 Chapter 06 International Trade Theory Answer Key True / False Questions 1.Free trade refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country. TRUE Free trade refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country, or what they can produce and sell to another country. 2.The theories of Smith and Ricardo show that countries should not engage in international trade for products that it is able to produce for itself. FALSE The theories of Smith, Ricardo, and Heckscher-Ohlin show why it is beneficial for a country to engage in international trade even for products it is able to produce for itself. 3.David Ricardo's theory of comparative advantage explains international trade in terms of international differences in political environments. FALSE David Ricardo's theory of comparative advantage explains international trade in terms of international differences in labor productivity. 4.New trade theory stresses that in some cases countries specialize in the production and export of particular products because the world market can support only a limited number of firms. TRUE New trade theory stresses that in some cases countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can support only a limited number of firms. 5.Porter's theory of national competitive advantage recommends unrestricted free trade between countries. FALSE Porter's theory of national competitive advantage can be interpreted as justifying some limited government intervention to support the development of certain export-oriented industries. Which of the following factors according to Michael Porter is most likely to give a country competitive advantage over another country?Which of the following factors, according to Porter's national Diamond, is most likely to give a country competitive advantage over another country? Skilled Labor. Porter argues that a nation's firms gain competitive advantage if _____________________________.
Which of the following is a statement that supports the theory of comparative advantage quizlet?Which of the following is a statement that supports the theory of comparative advantage? Global production is greater with free trade than it is with restricted trade.
Which of the following theories suggests that first mover advantage is significant in the export of a good?Which of the following theories suggests that first mover advantage is significant in the export of a good? The product life-cycle theory argues that the developing nations will not produce a product if the product is highly standardized.
Which element is included in Porter's diamond model of national advantage quizlet?Which element is included in Porter's diamond model of national advantage? the existence of similar preferences and demands among countries with similar income levels.
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Which of the following observations is consistent with Michael Porters theory of national competitive?
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