Podcast
Questions and Answers
_____ are politically motivated trade sanctions against foreign countries to signal displeasure.
_____ are politically motivated trade sanctions against foreign countries to signal displeasure.
Trade Embargos
Trade deficit occurs when a nation _____.
Trade deficit occurs when a nation _____.
imports more than its exports
The _____ is popularly known as the diamond theory because its principal architect, Harvard strategy professor Michael Porter, presents it in a diamond-shaped diagram.
The _____ is popularly known as the diamond theory because its principal architect, Harvard strategy professor Michael Porter, presents it in a diamond-shaped diagram.
theory of national competitive advantage of industries
Which of the following statements best describes merchandise trade?
Which of the following statements best describes merchandise trade?
Which of the following statements is true of opportunity cost?
Which of the following statements is true of opportunity cost?
Which of the following statements is true of import tariff?
Which of the following statements is true of import tariff?
Which of the following statements is true of the theory of mercantilism?
Which of the following statements is true of the theory of mercantilism?
_____ is the idea that government should actively guard domestic industries from imports and vigorously promote exports.
_____ is the idea that government should actively guard domestic industries from imports and vigorously promote exports.
Which of the following statements is true of non-tariff barriers?
Which of the following statements is true of non-tariff barriers?
In order to ensure the success of firms' exports, managers need to:
In order to ensure the success of firms' exports, managers need to:
Which of the following is a reason why the product life cycle theory is criticized?
Which of the following is a reason why the product life cycle theory is criticized?
_____ can determine the success and failure of a firm's exports around the globe.
_____ can determine the success and failure of a firm's exports around the globe.
Which of the following statements best defines balance of trade?
Which of the following statements best defines balance of trade?
Which of the following statements is true of deadweight costs?
Which of the following statements is true of deadweight costs?
Which of the following statements is true of strategic trade theory?
Which of the following statements is true of strategic trade theory?
According to Adam Smith, a nation that is more efficient than anyone else in the production of any good or service is said to have a(n) _____ in the production of that good or service.
According to Adam Smith, a nation that is more efficient than anyone else in the production of any good or service is said to have a(n) _____ in the production of that good or service.
Which of the following definitions best describes import quotas?
Which of the following definitions best describes import quotas?
Which of the following is a reason why strategic trade theory is criticized?
Which of the following is a reason why strategic trade theory is criticized?
Which of the following is an economic argument against free trade?
Which of the following is an economic argument against free trade?
Which of the following statements is true of free trade?
Which of the following statements is true of free trade?
Which of the following statements is true of the Heckscher-Ohlin theory?
Which of the following statements is true of the Heckscher-Ohlin theory?
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Study Notes
Trade Concepts and Theories
- Trade embargos are politically motivated sanctions imposed on foreign countries to express disapproval.
- A trade deficit occurs when a nation imports more than it exports.
- The theory of national competitive advantage, created by Michael Porter, is illustrated through a diamond-shaped diagram.
- Merchandise trade involves the buying and selling of tangible products.
Economic Principles
- Opportunity cost refers to the value lost when one activity is pursued over another.
- An import tariff is a tax levied on goods brought into a country from abroad.
- Mercantilism suggests that global wealth is fixed, promoting national trade surpluses.
- Protectionism advocates for government measures to protect domestic industries from foreign competition.
Trade Barriers and Strategies
- Non-tariff barriers include subsidies, import quotas, and export restrictions that limit trade.
- To succeed in exporting, firms need to enhance the comparative advantage of their locations.
- Critics of the product life cycle theory argue it erroneously assumes the U.S. will always lead in innovation.
Trade Metrics
- The balance of trade measures a country’s overall trade surplus or deficit.
- Deadweight costs result from tariffs, leading to net economic losses.
- Strategic trade theory supports government assistance for certain industries, such as clean energy sectors.
Comparative and Absolute Advantage
- According to Adam Smith, a nation that can produce a good more efficiently than others holds an absolute advantage.
- Import quotas restrict the maximum quantity of goods that can enter a country.
- Strategic trade theory faces criticism for encouraging government intervention in markets.
Free Trade Perspectives
- Economic arguments against free trade include the need to protect emerging industries from foreign competition.
- Free trade promotes minimal government intervention in the buying and selling of goods and services.
- The Heckscher-Ohlin theory posits that comparative advantages arise from a nation’s locally abundant resources.
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