Week 6 - Theories of International Trade

Born global firms are ________.

young companies that internationalize early in their evolution

The ________ theory states that countries produce and export goods that require resources available in abundance and import goods that require resources in short supply.

factor proportions

The internationalization process model describes ________?

how companies expand abroad

A proactive economic development plan initiated by the government, often in collaboration with the private sector, that aims to develop or support particular industries within the country is referred to as ________.

national industrial policy

Which of the following is TRUE about the theory of absolute advantage? -It accepts the mercantilist idea that international trade is a zero-sum game -It measures a nation's wealth by how much gold and silver it has on reserve -It emphasizes that nations should open their doors to trade so that people can obtain more goods at cheaper rates -It approves the objective of national governments to acquire wealth through restrictive trade policies

It emphasizes that nations should open their doors to trade so that people can obtain more goods at cheaper rates

________ refers to the superior features of a country that provide unique benefits in global competition, typically derived from either natural endowments or deliberate national policies.

Comparative advantage

Which of the following is TRUE with regard to comparative advantage? -Comparative advantage includes inherited resources, such as arable land -Comparative advantages are typically derived from deliberate firm policies -A comparative advantage is difficult for competitors to imitate -A comparative advantage is also known as a firm-specific advantage

Comparative advantage includes inherited resources, such as arable land

Which of the following is an example of a competitive advantage? Climate Resources Arable Land Strategies

Strategies

Which of the following is an example of an industrial cluster? -The high productivity of workers in South Korea -The community of football fans in the United States -The proliferation of counterfeit goods in the global marketspace -The consumer electronics firms in Japan

The consumer electronics firms in Japan

Which of the following is TRUE with regard to firm-level theories? -They are classical theories, widely accepted since the sixteenth century -They do not address the issue of organizational performance -They address the question: "Why do nations trade?" -They address the question: "How can internationalizing firms gain and sustain competitive advantage?"

They address the question: "How can internationalizing firms gain and sustain competitive advantage?"

Which of the following is TRUE with regard to new trade theory? -Achieving economies of scale is not necessary for superior international performance -Export is less beneficial to firms than commonly believed -Countries differ in the type and quantity of production factors they possess -Trade is beneficial even for countries that produce only a limited variety of products

Trade is beneficial even for countries that produce only a limited variety of products

Which of the following is a typical outcome of free trade? -Lower-cost imports cause living standards to deteriorate -Domestically produced products tend to be cheaper than imported products -Unrestricted international trade generally increases the overall prosperity of poor countries -Free trade sustains inflation in developing economies

Unrestricted international trade generally increases the overall prosperity of poor countries

According to the ________, a country benefits by producing only those products in which it has complete advantage or that it can produce using fewer resources than another country.

absolute advantage principle

Competitive advantage refers to the ________.

distinctive assets or competencies of a firm that are difficult for competitors to imitate

Which of the following is TRUE with regard to competitive advantage? -Competitive advantages are typically derived from deliberate national policies -A competitive advantage is also known as a country-specific advantage -A competitive advantage is difficult for competitors to imitate -Competitive advantage includes inherited resources, such as arable land

A competitive advantage is difficult for competitors to imitate

Which of the following is TRUE about national industrial policy? -It is designed to create monetary and fiscal policies that provide stable supply of capital for company investments -It explains why nations attempt to run a trade surplus -It underlines the demerits of rigorous educational systems at the precollege level -It demonstrates that what matters is not the absolute cost of production but rather the relative efficiency

It is designed to create monetary and fiscal policies that provide stable supply of capital for company investments

Which of the following is an example of a comparative advantage? Relationships Innovativeness Labor Knowledge

Labor

________ says that nations should accumulate financial wealth by encouraging exports and discouraging imports.

Mercantilism