All of the following are features of the diamond of national advantage theory except ________.

International Business, 14e (Daniels et al.)

Chapter 5 International Trade and Factor-Mobility Theory

1) Which of the following is NOT a reason thatinternational trade theory is useful for managers to

understand? P234

A) Countries use trade theories to help them decide how to improve their competitive positions, such as

improving the quantity and quality of production factors.

B) Countries' trade policies affect whether imports are allowed to compete against domestic production,

thus affecting where companies need to produce to serve given markets.

C) Countries use laissez-faire policies to intervene in the free movement of international trade, thus

affecting where companies can produce most efficiently.

D) Countries wrestle with the questions and set policies on what, with whom, and how much they

should import and export, thus affecting companies' abilities to produce given products efficiently and

sell them into given markets.

Answer: C

Diff: 3

Learning Outcome: Compare and contrast theories of international trade

Skill: Concept

Objective: 1

2) Why should managers in international business understand international trade theories? P234

A) Countries' trade policies, based on trade theories, influence which products companies might export

to given countries.

B) The understanding helps managers decide whether their companies should follow laissez-faire

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Chapter 6

Chapter Quizzes

This activity contains 35 questions.

Why should managers in international business understand international trade theories?

The trade theory that premises a country's wealth is measured by its holdings of treasure, usually in gold, is known as _______.

_______ holds that there are advantages to trade because different countries can produce different goods more efficiently than others.

Comparative advantage holds that there is a basis for trade when Country A specializes _______.

Adam Smith, in his theory of absolute advantage, reasoned that specialization of production would lead to greater efficiency. He gave all of the following reasons except _______.

Countries with large land areas are generally less dependent on trade than countries with small land areas. One of the factors causing this difference is that large countries _______.

The factor proportions theory of trade says that a country will have its best trade advantage if it concentrates on _______.

The country similarity theory of trade is a departure from earlier trade theories in that it _______.

The product life cycle (PLC) theory of trade holds that _______.

Which of the following products would most likely change international production location as predicted by the product life cycle theory?

The identification by a government of target industries to be competitive internationally is a(n) _______.

All of the following are conditions of the Porter Diamond except _________.

The international movement of production factors takes place primarily because of _______.

The term used to describe a country's loss of highly educated productive human resources is known as _______.

The international movement of production factors as an alternative to trade _______.

	All countries face the questions of what, how much, and with whom they should export and imports.

	True False

	Under mercantilism, governments sought to influence trade by limiting imports and subsidizing exports.

	True False

	The theory of absolute advantage holds that a country will gain from trade even though it can produce all goods more efficiently than other countries.

	True False

	Gains from trade in comparative advantage theory hold that the gains are due to economies of scale that reduce costs.

	True False

	The free trade theories of specialization assume that countries have objectives other than economic efficiency.

	True False

	The top 10 exporting countries are dominated by countries with cheap labor.

	True False

	The factor proportions theory holds that a country will benefit most from trade by importing labor-intensive products and exporting capital-intensive products.

	True False

	Trade among developed countries occurs primarily because of their specialization in different agricultural products.

	True False

	At an early stage of a product's life cycle, the product is apt to be made in a more capital-intensive method than in its later stages.

	True False

	A consumer durable product is more apt to behave according to the product life cycle theory of trade and development than a product with very rapid obsolescence.

	True False

	The existence of the four favorable conditions of the Diamond of National Advantage Theory guarantees that an industry will develop in a given locale.

	True False

	According to the diamond of national advantage theory, companies' development of internationally competitive products depends on their domestic demand conditions.

	True False

	The most internationally mobile factor of production is labor.

	True False

	Poor countries have sometimes received more in remittances from their citizens who have gone abroad than they have received from their exports.

	True False

	If a country cannot gain foreign production factors to use in its domestic operations, it may be stimulated to adopt efficient substitute methods of production.

	True False