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 Factor endowments are unit cost reductions associated with a large scale of output. Indicate whether the statement is true or false. ANSWER FALSE Economies of scale are unit cost reductions associated with a large scale of output. Factor Endowments refer to a country’s endowment with resources such as land, labor, and capital.
QUESTION An inconsistency in the mercantilist doctrine, as pointed out by David Hume, is that: A. the volume of a country’s imports increases as an indirect consequence of mercantilism. B. the exclusion of government influence in matters pertaining to trade is not ideal. C. in the long run, no country could sustain a surplus on […]
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 […]
QUESTION The major advantage of mercantilism was that it viewed trade as a zero-sum game. Indicate whether the statement is true or false. ANSWER FALSE The flaw with mercantilism was that it viewed trade as a zero-sum game. (A zero-sum game is one in which a gain by one country results in a loss […]
