Question 1

According to the product life cycle theory, as demand for a product starts to grow in other advanced countries, potential for exports from the United States will gradually increase.

Accepted Answer

The answer of According to the product life cycle theory,...

Question 2

Porter's theory has been subjected to detailed empirical testing and it is proven that it accurately predicts international trade patterns.

Accepted Answer

The answer of Porter's theory has been subjected to detailed...

Question 3

The new trade theory suggests that a country may predominate in the export of a good simply because it was lucky enough to have one or more pioneering firms to produce that good.

Accepted Answer

The answer of The new trade theory suggests that a...

Question 4

When the impact of differences of technology on productivity is controlled for, Heckscher-Ohlin theory gains predictive power.

Accepted Answer

The answer of When the impact of differences of technology...

Question 5

Michael Porter argues that advanced factors are the most significant for competitive advantage.

Accepted Answer

The answer of Michael Porter argues that advanced factors are...

Question 6

Factor endowments are unit cost reductions associated with a large scale of output.

Accepted Answer

The answer of Factor endowments are unit cost reductions associated...

Question 7

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

Accepted Answer

The answer of Porter's theory suggests that it is in...

Question 8

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

Accepted Answer

The answer of Free trade is likely to increase a...

Question 9

According to Michael Porter, government can influence each of the four components of Porter's diamond-either positively or negatively.

Accepted Answer

The answer of According to Michael Porter, government can influence...

Question 10

According to the product life-cycle theory, the locus of global production initially switches from developing countries to other advanced nations and then from those nations to the United States.

Accepted Answer

The answer of According to the product life-cycle theory, the...

Question 11

Viewed from an Asian or European perspective, Vernon's argument that most new products are developed and introduced in the United States seems ethnocentric and increasingly dated.

Accepted Answer

The answer of Viewed from an Asian or European perspective,...

Question 12

The Heckscher-Ohlin theory is the best predictor of real-world international trade patterns.

Accepted Answer

The answer of The Heckscher-Ohlin theory is the best predictor...

Question 13

Factor endowments refer to the extent to which free trade impacts the wealth of a country.

Accepted Answer

The answer of Factor endowments refer to the extent to...

Question 14

Porter argues that an absence of domestic rivalry is vital to the creation and persistence of international competitive advantage in an industry.

Accepted Answer

The answer of Porter argues that an absence of domestic...

Question 15

The new trade theory emerged from the thought that the ability of firms to attain economies of scale might have important implications for international trade.

Accepted Answer

The answer of The new trade theory emerged from the...

Question 16

Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by the firms situated in Germany and sold first in the German market.

Accepted Answer

The answer of Raymond Vernon's product life-cycle theory was based...

Question 17

Individual firms should invest substantial financial resources in trying to build a first-mover advantage, even if that means several years of losses before a new venture becomes profitable.

Accepted Answer

The answer of Individual firms should invest substantial financial resources...

Question 18

While Vernon's theory is useful for explaining the pattern of international trade in the modern world, its relevance during the period of American global dominance seemed more limited.

Accepted Answer

The answer of While Vernon's theory is useful for explaining...

Question 19

Most economists prefer Ricardo's theory to the Heckscher-Ohlin theory because it makes fewer simplifying assumptions.

Accepted Answer

The answer of Most economists prefer Ricardo's theory to the...

Question 20

Despite the short-term adjustment costs associated with adopting a free trade regime, trade would seem to produce greater economic growth and higher living standards in the long run.

Accepted Answer

The answer of Despite the short-term adjustment costs associated with...

Quiz 6: International Trade Theory