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Import tariffs Reduce the overall efficiency of the world’s economy Which of the following is a benefit of engaging in free trade Gives countries access to more products that they cannot produce Which of the following observations is consistent with Michael Porter’s theory of national competitive advantage Factors such as domestic demand and domestic rivalry determine nations dominance
on production According to Ricardo’s theory of comparative advantage, a country should produce goods... That it produces most efficiently ...is a direct restriction on the quantity of some good that may be imported into a country Import Quota Which of the following is NOT one of the main instruments of trade policy?
Credit Portfolios According to the 1986
Uruguay Round, the … was to be created to implement the GATT agreement World Trade Organisation (WTO) What is the incorrect statement about trade barriers they may put a firm at a competitive advantage to indigenous (host market) competitors Example of trade barrier (Japan checking tulips coming from the Netherlands by cutting it vertically) administrative trade policies Which of the
following terms refers to the extent to which a country is gifted with such resources as land, labour and capital? Factor endowments
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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.