19) The ________ theory states that countries produce and export goods that require resourcesavailable in abundance and import goods that require resources in short supply.A) new tradeB) absolute advantageC) international product life cycleD) factor proportionsAnswer:D
Diff:2: ModerateSkill:ConceptObjective:5-1: Explain why nations tradeAACSB:Application of Knowledge20) Which of the following was the analysis revealed by the "Leontief paradox"?BDiff:2: Moderate
Skill:ConceptObjective:5-1: Explain why nations tradeAACSB:Application of Knowledge21) In his International Product Life Cycle (IPLC) Theory, Raymond Vernon observed that eachproduct and its manufacturing technologies go through three stages of evolution: introduction,maturity, and ________.BDiff:1: Easy
Skill:ConceptObjective:5-1: Explain why nations tradeAACSB:Application of Knowledge
22) Which of the following is TRUE about the first stage of evolution in the internationalproduct life cycle theory?ADiff:2: Moderate
Skill:ConceptObjective:5-1: Explain why nations tradeAACSB:Application of Knowledge23) Which of the following is the last stage of evolution in the international product life cycletheory?A) temporary monopolyB) standardizationC) declineD) diversificationAnswer:B
Diff:1: EasySkill:ConceptObjective:5-1: Explain why nations tradeAACSB:Application of Knowledge24) The ________ theory states that a country's export eventually becomes its import.C
Diff:2: ModerateSkill:ConceptObjective:5-1: Explain why nations tradeAACSB:Application of Knowledge
quizlet/88369610/international-business-ch-5-6-flash-cards
________ refers to the purchase, sale, or exchange of goods and services across national borders. International trade
The importance of trade for a nation can be measured by ________. examining the volume of its trade relative to its total output
Most of the world merchandise trade is composed of trade in ________. manufactured goods
A majority of the total world merchandise trade occurs among ________. high-income economies
The smallest portion of the total world trade comprises trade between ________. low-income and middle-income nations
The danger of trade dependency is that ________. political turmoils in a country might affect all dependent countries
________ says that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports. Mercantilism
The measures of a nation's well-being other than the financial wealth accumulated through exports are irrelevant according to ________. mercantilism
Which of the following was a prominent mercantilist nation? Britain
One of the major pillars upon which the practice of mercantilism rested was ________. trade surpluses
The condition that results when the value of a nation's exports is greater than the value of its imports is called ________. a trade surplus
The condition that results when the value of a country's imports is greater than the value of its exports is called ________. a trade deficit
According to mercantilism, the accumulation of national wealth depended on the ________. increase in a nation's trade surplus
Which of the following statements is incorrect with regard to the importance of colonies for mercantilist nations? They served as a source of military protection.
Nations following the theory of ________ believed that the world's wealth was limited and that a nation could increase its share of the pie only at the expense of its neighbors. mercantilism
Today, countries seen by others as trying to maintain a trade surplus and expand their national treasures at the expense of other nations are accused of practicing ________. economic nationalism
Another term for neomercantilism is ________. economic nationalism
Which of the following refers to the ability of a nation to produce a good more efficiently than any other nation? absolute advantage
Who proposed the theory of absolute advantage? Adam Smith
Adam Smith believed that ________. market forces should determine trade flows
The theory of absolute advantage measures a nation's wealth by determining the ________. living standards of its people
The theory of absolute advantage destroys the mercantilism idea that international trade is a ________. zero-sum game
Which of the following is true about the theory of absolute advantage? The theory emphasizes that nations should open their doors to trade so that people can obtain more goods at cheaper rates.
When there are gains to be had by both countries that are party to an exchange, international trade is considered a(n) ________. positive-sum game
When a country is not able to produce a good more efficiently than other nations, but produces the good more efficiently than it does any other good, it is said to have a(n)
Factor proportions theory differs from the theory of comparative advantage in that the focus of factor proportions theory is on the ________. usage of the most abundant factors of production, while the focus of the comparative advantage theory is on the productivity of the production process
The Leontief paradox describes evidence ________. contrary to the predictions of the factor proportions theory
The international product life cycle theory was developed by ________. Raymond Vernon
The international product life cycle theory was put forth for ________. manufactured goods
The ________ theory states that a country's export eventually becomes its import. international product life cycle
During which of the following stages of the international product life cycle theory does high purchasing power and buyer demand in an industrialized nation encourage a company to design and introduce a product concept? new product stage
During which stage of the international product life cycle theory does demand rise and remain sustained for a fairly lengthy period of time? maturing product stage
During which stage of the product life cycle are companies looking for low-cost production bases in developing nations to supply a growing worldwide market? standardized product stage
In the ________ of the international product life cycle, competition from other companies selling similar products pressures companies to lower prices in order to maintain sales levels. standardized product stage
A product's components are manufactured in a country that can produce them at a very low cost while maintaining its quality. These components are then assembled in another country where productivity in assembly is high. This process resembles the theory of ________. comparative advantage
Much production in the world today closely resembles what is predicted by the ________. theory of comparative advantage
Which of the following is an argument offered by the new trade theory?
There are gains to be made from specialization and increasing economies of scale.
The new trade theory is mainly at odds with the ________ theory. factor proportions
National competitive advantage theory states that a nation's competitiveness in an industry depends on ________. the capacity of the industry to innovate and upgrade
According to the Porter diamond, which of the following is an example of an advanced factor? technological infrastructure in the nation
Which element of national competitive advantage theory divides resources into two groups: basic and advanced? factor conditions
Scenario: Chuck Praeger, Global Entrepreneur Chuck Praeger has made a name for himself by selling high-quality golf equipment to customers in Europe. He would like to expand his business into the Pacific Rim countries and has therefore, begun making inquiries into potential distributors.
Chuck is convinced that his golf equipment will sell itself. But he is preparing a special presentation for Asian customers because he wants to make a good first impression. As an expert in culture of the Pacific Rim countries, which of the following would be your most likely advice to Chuck? Aggressive salesmanship is unlikely to work in Pacific Rim countries.
Scenario: Chuck Praeger, Global Entrepreneur Chuck Praeger has made a name for himself by selling high-quality golf equipment to customers in Europe. He would like to expand his business into the Pacific Rim countries and has therefore, begun making inquiries into potential distributors.
Chuck believes that his business has grown because of his personal involvement in every step of the way. What advice do you offer Chuck as he continues to expand his business in new Asian markets? Use proper intermediaries as required in Pacific Rim nations.
Scenario: Foodland and Drinkland Two countries, Foodland and Drinkland, produce food and drinks. In Foodland, one resource unit produces 20 tons of food and one resource unit produces 10 tons of drinks. In Drinkland, one resource unit produces 12 tons of food and one resource unit produces 24 tons of drinks.
Foodland, and Drinkland? Funland has a comparative advantage in producing food.
Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues.
Wallace's executive team reviews the stages of the international product life cycle to understand better what to expect when the product is sold overseas. Since there is virtually no export market for the product at present, the product is most likely in which of the following stages of the international product life cycle? new product stage
Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues.
Wallace expects that markets abroad will soon become fully aware of the existence of the product and its benefits. Which of the following life cycle stages will the product be a part of during that period?
Eventually, Wallace expects that domestic production of the mousetrap will cease altogether. This would happen in the ________ stage of the product life cycle. maturing product stage
Scenario: Better Mousetrap Inc. Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues.
Eventually, Wallace expects that domestic production of the mousetrap will cease altogether. This would happen in the ________ stage of the product life cycle. standardized product
Scenario: Conquering International Fulfillment Jack Damon, a Boston-based entrepreneur, is determined not to make the same mistakes that hindered his former employer's business expansions. Jack knows that to increase his international sales, he must make some changes in how his orders are filled.
Jack has always handled product returns on a case-by-case basis, but he is often unprepared to deal with too many cases of returns. Which of the following would most likely help Jack increase his repeat business? planning for returns and giving prompt credits to customers
Scenario: Conquering International Fulfillment Jack Damon, a Boston-based entrepreneur, is determined not to make the same mistakes that hindered his former employer's business expansions. Jack knows that to increase his international sales, he must make some changes in how his orders are filled.
In reviewing his fulfillment process, Jack realizes that different customers opt for different types of shipping based on their preferences. Which of the following would most likely help Jack provide better shipping service to his customers? offer customers a choice of delivery methods with different speeds and costs
The pattern of imports and exports that occurs in the absence of trade barriers is called ________. free trade
Which of the following is a political motive behind a government's intervention in trade? gaining influence over other nations
Which of the following is true of government interventions in a country's trade practices? Government interventions help companies take advantage of economies of scale and be the first movers in their industries.
Which of the following industries is typically protected for national security reasons? agriculture
Which of the following is prompting farmers in many developed nations to discover new ways to manage risk and increase agricultural efficiency? exposure of agribusiness to market forces
Which of the following do products designated as dual use require before exports can take place? special government approval
Which of the following is an example of a dual use product? a GPS navigation device
Which of the following best describes the infant industry argument? It states that a country's emerging industries need protection from international competition during their development until they become sufficiently competitive.
shipping them to other countries.
A common purpose of many companies' facilities in foreign trade zones is ________. final product assembly
Government trade promotion agencies ________. advertise in other countries to promote the nation's exports
Which of the following will add to the cost of an imported product by levying an additional tax upon it? tariffs
A tariff levied by the government of a country that is selling goods abroad is called a(n) ________. export tariff
Which of the following statements is true of tariffs? Export tariffs are used by countries when they believe an export's price is lower than it should be.
A tariff levied by the government of a country that a product is passing through on its way to a final destination is called a ________ tariff. transit
The most common tariffs used today are the ________ tariffs. import
A(n) ________ tariff is levied as a percentage of the stated price of an imported product. ad valorem
A(n) ________ tariff is levied as a particular fee for each unit of an imported product. specific
A(n) ________ tariff is levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit. compound
What of the following statements is true of tariffs? They protect domestic producers.
Using tariffs to generate government revenue is most common among ________. developing countries
A restriction on the amount of a good that can enter or leave a country during a certain period of time is called a(n) ________.
quota
Which of the following is true of quotas? They help domestic producers maintain their market shares and prices.
A country imposes a tariff on goods that it sells abroad at the request of another nation. This is an example of a(n) ________. voluntary export restraint
Countries might impose a(n) ________ in response to the threat of an import quota or total ban on a product by an importing nation. voluntary export restraint
A lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota is called a(n) ________. tariff-quota
Tariff-quotas are used extensively in the trade of ________. agricultural products
Rice imports to a nation under a quota limit of 8,500 tons are charged a tariff of 15 percent. Imports of rice above the quota limit are charged a tariff of 60 percent. This is an example of a(n) ________. tariff-quota
Country A implements a ban on trade in two products with Country B. This is an example of a(n) ________. embargo
A(n) ________ is the most restrictive nontariff trade barrier and is typically applied to accomplish political goals. Embargo
Which of the following statements is true of embargoes? An embargo may be placed on one or a few goods or may completely ban trade in all goods.
The purpose of ________ is to force companies from other nations to use local resources in their production processes, particularly labor. local content requirements
Which of the following statements is true of local content requirements? A) It is a strategy mainly used by developed nations. It forces companies from other countries to employ local resources in their production
Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Which of the following motives is least likely attributed to Freeland's restriction on free trade? social motives
Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Freeland's protection of its national identity is an example of a(n) ________. cultural motive
Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Which of the following motives illustrates Freeland's efforts to protect local jobs? political motive
Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Freeland's efforts to provide opportunities to its emerging industries is an example of its ________. economic motive
Scenario: Not-So-Free Freeland Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy. The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
The belief that Freeland's emerging industries need protection from international competition during their development phase is an example of ________. the infant industry argument
Scenario: Konesia Joins the World Konesia, a former totalitarian economy and pariah state, is taking steps toward a free market economy. The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
Which of the following would be Konesia's least appropriate method to restrict unwanted trade? reduce tariffs
Scenario: Konesia Joins the World Konesia, a former totalitarian economy and pariah state, is taking steps toward a free market economy. The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
If Konesia chooses to levy tariffs as a percentage of the stated price of an imported product, this would be an example of a(n) ________. ad valorem tariff
Scenario: Konesia Joins the World Konesia, a former totalitarian economy and pariah state, is taking steps toward a free market economy. The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
Which of the following is the most likely reason for Konesia's government to impose an import quota? to maintain market shares and prices of domestic producers
Scenario: Konesia Joins the World Konesia, a former totalitarian economy and pariah state, is taking steps toward a free market economy. The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
Konesia has created a hybrid form of trade restriction-a lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota. This is an example of a(n) tariff-quota
Scenario: Excelsior's Limited Excelsior's Limited, a manufacturer of health and beauty aids, is expanding its presence in several countries around the world. Excelsior's president is surprised at some of the