International Business CH. 5 Prof. He

What was a prominent mercantilist nation?

Britain

T/F: Mercantilism states that nations should only concern themselves with accumulating financial wealth.

True

T/F: The theory of absolute advantage measures a nation's wealth by the standard of living of its people.

True

The condition that results when the value of a nation's exports is greater than the value of its imports is called ________.

a trade surplus

What is mercantilism?

belief in the benefits of profitable trading; nations should accumulate financial wealth usually in the form of gold, by encouraging exports and discouraging imports

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.

comparative advantage

Mercantilism states that nations should only concern themselves with accumulating financial wealth.

manufactured goods

During which stage of the international product life cycle theory does demand rise and remain sustained for a fairly lengthy period of time?

maturing product stage

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.

mercantilism

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.

standardized product stage

absolute advantage?

the ability to produce a good more efficiently than any other nation

New trade theory

there are gains to be made from specialization and increasing economies of scale, the companies first to market can create barriers to entry and government may play a role in assisting its home companies

Factor proportions theory differs from the theory of comparative advantage in that the focus of factor proportions theory is on the ________.

usage of the most abundant factors of production, while the focus of the comparative advantage theory is on the productivity of the production process

comparative advantage?

when a country is unable to produce a good more efficiently than other nations but produces the good more efficiently than it does any other good