ib chapter 5 study guide
comparative advantage
A product's components are manufactured in a country that can produce them at a very low cost while maintaining its quality. These components are then assembled in another country where productivity in assembly is high. This process resembles the theory of ________.
technological infrastructure in the nation
According to the Porter diamond, which of the following is an example of an advanced factor?
comparative advantage
According to the theory of ________, trade is beneficial even if one country is less efficient in the production of two goods, as long as it is less inefficient in the production of one of the goods.
labor
Both absolute and comparative advantage theories assume that ________ is the only resource used in the production process.
new product stage
During which of the following stages of the international product life cycle theory does high purchasing power and buyer demand in an industrialized nation encourage a company to design and introduce a product concept?
maturing product stage
During which stage of the international product life cycle theory does demand rise and remain sustained for a fairly lengthy period of time?
standardized product stage
During which stage of the product life cycle are companies looking for low-cost production bases in developing nations to supply a growing worldwide market?
standardized product
Eventually, Wallace expects that domestic production of the mousetrap will cease altogether. This would happen in the ________ stage of the product life cycle.
heckscher and ohlin
Factor proportions theory was developed by ________.
positive sum game
If these two countries were to gain from trading with each other, this would support the notion that trade is a ________.
standardized product stage
In the ________ of the international product life cycle, competition from other companies selling similar products pressures companies to lower prices in order to maintain sales levels.
international product life cycle
The ________ theory states that a country's export eventually becomes its import.
factor proportions
The ________ theory states that countries produce and export goods that require resources available in abundance and import goods that require resources in short supply.
productivity of the production process
The focus of factor proportions theory is on the ________.
raymond vernon
The international product life cycle theory was developed by ________.
manufactured goods
The international product life cycle theory was put forth for ________.
factor proportions
The new trade theory is mainly at odds with the ________ theory.
zero sum game
The theory of absolute advantage destroys the mercantilist idea that international trade is a ________.
living standards of its people
The theory of absolute advantage measures a nation's wealth by determining the ________.
David Ricardo
The theory of comparative advantage was proposed by ________.
economic nationalism
Today, countries seen by others as trying to maintain a trade surplus and expand their national treasures at the expense of other nations are accused of practicing ________.
maturing product stage
Wallace expects that markets abroad will soon become fully aware of the existence of the product and its benefits. Which of the following life cycle stages will the product be a part of during that period?
new product stage
Wallace's executive team reviews the stages of the international product life cycle to understand better what to expect when the product is sold overseas. Since there is virtually no export market for the product at present, the product is most likely in which of the following stages of the international product life cycle?
comparative advantage
When a country is not able to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good, it is said to have a(n) ________.
positive-sum game
When there are gains to be had by both countries that are party to an exchange, international trade is considered a(n) ________.
factor conditions
Which element of national competitive advantage theory divides resources into two groups: basic and advanced?
absolute advantage
Which of the following refers to the ability of a nation to produce a good more efficiently than any other nation?
adam smith
Who proposed the theory of absolute advantage?
national competitive advantage
___ theory states that a nation's competitiveness in an industry depends on capacity of the industry to innovate and upgrade
international trade
____ refers to the purchase, sale, or exchange of goods and services across national borders
mercantilism
_____ says that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports
high income economies
a majority of the total world merchandise trade occurs among
increase in a nation's trade surplus
according to mercantilism, the accumulation of national wealth depended on the ____
economic nationalism
another term for neomercantilism
manufactured goods
most of the world merchandise is composed of trade in ___
mercantilism
nations following the theory of ____ Believed that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors
trade surpluses
one of the major pillars upon which the practice of mercantilism rested was ____
trade deficit
the condition that results when the value of a country's imports is greater than the value of its exports is called ____
mercantilism
the measures of a nation's well being other than the financial wealth accumulated through exports are irrelevant according to ____
low and middle income nations
the smallest portion of the total world trade comprises trade between ___
britain
what country was a prominent mercantilist nation?
