Int'l Business Exam #2 Questions

India specializes in business process outsourcing and does this more efficiently than any other country. It buys agricultural commodities, which it produces less efficiently than outsourcing activities, from the United States, even though it produces these agricultural commodities more efficiently than the United States Which international trade theory supports India's decision to buy agricultural commodities from the United States?

Ricardo's theory of comparative advantage

Which organization was created to implement the GATT agreement?

WTO

The mercantilist doctrine promoted government intervention in order to achieve

a surplus in the balance of trade

If France is more efficient at producing fine wines than other nations, then France has a(n)

absolute advantage

According to Porter, which factor endowment would be classified as an advanced factor?

communication infrastructure

Aesha works for a moderately priced running shoe manufacturer and while their products are lower in cost, there is a high degree of consumer pressure to create the best quality running shoes possible and to constantly innovate with new designs. Which aspect of Porter's Diamond does this demonstrate?

demand conditions

__________ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

dumping

Tavis lives in southern Florida where there is sufficient land and labor to successfully grow gourds and melons. Heckscher-Ohlin would consider the land and labor to be

factor endowments

Free trade is likely to decrease a country's stock of resources and the efficiency with which it utilizes those resources.

false

The practice of mercantilism discouraged countries from exporting but encouraged them to import the goods they needed.

false

Airbus pioneered the development of the new superjumbo jet at a cost of $15 billion. It quickly obtained contracts for many of the 400 units that are expected to be ordered in the next 20 years, thereby effectively shutting out its competitor, Boeing. Airbus benefits from

first mover advantage

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

first mover advantage

Most economists would agree that the best interests of international business are found in a nation with a

free trade theory

A tariff rate quota provides a lower tariff rate to

imports within the quota

The __________ argument was proposed by Alexander Hamilton in 1792 and is by far the oldest economic argument for government intervention.

infant industry

How did the Smoot-Hawley Act divert consumer demand away from foreign products?

it implemented a wall of tariffs

An implication of trade barriers for business practice is that they

limit firms ability to serve a country from locations outside of that country

When the management team reviewed its government contract on office chairs, they noticed that in order to bid on the project, at least 37 percent of the value of the office chairs had to be produced in the United States. This stipulation is an example of a(n)

local content requirement

Brianna lives in a nation that encourages the production of goods for exporting and to satisfy the needs of the nation's citizens. This results in the nation relying less on importing goods. Which trade theory does this reflect?

mercantilism

Soyung works for a company that produces computer notebook component parts. Her company developed a component that no competitor had and was soon enjoying economies of scale as the only producers of the part. Which trade theory is most reflected in the success of this company?

new trade theory

__________ justifies some limited government intervention to support the development of certain export-oriented industries.

new trade theory

A European nation specializes in engine parts, while its geographical neighbor specializes in automobiles. Each country exports the product it specializes in to the other country. According to the theory of comparative advantage, this mutually beneficial trade relationship best illustrates

positive sum game

Raymond Vernon noticed that in the 1960s, the wealth and size of the U.S. market was a natural incentive to develop new consumer products. What theory did he propose based on this fact?

product life cycle

A(n) __________ refers to the extra profit that producers make when supply is artificially limited by an import quota.

quota rent

The Heckscher-Ohlin theory is based on the idea that

the pattern of international trade is determined by differences in factor endowments

A European nation has the world's most efficient computer monitor manufacturing industry, while a country in Central America has the world's most efficient agricultural machines industry. The European nation trades computer monitors with the Central American country in exchange for agricultural machinery. This form of trade between the two countries illustrates

theory of absolute advantage

A country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it.

true

Mercantilism asserted that gold and silver were the mainstays of national wealth and essential to vigorous commerce.

true

Porter's theory suggests that it is in the best interest of business for a firm to invest in upgrading advanced factors of production.

true

Foreign producers agree to __________ imposed by an exporting country because they fear more damaging punitive tariffs or import quotas might follow if they do not.

voluntary exports restraints