Question 1

The eclectic paradigm specifies three conditions that determine whether a company will internationalize via FDI. Which of the following refer(s)  to one of those conditions?

Accepted Answer

A)   entrepreneurial orientation of national enterprises
B)   FDI stock
C)   availability of variable capital in the home country
D)   location-specific advantagesE) All of the above
F) B) and C)

Question 2

Early trade theories failed to consider the fact that the primary participants in international trade are individual firms that differ in significant ways from each other.

Accepted Answer

A) True 
 B)False

Question 3

According to Michael Porter, a nation's factor endowments help determine its ________.

Accepted Answer

A)   national competitive advantage
B)   demand conditions
C)   negative balance of trade
D)   comparative advantageE) A) and B)
F) C) and D)

Question 4

Which of the following is TRUE with regard to competitive advantage?

Accepted Answer

A)   Competitive advantages are typically derived from deliberate national policies.
B)   A competitive advantage is difficult for competitors to imitate.
C)   A competitive advantage is also known as a country-specific advantage.
D)   Competitive advantage includes inherited resources, such as arable land.E) A) and B)
F) All of the above

Question 5

In a short essay, explain the factor proportions theory. How does the theory differ from other theories?

Accepted Answer

The factor proportions theory suggests t...

Question 6

Explain the limitations of early trade theories. Discuss born global firms.

Accepted Answer

While the concepts of absolute advantage...

Question 7

Which of the following is an example of an ownership-specific advantage?

Accepted Answer

A)   the physical assets owned by a firm
B)   natural resources of the region where the firm operates
C)   low-cost labor
D)   inexpensive capitalE) C) and D)
F) A) and D)

Question 8

Which of the following comparative advantages is acquired over time?

Accepted Answer

A)   labor
B)   innovative capacity
C)   arable land
D)   petroleum reservesE) C) and D)
F) All of the above

Question 9

In a short essay, explain why the comparative advantage principle is the foundation and overriding justification for international trade. How does this principle support the competitive advantage of nations theory?

Accepted Answer

British political economist David Ricard...

Question 10

Earth-Rite Organic Foods (Scenario) 
Earth-Rite Organic Foods Inc. is an MNE based in Sweden with subsidiaries located in numerous countries around the world. Earth-Rite has annual sales of $10 billion and employs more than 90,000 individuals worldwide. Earth-Rite currently dominates the organic food industry, but competitors are beginning to catch up because of a growing demand for organic produce. Earth-Rite is considering a collaborative venture with a small chain of organic grocery stores located in Brazil, a country where Earth-Rite has no stores.
-Earth-Rite executives are considering internalizing operations in Brazil. Which of the following, if TRUE, best supports this plan?

Accepted Answer

A)   The management of Earth-Rite wants to maximize dissemination of proprietary knowledge.
B)   Intermediaries and collaborators ensure greater control over domestic operations.
C)   By internalizing operations, Earth-Rite will retain control of product quality.
D)   Internalizing value-chain activities increases employee turnover.E) All of the above
F) B) and C)

Question 11

Which of the following is the last stage of evolution in the international product life cycle theory?

Accepted Answer

A)   temporary monopoly
B)   standardization
C)   decline
D)   diversificationE) B) and D)
F) All of the above

Question 12

In today's world, the most important source of national advantage is a country's natural resources.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an element of the comparative advantage principle?

Accepted Answer

A)   per unit cost advantage
B)   relative efficiency of production
C)   absolute cost of production
D)   negative balance of tradeE) All of the above
F) A) and D)

Question 14

Which of the following was the analysis revealed by the "Leontief paradox"?

Accepted Answer

A)   that despite having an abundant pool of labor, the U.S. was exporting capital-intensive goods
B)   that the U.S. often exported labor-intensive goods and imported more capital-intensive goods
C)   that international trade was simpler than perceived
D)   that contrary to the popular belief, new products are more likely to originate in developing economiesE) C) and D)
F) A) and B)

Question 15

A benefit of the monopolistic advantage theory is that firms can operate foreign subsidiaries more profitably than the local firms that compete in their own markets.

Accepted Answer

A) True 
 B)False

Question 16

Monopolistic advantage theory suggests that firms that use FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

Accepted Answer

A) True 
 B)False

Question 17

________ theory suggests that firms using FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

Accepted Answer

A)   Factor proportions
B)   Monopolistic advantage
C)   Internalization
D)   Absolute advantageE) All of the above
F) A) and C)

Question 18

Which of the following is a benefit of internalizing foreign-based value-chain activities?

Accepted Answer

A)   The MNE maintains a monopolistic presence in foreign countries.
B)   The MNE eliminates employee turnover.
C)   The MNE oversees control of foreign operations and ensures product quality.
D)   The MNE learns new manufacturing methods from foreign partners.E) B) and C)
F) B) and D)

Question 19

The ________ is one of the three key modern perspectives that helps explain the development of national competitive advantage.

Accepted Answer

A)   factor proportions theory
B)   absolute advantage principle
C)   national industrial policy
D)   comparative advantage of nationsE) None of the above
F) B) and C)

Question 20

Adam Smith attacked the mercantilist view by suggesting that nations benefit most from free trade.

Accepted Answer

A) True 
 B)False

Exam 5: Theories of International Trade and Investment

In a short essay, explain why the comparative advantage principle is the foundation and overriding justification for international trade. How does this principle support the competitive advantage of nations theory?

Correct Answer
verified
British political economist David Ricard...
View Answer

In today's world, the most important source of national advantage is a country's natural resources.

Correct Answer
verified

Explain the limitations of early trade theories. Discuss born global firms.

Correct Answer
verified
While the concepts of absolute advantage...
View Answer

Which of the following is a benefit of internalizing foreign-based value-chain activities?

Correct Answer
verified

A benefit of the monopolistic advantage theory is that firms can operate foreign subsidiaries more profitably than the local firms that compete in their own markets.

Correct Answer
verified

In a short essay, explain the factor proportions theory. How does the theory differ from other theories?

Correct Answer
verified
The factor proportions theory suggests t...
View Answer

Monopolistic advantage theory suggests that firms that use FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

Correct Answer
verified

Adam Smith attacked the mercantilist view by suggesting that nations benefit most from free trade.

Correct Answer
verified

Correct Answer
verified

Which of the following is the last stage of evolution in the international product life cycle theory?

Correct Answer
verified

According to Michael Porter, a nation's factor endowments help determine its ________.

Correct Answer
verified

Which of the following is an example of an ownership-specific advantage?

Correct Answer
verified

________ theory suggests that firms using FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

Correct Answer
verified

Which of the following is TRUE with regard to competitive advantage?

Correct Answer
verified

Early trade theories failed to consider the fact that the primary participants in international trade are individual firms that differ in significant ways from each other.

Correct Answer
verified

Which of the following is an element of the comparative advantage principle?

Correct Answer
verified

The eclectic paradigm specifies three conditions that determine whether a company will internationalize via FDI. Which of the following refer(s) to one of those conditions?

Correct Answer
verified

Which of the following was the analysis revealed by the "Leontief paradox"?

Correct Answer
verified

The ________ is one of the three key modern perspectives that helps explain the development of national competitive advantage.

Correct Answer
verified

Which of the following comparative advantages is acquired over time?

Correct Answer
verified

Exam 5: Theories of International Trade and Investment

In a short essay, explain why the comparative advantage principle is the foundation and overriding justification for international trade. How does this principle support the competitive advantage of nations theory?

Correct AnswerverifiedBritish political economist David Ricard...View AnswerShow Answer

In today's world, the most important source of national advantage is a country's natural resources.

Correct AnswerverifiedShow Answer

Explain the limitations of early trade theories. Discuss born global firms.

Correct AnswerverifiedWhile the concepts of absolute advantage...View AnswerShow Answer

Which of the following is a benefit of internalizing foreign-based value-chain activities?

Correct AnswerverifiedShow Answer

A benefit of the monopolistic advantage theory is that firms can operate foreign subsidiaries more profitably than the local firms that compete in their own markets.

Correct AnswerverifiedShow Answer

In a short essay, explain the factor proportions theory. How does the theory differ from other theories?

Correct AnswerverifiedThe factor proportions theory suggests t...View AnswerShow Answer

Monopolistic advantage theory suggests that firms that use FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

Correct AnswerverifiedShow Answer

Adam Smith attacked the mercantilist view by suggesting that nations benefit most from free trade.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the last stage of evolution in the international product life cycle theory?

Correct AnswerverifiedShow Answer

According to Michael Porter, a nation's factor endowments help determine its ________.

Correct AnswerverifiedShow Answer

Which of the following is an example of an ownership-specific advantage?

Correct AnswerverifiedShow Answer

________ theory suggests that firms using FDI as an internationalization strategy must own or control certain resources and capabilities not easily available to competitors.

Correct AnswerverifiedShow Answer

Which of the following is TRUE with regard to competitive advantage?

Correct AnswerverifiedShow Answer

Early trade theories failed to consider the fact that the primary participants in international trade are individual firms that differ in significant ways from each other.

Correct AnswerverifiedShow Answer

Which of the following is an element of the comparative advantage principle?

Correct AnswerverifiedShow Answer

The eclectic paradigm specifies three conditions that determine whether a company will internationalize via FDI. Which of the following refer(s) to one of those conditions?

Correct AnswerverifiedShow Answer

Which of the following was the analysis revealed by the "Leontief paradox"?

Correct AnswerverifiedShow Answer

The ________ is one of the three key modern perspectives that helps explain the development of national competitive advantage.

Correct AnswerverifiedShow Answer

Which of the following comparative advantages is acquired over time?

Correct AnswerverifiedShow Answer

Correct Answer
verified
British political economist David Ricard...
View Answer

Correct Answer
verified

Correct Answer
verified
While the concepts of absolute advantage...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The factor proportions theory suggests t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified