International Trade Theories Quiz

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What is a key component of New Trade Theory that emphasizes the role of government?

Technical innovation

Economies of scale (correct)

First-mover advantage

Market regulation

According to National Competitive Advantage theory, what is crucial for a nation's competitiveness in an industry?

Capacity for innovation and upgrading (correct)

Availability of raw materials

Access to international markets

Relatively low labor costs

What aspect distinguishes advanced factors in the National Competitive Advantage theory?

Educational investments and workforce skills (correct)

Natural resources and geographical advantages

Government subsidies and protections

Market size and consumer demand

How does first-mover advantage create barriers to entry for competitors?

Through economies of scale and brand loyalty Signup and view all the answers

What does the Porter Diamond emphasize for competitive advantage in an industry?

Interplay of various national factors Signup and view all the answers

Which of the following assumptions is part of the Comparative Advantage theory?

Only two countries produce and consume just two goods. Signup and view all the answers

What does Factor Proportions Theory primarily focus on?

Countries producing goods based on available resources. Signup and view all the answers

In which stage of the International Product Life Cycle is a product introduced and designed?

New product stage Signup and view all the answers

What is the main principle behind Absolute Advantage?

A nation produces goods more efficiently than other nations. Signup and view all the answers

According to Factor Proportions Theory, a country with low labor costs is likely to specialize in which type of products?

Labor-intensive products. Signup and view all the answers

What major shift occurs as a product progresses to the Standardized product stage in the International Product Life Cycle?

Pressure from competition to lower prices. Signup and view all the answers

In the context of Comparative Advantage, what characterizes a less efficient nation?

It can produce one good more efficiently than another. Signup and view all the answers

Which factor is NOT considered in the Factor Proportions Theory?

Technological advancement Signup and view all the answers

Which of the following statements best describes the flaws of Mercantilism?

It results in a zero-sum game. Signup and view all the answers

What is one effect of colonialism in the context of Mercantilism?

It helps acquire territories for raw materials. Signup and view all the answers

What is the main purpose of the International Product Life Cycle theory?

To explain the evolution of a product in global markets. Signup and view all the answers

The main focus of the Factor Proportions Theory is on the use of which types of production factors?

Abundant and cheap resources. Signup and view all the answers

What is a characteristic of a trade surplus?

Maintaining higher exports than imports. Signup and view all the answers

How does the concept of neomercantilism manifest in modern economies?

By encouraging exports while discouraging imports. Signup and view all the answers

In terms of International Product Life Cycle, which stage typically requires significant investment in marketing?

Introduction stage Signup and view all the answers

Which of the following is NOT a component of the Porter Diamond in explaining national competitive advantage?

Cultural factors Signup and view all the answers