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 The new trade theory suggests that a country may predominate in the export of a good simply because it was lucky enough to have one or more pioneering firms to produce that good. Indicate whether the statement is true or false. ANSWER TRUE The new trade theory suggests that a country may predominate […]
QUESTION Porter’s theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns. Indicate whether the statement is true or false. ANSWER FALSE Porter’s theory has not been subjected to detailed empirical testing. Much about the theory rings true, but the same can be said for […]
QUESTION Individual firms should invest substantial financial resources in trying to build a first-mover advantage, even if that means several years of losses before a new venture becomes profitable. Indicate whether the statement is true or false. ANSWER TRUE Individual firms should realize that it pays to invest substantial financial resources in trying to […]
QUESTION Porter’s theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production. Indicate whether the statement is true or false. ANSWER TRUE Porter’s theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced […]
QUESTION According to Adam Smith, countries should specialize in the production of goods for which they have an absolute advantage and then trade these for goods produced by other countries. Indicate whether the statement is true or false. ANSWER TRUE According to Adam Smith, countries should specialize in the production of goods for which […]
QUESTION According to Ricardo’s theory of comparative advantage, it makes sense for a country to specialize in the production of those goods that it produces most efficiently and to import goods that it produces less efficiently. Indicate whether the statement is true or false. ANSWER TRUE According to Ricardo’s theory of comparative advantage, it […]
