Global chapter 6 – Flashcards
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Which of the following advantages is most likely to be enjoyed by a company as a part of the first-mover advantages?
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Correct The ability to capture scale economies ahead of later entrants
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What is a zero-sum game?
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Correct A situation in which a gain by one country results in a loss by another.
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Sentoria is an island nation in the Pacific ocean. It's geographical location is advantageous since it has access to a variety of aquatic life forms and also a number of fresh water sources that provide for fisheries. The lack of arable land drives local demand for seafood. The competition in the domestic fishing industry is fierce and enables Sentoria to be one of the major exporters of seafood. Which of the following theories of international trade best explains Sentoria's dominance as an exporter of seafood?
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Correct Theory of national competitive advantage
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Which of the following was a pervasive finding of Porter's study?
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Correct Successful industries within a country tend to be grouped into clusters of related industries.
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Which of the following is one of the four factors included in Porter's diamond?
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Correct Firm strategy, structure, and rivalry
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The new trade theory diverts from its advocacy of free trade by:
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Correct suggesting an economic rationale for a proactive trade policy.
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According to the new trade theory, how does trade offer an opportunity for mutual gain when countries do not differ in their resource endowments or technology?
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Correct Trade increases the variety of goods available to consumers and lowers the costs of those goods.
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Which of the following formed the crux of Porter's 1990 study of national competitive advantage?
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Correct Determining how a country achieves international success in a particular industry
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According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends?
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Correct Over time, the U.S. switches from being an exporter of a product to an importer of the product.
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Dynamic gains in both the stock of a country's resources and the efficiency with which resources are utilized will:
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Correct enable the country to produce more goods than it did before the introduction of free trade.
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Which of the following is a correct inference from Adam Smith's theory of absolute advantage?
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Correct A country that has an absolute advantage in the production of all goods might derive no benefits from international trade.
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Which of the following factor endowments would be classified as an advanced factor by Michael Porter?
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Correct Skilled labor
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Which of the following theories generates for government intervention and strategic trade policy?
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Correct New trade theory
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The _____ theory states that in those industries where the output required to attain economies of scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises.
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Correct new trade
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Which of the following is consistent with the central beliefs of mercantilism?
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Correct A country's government should intervene to achieve a surplus in the balance of trade.
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Porter argued that in terms of factor endowments, _____ factors are the most significant for competitive advantage.
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Correct advanced
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_____ suggests that trade is a positive-sum game in which all participating countries fetch economic gains.
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Correct The theory of comparative advantage
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Which of the following is a component of Porter's diamond?
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Correct Demand conditions
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Which of the following is a result of certain products having small national markets, in the absence of trade?
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Correct Limited demand for such products leads to non realization of economies of scale.
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Most economists prefer the Heckscher-Ohlin theory to Ricardo's theory because:
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Correct it makes fewer simplifying assumptions.
