int. business ch. 6

2 & 3

A basic message of Ricardo's theory of comparative advantage is that: (Check the two that apply.) - by strategically using subsidies, a government would increase the chances of its domestic firms becoming first movers in newly emerging industries. - even if countries lack an absolute advantage in the production of any good, consumers can still consume more if there are no restrictions on trade. - potential world production is greater with unrestricted free trade than it is with restricted trade. - trade is a zero-sum game that creates clear winners and losers.

can

A company _____ benefit from related industries that are internationally competitive and can spill over into the company. - can - cannot

is more efficient than any other country at producing the item.

A country is said to have an absolute advantage in the production of an item when the country - exports more of the item to other nations than any other country. - promotes the idea of importing but downplays the idea of exporting. - is more efficient than any other country at producing the item. - is able to import the item at a lower cost than producing it themselves.

factor endowments

According to Heckscher and Ohlin, each country has certain ______, such as land, labor, and capital. - economic principles - output endowments - wealth sources - factor endowments

creates a barrier to entry

According to new trade theory, the first mover's ability to benefit from increasing returns ______ for other firms. - creates a barrier to entry - fosters the competitive spirit - accelerates the demand

Lontief Paradox

According to the Heckscher-Ohlin theory, it is expected that the US would export capital-intensive goods and import labor-intensive goods, but the opposite was found to be true. This became known as the - Porter paradox. - Leontief paradox. - Greenspan paradox. - Ricardo paradox.

export

Based on the theories of Smith, Ricardo, and Heckscher-Ohlin, in a country with access to cheap labor, productive land, and diverse plant life, it makes sense to _____ agricultural goods. - export - import

new trade theory

Because of economies of scale, some countries specialize in manufacturing a particular product (such as cars) for which the global market can only support a limited number of firms. This is a reflection of _____. - new trade theory - mercantilism - production possibilities frontier - product life-cycle theory

1, 4 & 5

Choose three advanced factors that Porter believes are MOST significant for competitive advantage. (Check all that apply.) - Skilled labor - Demographics - Climate - Research facilities - Technology know-how

comparative

Economic studies have suggested that according to the theory of ______ advantage, countries will experience higher growth rates if they follow a more open stance toward international growth. - competitive - absolute - comparative

comparative advantage

Heckscher and Ohlin identified differences in national factor endowments as the root of ______. - deregulation - absolute advantage - entrepreneurship - comparative advantage

domestic rivalry

Porter argues that achieving international success in a certain industry is a function of factor endowments, domestic demand conditions, related and supported industries, and ______. - social hierarchies - government intervention - host-country norms - domestic rivalry

competitive

Porter states that a company can gain ______ advantage if their home customers are demanding and knowledgeable. - competitive - absolute - comparative

first-mover advantages

Preempting demand, gaining volume cost advantages, building the brand, and establishing a long-term competitive advantage are associated with - brand equity. - segmenting, targeting & positioning. - first-mover advantages. - secondary-mover advantages.

free trade

Ricardo's theory encourages ______ because it suggests that trade is a positive-sum game where all participating countries realize economic gains. - free trade - a planned economy - restricted trade - isolationism

constant

Ricardo's theory of comparative advantage assumes ______ returns to scale. - increasing - constant - decreasing - evolving

open

Sachs and Warner found a strong correlation between a(n) ______ response to trade and economic growth. - open - closed

offshoring of service jobs

Samuelson is concerned that advances in communications technology will result in the - offshoring of service jobs. - advancement of developing nations. - lack of entrepreneurial spirit. - ultimate dynamic gains in global production.

product life-cycle

The ethnocentric view that most new products are developed and introduced in the US is a key weakness in the ______ theory. - new trade - comparative advantage - Heckscher-Ohlin - product life-cycle

absolute

The theory of ______ advantage was the first to attack the tenet of mercantilism which implied that trade is a zero-sum game. - comparative - political - absolute - social

demand conditions

What did Porter call the concept where firms are typically most sensitive to the needs of their closest customers? - Demand conditions - Unitary demand - Elastic demand - Supporting industries

absolute

When a country is more efficient at producing a product than any other country, the country has a(n) ______ advantage in the production of that product. - comparative - absolute - social - political

constant

Which form of returns to specialization means that the units of resources required to produce one unit are assumed to remain the same no matter where a country is on the production possibilities frontier? - Diminishing - Absolute - Constant - Increasing

mercantilism

Which theory does NOT support unrestricted free trade between countries? - Ricardo's Theory - Hecksher-Ohlin's Theory - Mercantilism - Smith's Theory

new trade

Which theory states that for products where economies of scale are significant and that control a substantial amount of world demand, the first movers in an industry can gain a scale-based cost advantage NOT available to late entrants? - Ricardo - Product life-cycle - New trade - Mercantilism

product life-cycle

Which theory was based on the observation that early in the development of a commodity, all the parts and labor come from the area in which it was invented? - Absolute advantage theory - Comparative advantage theory - Product life-cycle - New trade theory

free trade

______ is reflected in a nation in which the government does not attempt to influence what its citizens can buy from another country by applying import duties or what citizens can produce and sell to another country. - Free trade - Bilateral trade - Restricted trade - Fair trade

mercantilism

______ is the first theory of trade that advocated that a country should export more than it imports and should accumulate gold and silver to make up the difference and maintain a trade surplus. - New Trade - Isolationism - Mercantilism - Planned economy