Question 1

Which of the following are the limitations of Ricardo's theory of comparative advantage? Please select all that apply.

Accepted Answer

A)   Not all countries gain from international trade. Job loss is likely to occur in import-competing industries after international trade.
B)   Not all countries gain from international trade. Job loss is likely to occur in exporting industries after international trade.
C)   Ricardo's model cannot capture technological change.
D)   Ricardo's model is static.E) A) and D)
F) C) and D) A, C, D

Question 2

Which firm is most likely to successfully compete in foreign direct investment?

Accepted Answer

A)   A firm that has competitive advantages based on its cheaper labour
B)   A firm that is specialise in producing produces based mainly on limited natural resource
C)   A firm that is owned by the government
D)   A firm that has competitive advantages based on its investment in research and developmentE) B) and D)
F) A) and D)

Question 3

Which of the following is correct? Please select all that apply.

Accepted Answer

A)   Mercantilism promotes exports.
B)   Theory of comparative advantage predicts that a country could gain from trade despite the country's inefficient production.
C)   Theory of absolute advantage promote exports without imports.
D)   Theory of absolute advantage predicts that a country could gain more from export products in which it can produce cheaply.E) A) and B)
F) All of the above

Question 4

Which of the following is not the form of government subsidies?

Accepted Answer

A)   Low-interest rate loan
B)   Tax relief
C)   Quantitative restrictions
D)   Cash grantsE) B) and C)
F) A) and B)

Question 5

Is the following statement true or false? Only by international outsourcing that integrated productive activities are segmented and spread over an international network of production.

Accepted Answer

A) True 
 B)False

Question 6

According to the theory of comparative advantage, which of the following is correct?

Accepted Answer

A)   A country gains from trade only when it can produce goods and services more efficiently than any other country.
B)   A country gains from trade because it has cheaper labour compared to other countries.
C)   A country can export its products to other countries despite it has less efficient production than other countries.
D)   To gain from trade, a country should specialise in producing goods and services that it can produce more efficiently and cheaply compared to any other country.E) All of the above
F) A) and D)

Question 7

Assume there are two countries, A and B. If country A is better in producing two products than country B, according to the theory of comparative advantage, is it true or false that country B should not produce nor export any product?

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is wrong?

Accepted Answer

A)   The quality of labour in a country is not a locational advantage.
B)   The high quantity of oil and gas in a country can be considered as its locational advantage.
C)   The investment in research and development of a firm creates its ownership advantage.
D)   Locational advantages, in general, are available to all firms in the same country.E) A) and D)
F) All of the above

Question 9

Which of the following is not included in the Porter's diamond?

Accepted Answer

A)   Demand conditions
B)   Factor endowments
C)   Capabilities of the managers
D)   Related and supporting industriesE) All of the above
F) A) and B)

Question 10

Which of the following are the limitations of Vernon's product cycle model? Please select all that apply.

Accepted Answer

A)   Modern firms do not develop products focusing only for domestic market.
B)   Price competition is not the only way to compete in the market.
C)   Product cycle model is a static model.
D)   Product cycle model may not explain some types of products.E) B) and C)
F) A) and D)

Question 11

Which of the following are correct? Please select all that apply.

Accepted Answer

A)   Subsidies are government payments to domestic producers, in the form of cash grants, low-interest loans, and tax relief.
B)   Quantitative restrictions or quotas restrict the quantity of imports in order to protect the market share of domestic firms.
C)   Tariff barriers can affect both merchandise and trade in services.
D)   Quantitative restrictions or quotas are enforced by issuing licenses to a group of firmsE) B) and C)
F) A) and B)

Question 12

According to product life cycle theory, which of the following explains a situation when a country will eventually import the product which is initially developed and exported by the country itself?

Accepted Answer

A)   That product is cheaper producing in other countries
B)   Other country creates more advance technology to produce that particular product
C)   That country does not has strict regulations on property right
D)   That product is no longer needed in the country that initially created it.E) A) and D)
F) A) and C) A

Question 13

Which of the following is wrong?

Accepted Answer

A)   Artificial barriers control trade quantity by influencing domestic prices.
B)   Artificial barriers control trade quantity by influencing the quantity imported.
C)   Non-tariff barriers are employed only by governments.
D)   Non-tariff barriers can be applied to trade in servicesE) All of the above
F) A) and D)

Question 14

Which industry is most likely to loss (e.g. facing unemployment)  from international trade?

Accepted Answer

A)   Export-oriented industry
B)   The industry producing exporting products made from importing raw materials
C)   The industry that uses importing goods to produce products for both domestic and foreign markets
D)   Import-competing industryE) A) and B)
F) A) and C)

Question 15

Is the following statement true or false? New trade theory differs mainly from classic trade theory because it provides comprehensive explanation of the role of the firm in international trade.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is best described as the driving force of the growth of international trade among advanced economies?

Accepted Answer

A)   Government support
B)   Technology
C)   Social capital
D)   Institutional developmentE) All of the above
F) A) and D)

Question 17

Which of the following are the reasons a country applies trade protections? Please select all that apply.

Accepted Answer

A)   To promote its industrialisation
B)   To protect its consumers
C)   To raise the government income
D)   To safeguard domestic jobsE) B) and D)
F) C) and D) A, B, C, D

Question 18

Which of the following explains 'offshoring foreign direct investment '?

Accepted Answer

A)   Offshoring foreign direct investment happens when a production is moved to a location abroad to reduce costs, increase efficiency, and reduce risk.
B)   Offshoring foreign direct investment is the same with licensing.
C)   Offshoring foreign direct investment happens when a production is moved to a cheaper location in the home country.
D)   Offshoring foreign direct investment happens when a production is assigned to other firms hired by the multinational company.E) All of the above
F) B) and C)

Question 19

Is the following statement true or false? According to the theory of comparative advantage, the allocation of resource among countries participating in international trade will return the greatest welfare for all countries.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following explains why a country which has rich natural resources can become less competitive compared to some other countries?

Accepted Answer

A)   A country cannot export its natural resources.
B)   A country focuses mainly on producing low-valued natural products without producing created assets.
C)   A country does not have absolute advantage in producing natural assets.
D)   A country does not have comparative advantage in producing natural assets.E) C) and D)
F) A) and B)

Exam 4: International Trade Theory and the Firm

Which of the following are the limitations of Ricardo's theory of comparative advantage? Please select all that apply.

Correct AnswerverifiedA, C, D

Which firm is most likely to successfully compete in foreign direct investment?

Correct AnswerverifiedShow Answer

Which of the following is correct? Please select all that apply.

Correct AnswerverifiedShow Answer

Which of the following is not the form of government subsidies?

Correct AnswerverifiedShow Answer

Is the following statement true or false? Only by international outsourcing that integrated productive activities are segmented and spread over an international network of production.

Correct AnswerverifiedShow Answer

According to the theory of comparative advantage, which of the following is correct?

Correct AnswerverifiedShow Answer

Assume there are two countries, A and B. If country A is better in producing two products than country B, according to the theory of comparative advantage, is it true or false that country B should not produce nor export any product?

Correct AnswerverifiedShow Answer

Which of the following is wrong?

Correct AnswerverifiedShow Answer

Which of the following is not included in the Porter's diamond?

Correct AnswerverifiedShow Answer

Which of the following are the limitations of Vernon's product cycle model? Please select all that apply.

Correct AnswerverifiedShow Answer

Which of the following are correct? Please select all that apply.

Correct AnswerverifiedShow Answer

According to product life cycle theory, which of the following explains a situation when a country will eventually import the product which is initially developed and exported by the country itself?

Correct AnswerverifiedA

Which of the following is wrong?

Correct AnswerverifiedShow Answer

Which industry is most likely to loss (e.g. facing unemployment) from international trade?

Correct AnswerverifiedShow Answer

Is the following statement true or false? New trade theory differs mainly from classic trade theory because it provides comprehensive explanation of the role of the firm in international trade.

Correct AnswerverifiedShow Answer

Which of the following is best described as the driving force of the growth of international trade among advanced economies?

Correct AnswerverifiedShow Answer

Which of the following are the reasons a country applies trade protections? Please select all that apply.

Correct AnswerverifiedA, B, C, D

Which of the following explains 'offshoring foreign direct investment '?

Correct AnswerverifiedShow Answer

Is the following statement true or false? According to the theory of comparative advantage, the allocation of resource among countries participating in international trade will return the greatest welfare for all countries.

Correct AnswerverifiedShow Answer

Which of the following explains why a country which has rich natural resources can become less competitive compared to some other countries?

Correct AnswerverifiedShow Answer

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A, C, D

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A

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A, B, C, D

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