Question 1 Multiple Choice 1 of 1 point(s) The main tenet of mercantilism was that it was in a country's best interest to maintain a trade: Your Answer: surplus Correct Answer: surplus Feedback: Difficulty: Medium Page: 147 Question 2 Multiple Choice 0 of 1 point(s) The Heckscher-Ohlin theory has a(n) _______ appeal. Your Answer: cost efficiency Correct Answer: commonsense Feedback: Difficulty: Medium Page: 158 Question 3 Multiple Choice 1 of 1 point(s) According to the new trade theory, if international trade results in a country specializing in the production of a certain good, and if there are economies of scale in producing that good, then as output of that good expands, unit costs will: Your Answer: fall Correct Answer: fall Feedback: Difficulty: Medium Page: 162 Question 4 Multiple Choice 0 of 1 point(s) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following are attributes except: Your Answer: firm strategy, structure, and rivalry Correct Answer: customs Feedback: Difficulty: Hard Page: 165-166 Question 5 Multiple Choice 1 of 1 point(s) _______ is the basic message of the theory of comparative advantage. Your Answer: Potential world production is greater with unrestricted free trade than it is with restricted trade Correct Answer: Potential world production is greater with unrestricted free trade than it is with restricted trade Feedback: Difficulty: Hard Page: 153 Question 6 Multiple Choice 1 of 1 point(s) Swedish economists, __________ and __________, advanced a theory of trade that argued that comparative advantage arises from differences in national factor endowments. Your Answer: Hecksher, Ohlin Correct Answer: Hecksher, Ohlin Feedback: Difficulty: Medium Page: 158 Question 7 True/False 1 of 1 point(s) Free trade is a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 8 Multiple Choice 0 of 1 point(s) The flaw with mercantilism was that it viewed trade as a(n) __________. Your Answer: threat to a government's independence Correct Answer: zero-sum game Feedback: Difficulty: Medium Page: 148 Question 9 Multiple Choice 1 of 1 point(s) Porter argues that the presence of all components is usually required for the “diamond” to boost: Your Answer: competitive performance. Correct Answer: competitive performance. Feedback: Difficulty: Medium Page: 168 Question 10 Multiple Choice 0 of 1 point(s) Resources do not always move easily from one economic activity to another and the process creates: Your Answer: inflation. Correct Answer: friction and human suffering. Feedback: Difficulty: Medium Page: 154 Name: Quiz 2--Chapter 4 Status: Completed Score: 7 out of 10 point(s) Time Elapsed: 6 minutes and 11 seconds out of 10 minutes allowed. Instructions: Question 1 Multiple Choice 1 of 1 point(s) The theory of __________ was advanced by Adam Smith. Your Answer: absolute advantage Correct Answer: absolute advantage Feedback: Difficulty: Easy Page: 144 Question 2 True/False 1 of 1 point(s) According to our textbook, the product life-cycle theory has excellent relevance in the modern world. Your Answer: false Correct Answer: false Feedback: Difficulty: Hard Page: 161 Question 3 Multiple Choice 0 of 1 point(s) Porter argued that in regard to factor endowments, __________ factors are the most significant for competitive advantage in his study dealing with the competitive advantage of nations. Your Answer: basic Correct Answer: advanced Feedback: Difficulty: Medium Page: 166 Question 4 Multiple Choice 0 of 1 point(s) In the 20th century, __________ work was refined by two Swedish economists, Eli Heckscher and Bertil Ohlin, whose theory is known as the Heckscher-Ohlin theory. Your Answer: Hofstede's Correct Answer: Ricardo's Feedback: Difficulty: Medium Page: 144 Question 5 True/False 0 of 1 point(s) The notion of first-mover advantages is associated with the product life cycle theory. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 164 Question 6 Multiple Choice 1 of 1 point(s) Porter argues that the presence of all components is usually required for the “diamond” to boost: Your Answer: competitive performance. Correct Answer: competitive performance. Feedback: Difficulty: Medium Page: 168 Question 7 Multiple Choice 1 of 1 point(s) _______ is/are unit cost reductions associated with a large scale of output. Your Answer: Economies of scale Correct Answer: Economies of scale Feedback: Difficulty: Easy Page: 162 Question 8 Multiple Choice 1 of 1 point(s) The main tenet of mercantilism was that it was in a country's best interest to maintain a trade: Your Answer: surplus Correct Answer: surplus Feedback: Difficulty: Medium Page: 147 Question 9 Multiple Choice 1 of 1 point(s) Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialization. Your Answer: new trade Correct Answer: new trade Feedback: Difficulty: Medium Page: 162 Question 10 Multiple Choice 1 of 1 point(s) According to the new trade theory, if international trade results in a country specializing in the production of a certain good, and if there are economies of scale in producing that good, then as output of that good expands, unit costs will: Your Answer: fall Correct Answer: fall Feedback: Difficulty: Medium Page: 162 Question 1 Multiple Choice 1 of 1 point(s) The theory of comparative advantage Your Answer: provides a strong rationale for encouraging free trade. Correct Answer: provides a strong rationale for encouraging free trade. Feedback: Difficulty: Medium Page: 153 Question 2 Multiple Choice 1 of 1 point(s) Vernon's product life-cycle theory was based on the observation that for most of the 20th century a very large proportion of the world's new products had been developed by U.S. firms and sold first in the _______ market. Your Answer: U.S. Correct Answer: U.S. Feedback: Difficulty: Medium Page: 159 Question 3 Multiple Choice 0 of 1 point(s) The Hecksher-Olin theory argues that the pattern of international trade is determined by differences in: Your Answer: national priorities Correct Answer: factor endowments Feedback: Difficulty: Medium Page: 158 Question 4 Multiple Choice 1 of 1 point(s) _______, by its choice of policies, can detract from or improve national advantage. Your Answer: Government Correct Answer: Government Feedback: Difficulty: Easy Page: 166 Question 5 Multiple Choice 0 of 1 point(s) The Heckscher-Ohlin theory ________ in explaining why some countries export oil while others export textiles. Your Answer: emphasizes international differences in cultural histories Correct Answer: emphasizes the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries Feedback: Difficulty: Hard Page: 145 Question 6 True/False 1 of 1 point(s) According to Porter, the four broad attributes of a nation that shape the environment in which local firms compete and that promote or impede the creation of competitive advantage are demand conditions, firm strategy, structure, and rivalry, factor endowments, and relating and supporting industries. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 165 Question 7 Multiple Choice 1 of 1 point(s) __________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: Free trade Correct Answer: Free trade Feedback: Difficulty: Easy Page: 144 Question 8 True/False 0 of 1 point(s) In his 1776 landmark book, The Wealth of Nations, Adam Smith supported the mercantilist assumption that trade is a zero-sum game. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 148 Question 9 Multiple Choice 1 of 1 point(s) In the 20th century, __________ work was refined by two Swedish economists, Eli Heckscher and Bertil Ohlin, whose theory is known as the Heckscher-Ohlin theory. Your Answer: Ricardo's Correct Answer: Ricardo's Feedback: Difficulty: Medium Page: 144 Question 10 Multiple Choice 1 of 1 point(s) Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialization. Your Answer: new trade Correct Answer: new trade Feedback: Difficulty: Medium Page: 162 Question 1 True/False 1 of 1 point(s) According to Porter, the four broad attributes of a nation that shape the environment in which local firms compete and that promote or impede the creation of competitive advantage are demand conditions, firm strategy, structure, and rivalry, factor endowments, and relating and supporting industries. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 165 Question 2 Multiple Choice 0 of 1 point(s) Which theory of international trade directly explains why there are only two to three producers of airlines in the world today? Your Answer: Absolute advantage Correct Answer: New trade Feedback: Difficulty: Medium Page: 163 Question 3 True/False 0 of 1 point(s) Smith's basic argument was that a country should never produce goods at home that it can buy at a lower cost from other countries. Your Answer: false Correct Answer: true Feedback: Difficulty: Medium Page: 148 Question 4 True/False 1 of 1 point(s) A firm should invest in upgrading advanced factors of production because it is in the best interest of business for a firm, according to Porter's theory. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 171 Question 5 True/False 1 of 1 point(s) The great strength of the theories of Smith, Ricardo, and Heckscher-Ohlin is that they identify the specific benefits of international trade. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 144 Question 6 Multiple Choice 1 of 1 point(s) Which theory predicts that countries will export those goods that make intensive use of those factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce? Your Answer: Hecksher-Olin Correct Answer: Hecksher-Olin Feedback: Difficulty: Medium Page: 158 Question 7 Multiple Choice 0 of 1 point(s) According to David Hume, if England had a balance-of-trade surplus with France, the resulting inflow of gold and silver would: Your Answer: France's prices would rise Correct Answer: increase the money supply and cause inflation in England Feedback: Difficulty: Medium Page: 148 Question 8 Multiple Choice 1 of 1 point(s) Dynamic gains in both the stock of a country's resources and the efficiency with which resources are utilized will cause a country's PPF to: Your Answer: shift outward Correct Answer: shift outward Feedback: Difficulty: Hard Page: 156 Question 9 Multiple Choice 1 of 1 point(s) _______ is the basic message of the theory of comparative advantage. Your Answer: Potential world production is greater with unrestricted free trade than it is with restricted trade Correct Answer: Potential world production is greater with unrestricted free trade than it is with restricted trade Feedback: Difficulty: Hard Page: 153 Question 10 Multiple Choice 1 of 1 point(s) _______ is not consistent with the central beliefs of mercantilism. Your Answer: Policies should be put in place to minimize exports and maximize imports Correct Answer: Policies should be put in place to minimize exports and maximize imports Feedback: Difficulty: Hard Page: 148 Question 1 True/False 0 of 1 point(s) The notion of first-mover advantages is associated with the product life cycle theory. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 164 Question 2 Multiple Choice 1 of 1 point(s) The Heckscher-Ohlin theory ________ in explaining why some countries export oil while others export textiles. Your Answer: emphasizes the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries Correct Answer: emphasizes the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries Feedback: Difficulty: Hard Page: 145 Question 3 Multiple Choice 1 of 1 point(s) The economic and strategic advantages that accrue to early entrants in an industry are called: Your Answer: first-mover advantages Correct Answer: first-mover advantages Feedback: Difficulty: Easy Page: 164 Question 4 Multiple Choice 0 of 1 point(s) Propagated in the 16th and 17th centuries, __________ advocated that countries should simultaneously encourage exports and discourage imports. Your Answer: capitalism Correct Answer: mercantilism Feedback: Difficulty: Easy Page: 144 Question 5 Multiple Choice 1 of 1 point(s) The Hecksher-Olin theory argues that the pattern of international trade is determined by differences in: Your Answer: factor endowments Correct Answer: factor endowments Feedback: Difficulty: Medium Page: 158 Question 6 Multiple Choice 0 of 1 point(s) The Heckscher-Ohlin theory has a(n) _______ appeal. Your Answer: political Correct Answer: commonsense Feedback: Difficulty: Medium Page: 158 Question 7 Multiple Choice 0 of 1 point(s) In terms of explaining why some countries export automobiles, consumer electronics, and machine tools, while other countries export chemicals, watches, and jewelry, David Ricardo's theory of comparative advantage offers an explanation in terms of Your Answer: the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries and the proportions in which they are needed for producing particular goods. Correct Answer: international differences in labor productivity. Feedback: Difficulty: Hard Page: 145 Question 8 Multiple Choice 1 of 1 point(s) Porter argues that the presence of all components is usually required for the “diamond” to boost: Your Answer: competitive performance. Correct Answer: competitive performance. Feedback: Difficulty: Medium Page: 168 Question 9 Multiple Choice 1 of 1 point(s) __________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: Free trade Correct Answer: Free trade Feedback: Difficulty: Easy Page: 144 Question 10 Multiple Choice 1 of 1 point(s) Porter contends that the degree to which a nation is likely to achieve international success _______ is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and domestic rivalry. Your Answer: in a certain industry Correct Answer: in a certain industry Feedback: Difficulty: Medium Page: 168 Question 1 Multiple Choice 0 of 1 point(s) Economies of scale and learning effects both increase the efficiency of resource utilization, therefore increasing Your Answer: factor endowments. Correct Answer: productivity. Feedback: Difficulty: Medium Page: 164 Question 2 Multiple Choice 1 of 1 point(s) _______, according to Michael Porter, are a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. Your Answer: Factor endowments Correct Answer: Factor endowments Feedback: Difficulty: Hard Page: 165 Question 3 True/False 1 of 1 point(s) In sum, Porter's argument is that the degree to which a nation is likely to achieve international success in a certain industry is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and degree of government support. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 168 Question 4 Multiple Choice 0 of 1 point(s) Unlike the naturally endowed basic factors, advanced factors are a product of investment by all of the following except Your Answer: governments. Correct Answer: demographics. Feedback: Difficulty: Easy Page: 166 Question 5 Multiple Choice 1 of 1 point(s) The __________ argues that in many industries, because of substantial economies of scale, there are increasing returns to specialization. Your Answer: new trade theory Correct Answer: new trade theory Feedback: Difficulty: Medium Page: 162 Question 6 True/False 0 of 1 point(s) Free trade is a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: false Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 7 Multiple Choice 1 of 1 point(s) In his study, Porter observed that there are a disproportionate number of people with finance backgrounds on the top management teams of many __________ industries. Your Answer: United States Correct Answer: United States Feedback: Difficulty: Hard Page: 167 Question 8 Multiple Choice 1 of 1 point(s) Propagated in the 16th and 17th centuries, __________ advocated that countries should simultaneously encourage exports and discourage imports. Your Answer: mercantilism Correct Answer: mercantilism Feedback: Difficulty: Easy Page: 144 Question 9 Multiple Choice 0 of 1 point(s) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following are attributes except: Your Answer: factor endowments Correct Answer: customs Feedback: Difficulty: Hard Page: 165-166 Question 10 Multiple Choice 1 of 1 point(s) In terms of explaining why some countries export automobiles, consumer electronics, and machine tools, while other countries export chemicals, watches, and jewelry, David Ricardo's theory of comparative advantage offers an explanation in terms of Your Answer: international differences in labor productivity. Correct Answer: international differences in labor productivity. Feedback: Difficulty: Hard Page: 145 Question 1 Multiple Choice 1 of 1 point(s) The Heckscher-Ohlin theory has a(n) _______ appeal. Your Answer: commonsense Correct Answer: commonsense Feedback: Difficulty: Medium Page: 158 Question 2 True/False 1 of 1 point(s) Economic growth is positively effected by free trade. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 157 Question 3 Multiple Choice 1 of 1 point(s) The Hecksher-Olin theory argues that the pattern of international trade is determined by differences in: Your Answer: factor endowments Correct Answer: factor endowments Feedback: Difficulty: Medium Page: 158 Question 4 Multiple Choice 1 of 1 point(s) Porter visually depicted the four broad attributes that shape the competitive advantage of a nation as a: Your Answer: diamond Correct Answer: diamond Feedback: Difficulty: Medium Page: 165 Question 5 True/False 1 of 1 point(s) Because it makes fewer simplifying assumptions, and it has been subjected to many empirical tests, most economists prefer the Heckscher-Ohlin theory to Ricardo's theory. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 158 Question 6 Multiple Choice 1 of 1 point(s) Porter contends that the degree to which a nation is likely to achieve international success _______ is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and domestic rivalry. Your Answer: in a certain industry Correct Answer: in a certain industry Feedback: Difficulty: Medium Page: 168 Question 7 Multiple Choice 0 of 1 point(s) _______ theory of international trade suggests that the production of products is likely to switch from advanced countries to developing countries over time. Your Answer: New trade Correct Answer: Product life-cycle Feedback: Difficulty: Medium Page: 160 Question 8 Multiple Choice 0 of 1 point(s) Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialization. Your Answer: product life-cycle Correct Answer: new trade Feedback: Difficulty: Medium Page: 162 Question 9 Multiple Choice 0 of 1 point(s) Which of the following international management scholars argued that the "invisible hand" of the market mechanism, rather than government policy, should determine what a country imports and what it exports? Your Answer: David Ricardo Correct Answer: Adam Smith Feedback: Difficulty: Hard Page: 144 Question 10 Multiple Choice 1 of 1 point(s) _______ is not consistent with the central beliefs of mercantilism. Your Answer: Policies should be put in place to minimize exports and maximize imports Correct Answer: Policies should be put in place to minimize exports and maximize imports Feedback: Difficulty: Hard Page: 148 Question 1 True/False 1 of 1 point(s) In his 1776 landmark book, The Wealth of Nations, Adam Smith supported the mercantilist assumption that trade is a zero-sum game. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 148 Question 2 True/False 0 of 1 point(s) According to Porter, the four broad attributes of a nation that shape the environment in which local firms compete and that promote or impede the creation of competitive advantage are demand conditions, firm strategy, structure, and rivalry, factor endowments, and relating and supporting industries. Your Answer: false Correct Answer: true Feedback: Difficulty: Medium Page: 165 Question 3 Multiple Choice 0 of 1 point(s) New trade theorists stress the role of which of the following three variables in giving a firm first-mover advantage? Your Answer: Entrepreneurship, favorable foreign exchange rates, and innovation Correct Answer: Luck, entrepreneurship, and innovation Feedback: Difficulty: Hard Page: 164 Question 4 Multiple Choice 1 of 1 point(s) Propagated in the 16th and 17th centuries, __________ advocated that countries should simultaneously encourage exports and discourage imports. Your Answer: mercantilism Correct Answer: mercantilism Feedback: Difficulty: Easy Page: 144 Question 5 Multiple Choice 1 of 1 point(s) The Heckscher-Ohlin theory has a(n) _______ appeal. Your Answer: commonsense Correct Answer: commonsense Feedback: Difficulty: Medium Page: 158 Question 6 Multiple Choice 0 of 1 point(s) Governments often ease the transition toward free trade by _______ those who lose their jobs as a result. Your Answer: creating new jobs for Correct Answer: helping to retrain Feedback: Difficulty: Medium Page: 154 Question 7 Multiple Choice 0 of 1 point(s) _______ returns to specialization occur when the resources required to produce a good are assumed to remain constant no matter where it is on a country's production possibility frontier. Your Answer: Diminishing Correct Answer: Constant Feedback: Difficulty: Medium Page: 154 Question 8 Multiple Choice 1 of 1 point(s) The theory of comparative advantage Your Answer: provides a strong rationale for encouraging free trade. Correct Answer: provides a strong rationale for encouraging free trade. Feedback: Difficulty: Medium Page: 153 Question 9 Multiple Choice 1 of 1 point(s) Which of the following correctly matches one of Porter's broad attributes with its definition? Your Answer: Firm strategy, structure, and rivalry - the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry Correct Answer: Firm strategy, structure, and rivalry - the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry Feedback: Difficulty: Medium Page: 166 Question 10 Multiple Choice 1 of 1 point(s) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following are attributes except: Your Answer: customs Correct Answer: customs Feedback: Difficulty: Hard Page: 165-166 Question 1 Multiple Choice 1 of 1 point(s) Which of these occurs if an economy is opened to trade? Your Answer: Free trade might increase the efficiency with which a country uses its resources. Correct Answer: Free trade might increase the efficiency with which a country uses its resources. Feedback: Difficulty: Medium Page: 156 Question 2 Multiple Choice 0 of 1 point(s) To an even greater degree than the theory of absolute advantage, the theory of __________ suggests that trade is a positive-sum game in which all gain. Your Answer: total advantage Correct Answer: comparative advantage Feedback: Difficulty: Medium Page: 153 Question 3 Multiple Choice 0 of 1 point(s) In terms of explaining why some countries export automobiles, consumer electronics, and machine tools, while other countries export chemicals, watches, and jewelry, David Ricardo's theory of comparative advantage offers an explanation in terms of Your Answer: the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries and the proportions in which they are needed for producing particular goods. Correct Answer: international differences in labor productivity. Feedback: Difficulty: Hard Page: 145 Question 4 True/False 1 of 1 point(s) Because it makes fewer simplifying assumptions, and it has been subjected to many empirical tests, most economists prefer the Heckscher-Ohlin theory to Ricardo's theory. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 158 Question 5 Multiple Choice 1 of 1 point(s) Dynamic gains in both the stock of a country's resources and the efficiency with which resources are utilized will cause a country's PPF to: Your Answer: shift outward Correct Answer: shift outward Feedback: Difficulty: Hard Page: 156 Question 6 Multiple Choice 0 of 1 point(s) The theory of __________ was advanced by Adam Smith. Your Answer: similar opportunity Correct Answer: absolute advantage Feedback: Difficulty: Easy Page: 144 Question 7 Multiple Choice 0 of 1 point(s) Hagelstam observed that in most trade negotiations, the approach of individual negotiating countries has been to press for trade _______ in areas where their own comparative competitive advantages are the strongest, and to resist _______ in areas where they are less competitive and fear that imports would replace domestic production. Your Answer: capitalization; socialization Correct Answer: liberalization; liberalization Feedback: Difficulty: Medium Page: 148 Question 8 True/False 0 of 1 point(s) The new trade theorists argue that in those industries where the existence of substantial economies of scale imply that the world market will profitably support only a few firms, countries may export certain products simply because they have a firm that was an early entrant into that industry. Your Answer: false Correct Answer: true Feedback: Difficulty: Medium Page: 162 Question 9 Multiple Choice 1 of 1 point(s) Which of the following choices correctly matches a scholar with the theory that he or she proposed? Your Answer: Raymond Vernon / Product Life Cycle Correct Answer: Raymond Vernon / Product Life Cycle Feedback: Difficulty: Medium Page: 145 & 147 Question 10 Multiple Choice 0 of 1 point(s) Which of the following correctly matches one of Porter's broad attributes with its definition? Your Answer: Factor endowments - the presence or absence of supplier industries and related industries that are internationally competitive Correct Answer: Firm strategy, structure, and rivalry - the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry Question 1 Multiple Choice 0 of 1 point(s) The flaw with mercantilism was that it viewed trade as a(n) __________. Your Answer: [None Given] Correct Answer: zero-sum game Feedback: Difficulty: Medium Page: 148 Question 2 True/False 0 of 1 point(s) A firm should invest in upgrading advanced factors of production because it is in the best interest of business for a firm, according to Porter's theory. Your Answer: [None Given] Correct Answer: true Feedback: Difficulty: Medium Page: 171 Question 3 Multiple Choice 0 of 1 point(s) _______ is the basic message of the theory of comparative advantage. Your Answer: [None Given] Correct Answer: Potential world production is greater with unrestricted free trade than it is with restricted trade Feedback: Difficulty: Hard Page: 153 Question 4 True/False 0 of 1 point(s) The great strength of the theories of Smith, Ricardo, and Heckscher-Ohlin is that they identify the specific benefits of international trade. Your Answer: [None Given] Correct Answer: true Feedback: Difficulty: Medium Page: 144 Question 5 Multiple Choice 0 of 1 point(s) According to David Hume, if England had a balance-of-trade surplus with France, the resulting inflow of gold and silver would: Your Answer: [None Given] Correct Answer: increase the money supply and cause inflation in England Feedback: Difficulty: Medium Page: 148 Question 6 Multiple Choice 0 of 1 point(s) A situation in which a gain by one party results in a loss by another is called a(n) _______. Your Answer: [None Given] Correct Answer: zero-sum game Feedback: Difficulty: Easy Page: 148 Question 7 Multiple Choice 0 of 1 point(s) Which theory predicts that countries will export those goods that make intensive use of those factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce? Your Answer: [None Given] Correct Answer: Hecksher-Olin Feedback: Difficulty: Medium Page: 158 Question 8 Multiple Choice 0 of 1 point(s) In the 20th century, __________ work was refined by two Swedish economists, Eli Heckscher and Bertil Ohlin, whose theory is known as the Heckscher-Ohlin theory. Your Answer: [None Given] Correct Answer: Ricardo's Feedback: Difficulty: Medium Page: 144 Question 9 Multiple Choice 0 of 1 point(s) Dynamic gains in both the stock of a country's resources and the efficiency with which resources are utilized will cause a country's PPF to: Your Answer: [None Given] Correct Answer: shift outward Feedback: Difficulty: Hard Page: 156 Question 10 Multiple Choice 0 of 1 point(s) Vernon's product life-cycle theory was based on the observation that for most of the 20th century a very large proportion of the world's new products had been developed by U.S. firms and sold first in the _______ market. Your Answer: [None Given] Correct Answer: U.S. Feedback: Difficulty: Medium Page: 159 Question 1 Multiple Choice 1 of 1 point(s) Economies of scale and learning effects both increase the efficiency of resource utilization, therefore increasing Your Answer: productivity. Correct Answer: productivity. Feedback: Difficulty: Medium Page: 164 Question 2 True/False 1 of 1 point(s) Free trade is a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 3 Multiple Choice 1 of 1 point(s) According to the new trade theory, if international trade results in a country specializing in the production of a certain good, and if there are economies of scale in producing that good, then as output of that good expands, unit costs will: Your Answer: fall Correct Answer: fall Feedback: Difficulty: Medium Page: 162 Question 4 True/False 1 of 1 point(s) Smith's basic argument was that a country should never produce goods at home that it can buy at a lower cost from other countries. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 148 Question 5 Multiple Choice 1 of 1 point(s) _______ returns to specialization occur when the resources required to produce a good are assumed to remain constant no matter where it is on a country's production possibility frontier. Your Answer: Constant Correct Answer: Constant Feedback: Difficulty: Medium Page: 154 Question 6 Multiple Choice 1 of 1 point(s) The flaw with mercantilism was that it viewed trade as a(n) __________. Your Answer: zero-sum game Correct Answer: zero-sum game Feedback: Difficulty: Medium Page: 148 Question 7 True/False 0 of 1 point(s) The first theory of international trade emerged in England in the mid-16th century. Referred to as the theory of comparative advantage, its principle assertion was that gold and silver were the mainstays of national wealth and essential to vigorous commerce. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 147 Question 8 Multiple Choice 1 of 1 point(s) Hagelstam observed that in most trade negotiations, the approach of individual negotiating countries has been to press for trade _______ in areas where their own comparative competitive advantages are the strongest, and to resist _______ in areas where they are less competitive and fear that imports would replace domestic production. Your Answer: liberalization; liberalization Correct Answer: liberalization; liberalization Feedback: Difficulty: Medium Page: 148 Question 9 Multiple Choice 1 of 1 point(s) _______, according to Michael Porter, are a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. Your Answer: Factor endowments Correct Answer: Factor endowments Feedback: Difficulty: Hard Page: 165 Question 10 Multiple Choice 1 of 1 point(s) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following are attributes except: Your Answer: customs Correct Answer: customs Feedback: Difficulty: Hard Page: 165-166 Question 1 True/False 1 of 1 point(s) Economic growth is positively effected by free trade. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 157 Question 2 True/False 1 of 1 point(s) Smith's basic argument was that a country should never produce goods at home that it can buy at a lower cost from other countries. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 148 Question 3 Multiple Choice 1 of 1 point(s) The __________ argues that in many industries, because of substantial economies of scale, there are increasing returns to specialization. Your Answer: new trade theory Correct Answer: new trade theory Feedback: Difficulty: Medium Page: 162 Question 4 Multiple Choice 1 of 1 point(s) Cost savings that come from learning by doing is referred to as: Your Answer: learning effects. Correct Answer: learning effects. Feedback: Difficulty: Easy Page: 163 Question 5 Multiple Choice 0 of 1 point(s) The theory of __________, developed by Michael Porter, focuses on the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products. Your Answer: new trade Correct Answer: national competitive advantage Feedback: Difficulty: Medium Page: 147 Question 6 Multiple Choice 1 of 1 point(s) Unlike the naturally endowed basic factors, advanced factors are a product of investment by all of the following except Your Answer: demographics. Correct Answer: demographics. Feedback: Difficulty: Easy Page: 166 Question 7 Multiple Choice 0 of 1 point(s) Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialization. Your Answer: product life-cycle Correct Answer: new trade Feedback: Difficulty: Medium Page: 162 Question 8 Multiple Choice 1 of 1 point(s) _______ is a situation in which one country is more efficient at producing a product than any other country. Your Answer: Absolute advantage Correct Answer: Absolute advantage Feedback: Difficulty: Medium Page: 148 Question 9 Multiple Choice 1 of 1 point(s) In the 20th century, __________ work was refined by two Swedish economists, Eli Heckscher and Bertil Ohlin, whose theory is known as the Heckscher-Ohlin theory. Your Answer: Ricardo's Correct Answer: Ricardo's Feedback: Difficulty: Medium Page: 144 Question 10 Multiple Choice 1 of 1 point(s) In 1990, Michael Porter published the results of an intensive research effort that attempted to determine why some nations succeed and others fail in international competition. The name of the book was: Your Answer: The Competitive Advantage of Nations Correct Answer: The Competitive Advantage of Nations Feedback: Difficulty: Medium Page: 165 Question 1 Multiple Choice 1 of 1 point(s) _______ returns to specialization occur when the resources required to produce a good are assumed to remain constant no matter where it is on a country's production possibility frontier. Your Answer: Constant Correct Answer: Constant Feedback: Difficulty: Medium Page: 154 Question 2 Multiple Choice 1 of 1 point(s) Cost savings that come from learning by doing is referred to as: Your Answer: learning effects. Correct Answer: learning effects. Feedback: Difficulty: Easy Page: 163 Question 3 Multiple Choice 0 of 1 point(s) Which of these occurs if an economy is opened to trade? Your Answer: Economies of small-scale production would not be available as trade expands the size of the total market available to domestic firms. Correct Answer: Free trade might increase the efficiency with which a country uses its resources. Feedback: Difficulty: Medium Page: 156 Question 4 Multiple Choice 0 of 1 point(s) In his 1817 book entitled Principles of Political Economy, _______ introduced the theory of comparative advantage. Your Answer: Adam Smith Correct Answer: David Ricardo Feedback: Difficulty: Medium Page: 151 Question 5 Multiple Choice 1 of 1 point(s) Resources do not always move easily from one economic activity to another and the process creates: Your Answer: friction and human suffering. Correct Answer: friction and human suffering. Feedback: Difficulty: Medium Page: 154 Question 6 Multiple Choice 1 of 1 point(s) Porter visually depicted the four broad attributes that shape the competitive advantage of a nation as a: Your Answer: diamond Correct Answer: diamond Feedback: Difficulty: Medium Page: 165 Question 7 True/False 0 of 1 point(s) The first theory of international trade emerged in England in the mid-16th century. Referred to as the theory of comparative advantage, its principle assertion was that gold and silver were the mainstays of national wealth and essential to vigorous commerce. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 147 Question 8 Multiple Choice 1 of 1 point(s) Which of the following correctly matches one of Porter's broad attributes with its definition? Your Answer: Firm strategy, structure, and rivalry - the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry Correct Answer: Firm strategy, structure, and rivalry - the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry Feedback: Difficulty: Medium Page: 166 Question 9 Multiple Choice 1 of 1 point(s) A situation in which a gain by one party results in a loss by another is called a(n) _______. Your Answer: zero-sum game Correct Answer: zero-sum game Feedback: Difficulty: Easy Page: 148 Question 10 Multiple Choice 1 of 1 point(s) Porter contends that the degree to which a nation is likely to achieve international success _______ is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and domestic rivalry. Your Answer: in a certain industry Correct Answer: in a certain industry Feedback: Difficulty: Medium Page: 168 Question 1 Multiple Choice 1 of 1 point(s) Dynamic gains in both the stock of a country's resources and the efficiency with which resources are utilized will cause a country's PPF to: Your Answer: shift outward Correct Answer: shift outward Feedback: Difficulty: Hard Page: 156 Question 2 True/False 1 of 1 point(s) Free trade is a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 3 True/False 0 of 1 point(s) When a movement toward a free trade regime occurs, the pain is a long-term phenomenon, while the gains from trade once the transition has been made, and are both insignificant and short-term. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 154 Question 4 Multiple Choice 1 of 1 point(s) _______, according to Michael Porter, are a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. Your Answer: Factor endowments Correct Answer: Factor endowments Feedback: Difficulty: Hard Page: 165 Question 5 Multiple Choice 1 of 1 point(s) According to David Hume, if England had a balance-of-trade surplus with France, the resulting inflow of gold and silver would: Your Answer: increase the money supply and cause inflation in England Correct Answer: increase the money supply and cause inflation in England Feedback: Difficulty: Medium Page: 148 Question 6 Multiple Choice 1 of 1 point(s) The Hecksher-Olin theory argues that the pattern of international trade is determined by differences in: Your Answer: factor endowments Correct Answer: factor endowments Feedback: Difficulty: Medium Page: 158 Question 7 True/False 1 of 1 point(s) Adam Smith argued that the invisible hand of the market mechanism, rather than government policy, should determine what a country imports and what it exports. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 8 Multiple Choice 1 of 1 point(s) Swedish economists, __________ and __________, advanced a theory of trade that argued that comparative advantage arises from differences in national factor endowments. Your Answer: Hecksher, Ohlin Correct Answer: Hecksher, Ohlin Feedback: Difficulty: Medium Page: 158 Question 9 Multiple Choice 1 of 1 point(s) __________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: Free trade Correct Answer: Free trade Feedback: Difficulty: Easy Page: 144 Question 10 Multiple Choice 1 of 1 point(s) Which of the following international trade scholars was the first to explain why unrestricted free trade is beneficial to a country? Your Answer: Adam Smith Correct Answer: Adam Smith Feedback: Difficulty: Medium Page: 144 Question 1 Multiple Choice 1 of 1 point(s) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following are attributes except: Your Answer: customs Correct Answer: customs Feedback: Difficulty: Hard Page: 165-166 Question 2 Multiple Choice 1 of 1 point(s) In his study, Porter observed that there are a disproportionate number of people with finance backgrounds on the top management teams of many __________ industries. Your Answer: United States Correct Answer: United States Feedback: Difficulty: Hard Page: 167 Question 3 Multiple Choice 0 of 1 point(s) Contrary to what the Heckscher-Ohlin theory would predict, the United States has been a primary importer rather than an exporter of capital goods. This phenomenon is referred to as the _____ paradox. Your Answer: Ricardo Correct Answer: Leontief Feedback: Difficulty: Easy Page: 158 Question 4 Multiple Choice 1 of 1 point(s) _______, by its choice of policies, can detract from or improve national advantage. Your Answer: Government Correct Answer: Government Feedback: Difficulty: Easy Page: 166 Question 5 Multiple Choice 1 of 1 point(s) Which theory predicts that countries will export those goods that make intensive use of those factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce? Your Answer: Hecksher-Olin Correct Answer: Hecksher-Olin Feedback: Difficulty: Medium Page: 158 Question 6 True/False 1 of 1 point(s) The first theory of international trade emerged in England in the mid-16th century. Referred to as the theory of comparative advantage, its principle assertion was that gold and silver were the mainstays of national wealth and essential to vigorous commerce. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 147 Question 7 Multiple Choice 1 of 1 point(s) The conditions governing how companies are created, organized, and managed and the nature of domestic rivalry is referred to as Your Answer: firm strategy, structure, and rivalry. Correct Answer: firm strategy, structure, and rivalry. Feedback: Difficulty: Easy Page: 166 Question 8 Multiple Choice 1 of 1 point(s) _______ theory of international trade suggests that the production of products is likely to switch from advanced countries to developing countries over time. Your Answer: Product life-cycle Correct Answer: Product life-cycle Feedback: Difficulty: Medium Page: 160 Question 9 True/False 1 of 1 point(s) According to Porter, the four broad attributes of a nation that shape the environment in which local firms compete and that promote or impede the creation of competitive advantage are demand conditions, firm strategy, structure, and rivalry, factor endowments, and relating and supporting industries. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 165 Question 10 Multiple Choice 1 of 1 point(s) The flaw with mercantilism was that it viewed trade as a(n) __________. Your Answer: zero-sum game Correct Answer: zero-sum game Feedback: Difficulty: Medium Page: 148 Question 1 Multiple Choice 1 of 1 point(s) Unlike the naturally endowed basic factors, advanced factors are a product of investment by all of the following except Your Answer: demographics. Correct Answer: demographics. Feedback: Difficulty: Easy Page: 166 Question 2 Multiple Choice 0 of 1 point(s) According to the new trade theorists, because early entrants are able to gain __________, the early entrants into an industry may get a lock on the world market that discourages subsequent entry. Your Answer: high brand awareness Correct Answer: economies of scale Feedback: Difficulty: Medium Page: 164 Question 3 True/False 1 of 1 point(s) Smith's basic argument was that a country should never produce goods at home that it can buy at a lower cost from other countries. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 148 Question 4 True/False 1 of 1 point(s) The first theory of international trade emerged in England in the mid-16th century. Referred to as the theory of comparative advantage, its principle assertion was that gold and silver were the mainstays of national wealth and essential to vigorous commerce. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 147 Question 5 Multiple Choice 1 of 1 point(s) Which theory of international trade directly explains why there are only two to three producers of airlines in the world today? Your Answer: New trade Correct Answer: New trade Feedback: Difficulty: Medium Page: 163 Question 6 Multiple Choice 1 of 1 point(s) The conditions governing how companies are created, organized, and managed and the nature of domestic rivalry is referred to as Your Answer: firm strategy, structure, and rivalry. Correct Answer: firm strategy, structure, and rivalry. Feedback: Difficulty: Easy Page: 166 Question 7 Multiple Choice 1 of 1 point(s) Economies of scale and learning effects both increase the efficiency of resource utilization, therefore increasing Your Answer: productivity. Correct Answer: productivity. Feedback: Difficulty: Medium Page: 164 Question 8 True/False 0 of 1 point(s) The product life-cycle theory stresses that in some cases, countries specialize in the production and export of particular products not because of underlying differences in factor endowments but because in certain industries the world market can support only a limited number of firms. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 145 & 147 Question 9 Multiple Choice 1 of 1 point(s) Porter contends that the degree to which a nation is likely to achieve international success _______ is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and domestic rivalry. Your Answer: in a certain industry Correct Answer: in a certain industry Feedback: Difficulty: Medium Page: 168 Question 10 True/False 1 of 1 point(s) Ricardo's theory of competitive advantage says that it is logical for a country to specialize in the product of goods that it produces most efficiently and to export goods that it produces less efficiently. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 151 Question 1 True/False 1 of 1 point(s) Free trade is a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 2 Multiple Choice 1 of 1 point(s) In his study, Porter observed that there are a disproportionate number of people with finance backgrounds on the top management teams of many __________ industries. Your Answer: United States Correct Answer: United States Feedback: Difficulty: Hard Page: 167 Question 3 Multiple Choice 1 of 1 point(s) Resources do not always move easily from one economic activity to another and the process creates: Your Answer: friction and human suffering. Correct Answer: friction and human suffering. Feedback: Difficulty: Medium Page: 154 Question 4 Multiple Choice 1 of 1 point(s) The Heckscher-Ohlin theory ________ in explaining why some countries export oil while others export textiles. Your Answer: emphasizes the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries Correct Answer: emphasizes the interplay between the proportions in which the factors of production (such as land, labor, and capital) are available in different countries Feedback: Difficulty: Hard Page: 145 Question 5 Multiple Choice 1 of 1 point(s) Contrary to what the Heckscher-Ohlin theory would predict, the United States has been a primary importer rather than an exporter of capital goods. This phenomenon is referred to as the _____ paradox. Your Answer: Leontief Correct Answer: Leontief Feedback: Difficulty: Easy Page: 158 Question 6 Multiple Choice 1 of 1 point(s) The theory of __________, developed by Michael Porter, focuses on the importance of country factors such as domestic demand and domestic rivalry in explaining a nation's dominance in the production and export of particular products. Your Answer: national competitive advantage Correct Answer: national competitive advantage Feedback: Difficulty: Medium Page: 147 Question 7 True/False 1 of 1 point(s) Adam Smith argued that the invisible hand of the market mechanism, rather than government policy, should determine what a country imports and what it exports. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 8 Multiple Choice 0 of 1 point(s) What theory attempts to explain why Japan is strong in automobiles, Switzerland in precision instruments and pharmaceuticals, and Germany in chemicals? Your Answer: absolute advantage Correct Answer: national competitive advantage Feedback: Difficulty: Medium Page: 165 Question 9 Multiple Choice 1 of 1 point(s) Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete, and that these attributes promote or impede the creation of competitive advantage. All of the following are attributes except: Your Answer: customs Correct Answer: customs Feedback: Difficulty: Hard Page: 165-166 Question 10 Multiple Choice 1 of 1 point(s) Because of substantial economies of scale, the __________ theory argues that in many industries there are increasing returns to specialization. Your Answer: new trade Correct Answer: new trade Feedback: Difficulty: Medium Page: 162 Question 1 Multiple Choice 1 of 1 point(s) _______, according to Michael Porter, are a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry. Your Answer: Factor endowments Correct Answer: Factor endowments Feedback: Difficulty: Hard Page: 165 Question 2 Multiple Choice 0 of 1 point(s) The __________ argues that in many industries, because of substantial economies of scale, there are increasing returns to specialization. Your Answer: product life-cycle theory Correct Answer: new trade theory Feedback: Difficulty: Medium Page: 162 Question 3 Multiple Choice 1 of 1 point(s) In terms of explaining why some countries export automobiles, consumer electronics, and machine tools, while other countries export chemicals, watches, and jewelry, David Ricardo's theory of comparative advantage offers an explanation in terms of Your Answer: international differences in labor productivity. Correct Answer: international differences in labor productivity. Feedback: Difficulty: Hard Page: 145 Question 4 Multiple Choice 1 of 1 point(s) Porter visually depicted the four broad attributes that shape the competitive advantage of a nation as a: Your Answer: diamond Correct Answer: diamond Feedback: Difficulty: Medium Page: 165 Question 5 True/False 1 of 1 point(s) Adam Smith argued that the invisible hand of the market mechanism, rather than government policy, should determine what a country imports and what it exports. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 6 Multiple Choice 1 of 1 point(s) What is a possible explanation for observing the Leontief paradox? Your Answer: The U.S. has a special advantage in producing new products or goods made with innovative technologies. Correct Answer: The U.S. has a special advantage in producing new products or goods made with innovative technologies. Feedback: Difficulty: Medium Page: 158 Question 7 True/False 1 of 1 point(s) In sum, Porter's argument is that the degree to which a nation is likely to achieve international success in a certain industry is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and degree of government support. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 168 Question 8 Multiple Choice 1 of 1 point(s) Resources do not always move easily from one economic activity to another and the process creates: Your Answer: friction and human suffering. Correct Answer: friction and human suffering. Feedback: Difficulty: Medium Page: 154 Question 9 Multiple Choice 1 of 1 point(s) __________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: Free trade Correct Answer: Free trade Feedback: Difficulty: Easy Page: 144 Question 10 Multiple Choice 1 of 1 point(s) _______, by its choice of policies, can detract from or improve national advantage. Your Answer: Government Correct Answer: Government Feedback: Difficulty: Easy Page: 166 Question 1 True/False 1 of 1 point(s) A situation in which a gain by one country results in a loss by another is a positive-sum game. Your Answer: false Correct Answer: false Feedback: Difficulty: Easy Page: 148 Question 2 Multiple Choice 1 of 1 point(s) Hagelstam observed that in most trade negotiations, the approach of individual negotiating countries has been to press for trade _______ in areas where their own comparative competitive advantages are the strongest, and to resist _______ in areas where they are less competitive and fear that imports would replace domestic production. Your Answer: liberalization; liberalization Correct Answer: liberalization; liberalization Feedback: Difficulty: Medium Page: 148 Question 3 Multiple Choice 1 of 1 point(s) What theory attempts to explain why Japan is strong in automobiles, Switzerland in precision instruments and pharmaceuticals, and Germany in chemicals? Your Answer: national competitive advantage Correct Answer: national competitive advantage Feedback: Difficulty: Medium Page: 165 Question 4 True/False 0 of 1 point(s) The notion of first-mover advantages is associated with the product life cycle theory. Your Answer: true Correct Answer: false Feedback: Difficulty: Medium Page: 164 Question 5 True/False 1 of 1 point(s) Raymond Vernon's theory of the Product Life-Cycle was based on the observation that for most of the 20th century a very large proportion of the world's new products were developed by U.S. firms and sold first in the U.S. market. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 159 Question 6 Multiple Choice 1 of 1 point(s) Vernon's product life-cycle theory was based on the observation that for most of the 20th century a very large proportion of the world's new products had been developed by U.S. firms and sold first in the _______ market. Your Answer: U.S. Correct Answer: U.S. Feedback: Difficulty: Medium Page: 159 Question 7 Multiple Choice 1 of 1 point(s) Which theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments but because in certain industries the world market can support only a limited number of firms? Your Answer: New trade Correct Answer: New trade Feedback: Difficulty: Medium Page: 147 Question 8 True/False 1 of 1 point(s) Free trade is a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Your Answer: true Correct Answer: true Feedback: Difficulty: Easy Page: 144 Question 9 Multiple Choice 1 of 1 point(s) Porter contends that the degree to which a nation is likely to achieve international success _______ is a function of the combined impact of factor endowments, domestic demand conditions, related and supporting industries, and domestic rivalry. Your Answer: in a certain industry Correct Answer: in a certain industry Feedback: Difficulty: Medium Page: 168 Question 10 Multiple Choice 1 of 1 point(s) The Hecksher-Olin theory argues that the pattern of international trade is determined by differences in: Your Answer: factor endowments Correct Answer: factor endowments Feedback: Difficulty: Medium Page: 158 Question 1 Multiple Choice 1 of 1 point(s) In terms of explaining why some countries export automobiles, consumer electronics, and machine tools, while other countries export chemicals, watches, and jewelry, David Ricardo's theory of comparative advantage offers an explanation in terms of Your Answer: international differences in labor productivity. Correct Answer: international differences in labor productivity. Feedback: Difficulty: Hard Page: 145 Question 2 Multiple Choice 1 of 1 point(s) The economic and strategic advantages that accrue to early entrants in an industry are called: Your Answer: first-mover advantages Correct Answer: first-mover advantages Feedback: Difficulty: Easy Page: 164 Question 3 Multiple Choice 1 of 1 point(s) According to the new trade theorists, because early entrants are able to gain __________, the early entrants into an industry may get a lock on the world market that discourages subsequent entry. Your Answer: economies of scale Correct Answer: economies of scale Feedback: Difficulty: Medium Page: 164 Question 4 Multiple Choice 1 of 1 point(s) Propagated in the 16th and 17th centuries, __________ advocated that countries should simultaneously encourage exports and discourage imports. Your Answer: mercantilism Correct Answer: mercantilism Feedback: Difficulty: Easy Page: 144 Question 5 Multiple Choice 0 of 1 point(s) In his 1776 landmark book, The Wealth of Nations, __________ attacked the mercantilist assumption that trade is a zero-sum game. Your Answer: Michael Porter Correct Answer: Adam Smith Feedback: Difficulty: Easy Page: 148 Question 6 Multiple Choice 1 of 1 point(s) _______ is/are unit cost reductions associated with a large scale of output. Your Answer: Economies of scale Correct Answer: Economies of scale Feedback: Difficulty: Easy Page: 162 Question 7 True/False 1 of 1 point(s) Economic growth is positively effected by free trade. Your Answer: true Correct Answer: true Feedback: Difficulty: Medium Page: 157 Question 8 Multiple Choice 1 of 1 point(s) _______ is a situation in which one country is more efficient at producing a product than any other country. Your Answer: Absolute advantage Correct Answer: Absolute advantage Feedback: Difficulty: Medium Page: 148 Question 9 True/False 1 of 1 point(s) When a movement toward a free trade regime occurs, the pain is a long-term phenomenon, while the gains from trade once the transition has been made, and are both insignificant and short-term. Your Answer: false Correct Answer: false Feedback: Difficulty: Medium Page: 154 Question 10 Multiple Choice 0 of 1 point(s) Which of the following choices correctly matches a scholar with the theory that he or she proposed? Your Answer: David Ricardo / New Trade Correct Answer: Raymond Vernon / Product Life Cycle Feedback: Difficulty: Medium Page: 145 & 147