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Exam 5: International Trade Theories

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Question 21

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In 1990,who published the results of an intensive research effort that attempted to determine why some nations succeed and others fail in international competition?

A) Eli Heckscher
B) Michael Porter
C) Bertil Ohlin
D) Raymond Vernon
E) Wassily Leontief

F) D) and E)
G) C) and D)

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Question 22

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The theory of comparative advantage,advanced by __________,is the intellectual basis of the modern argument for unrestricted free trade.

A) Michael Porter
B) David Ricardo
C) Bertil Ohlin
D) Adam Smith
E) Wassily Leontief

F) A) and C)
G) A) and D)

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Question 23

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Economies of scale increases the efficiency of resource utilization,but do not affect productivity.

__________ 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.

When does free trade occur?

While diamonds are mined all over the world,including in Canada,the diamond trade is centred on Antwerp Belgium in an area known as the Diamond Quarter,or the Square Mile.Diamonds are cut and polished in lower wage countries such as India (which accounts for about 90% of all diamond cutting and polishing)but they are traded in Antwerp.There are almost 4,000 dealers,brokers and financial intuitions serving this industry,all located in an area of only several blocks.Antwerp has been the centre of the diamond industry for several centuries since Lodewyk van Berken,a Flemish jeweler invented a device for polishing diamonds around the year 1450. Which of Michael Porter's four factors of production would help explain why the diamond cutting industry is now centred in India?

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.

The potential world production is greater with unrestricted free trade than it is with restricted free trade is the basic message of the theory of comparative advantage.

Raymond Vernon's theory of the Product Life-Cycle was based on the observation that for most of the 20^th 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.

Propagated in the 16^th and 17^th centuries,__________ advocated that countries should simultaneously encourage exports and discourage imports.

_______ is a situation in which one country is more efficient at producing a product than any other country.

Which of the following international trade scholars was the first to explain why unrestricted free trade is beneficial to a country?

The Heckscher-Ohlin theory would predict that the United States should be a primary importer of capital goods.

_______ is the basic message of the theory of comparative advantage.

The economic and strategic advantages that accrue to early entrants in an industry are called:

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.

According to the textbook,historically the product-life-cycle theory is an:

Unlike the naturally endowed basic factors,advanced factors are a product of investment by all of the following except

While diamonds are mined all over the world,including in Canada,the diamond trade is centred on Antwerp Belgium in an area known as the Diamond Quarter,or the Square Mile.Diamonds are cut and polished in lower wage countries such as India (which accounts for about 90% of all diamond cutting and polishing)but they are traded in Antwerp.There are almost 4,000 dealers,brokers and financial intuitions serving this industry,all located in an area of only several blocks.Antwerp has been the centre of the diamond industry for several centuries since Lodewyk van Berken,a Flemish jeweler invented a device for polishing diamonds around the year 1450. Apply any elements of New Trade Theory that helps to understand this scenario.

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: