
QUESTION Limits on imports are often in the interests of domestic consumers, but not domestic producers. Indicate whether the statement is true or false. ANSWER FALSE Limits on imports are often in the interests of domestic producers, but not domestic consumers.
QUESTION A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it. Indicate whether the statement is true or false. ANSWER TRUE A country has an absolute advantage in the production of a product when it is more efficient than any […]
