International Business Midterm

Front 1

Mercantilism advocated that countries should encourage _____ and discourage _____

Back 1

exports, imports

Front 2

Inventor of theory of absolute advantage

Back 2

Adam Smith

Front 3

Was the first to explain why unrestricted free trade is beneficial to a country

Back 3

Absolute advantage

Front 4

refers to a situation in which a government doesnot attempt to influence through quotas or duties what its citizens can buyfrom another country, or what they can produce and sell to another country

Back 4

free trade

Front 5

Who theorized comparative advantage

Back 5

David ricardo

Front 6

is the intellectual basis of the modern argument for unrestricted free trade

Back 6

comparative advantage

Front 7

Inthe twentieth century, Ricardo's work was refined by two Swedish economists and their work became known as the

Back 7

Heckscher-Ohlin theory

Front 8

Who developed the new trade theory

Back 8

Paul Krugman

Front 9

stresses that in some cases countries specializein the production and export of particular products not because of underlyingdifferences in factor endowments, but because in certain industries the worldmarket can support only a limited number of firm

Back 9

new trade theory

Front 10

Who developed the theory of national competitive advantage

Back 10

Michael porter

Front 11

This attempts to explain why particular nationsachieve international success in particular industries.

Back 11

national competitive advantage

Front 12

the first theory of international trade

Back 12

mercantilism

Front 13

was that it was in a country's best interests tomaintain a trade surplus, to export more than it imported.

Back 13

mercantilism

Front 14

the flaw with mercantilism was that it viewed trade as a

Back 14

zero-sum game

Front 15

is one in which a gain by one country results in a loss by another

Back 15

zero-sum game

Front 16

production of a product when it is moreefficient than any other country in producing it.

Back 16

absolute advantage

Front 17

in absolute advantage trade is a ____ sum game

Back 17

positive

Front 18

it makes sense for a country to specialize inthe production of those goods that it produces most efficiently and to buy thegoods that it produces less efficiently from other countries, even if thismeans buying goods from other countries that it could produce more efficientlyitsef

Back 18

comparative advantage

Front 19

potential world production is greater withunrestricted free trade than it is with restricted trade.

Back 19

comparative advantage

Front 20

the units of resources required to produce agood (cocoa or rice) are assumed to remain constant no matter where one is on acountry's production possibility frontier (PPF)

Back 20

constant returns to specialization

Front 21

theyargued that comparative advantage arises from differences in national factorendowments

Back 21

Heckscher-Ohlin theory

Front 22

the extent to which a country is endowed withsuch resources as land, labor, and capital.

Back 22

factor endowments

Front 23

postulated that because the United States wasrelatively abundant in capital compared to other nations, the United Stateswould be an exporter of capital-intensive goods and an importer oflabor-intensive goods. To his surprise, however, he found that U.S. exportswere less capital-intensive than U.S. imports.

Back 23

Leontief paradox

Front 24

proposed the product life-cycle theory

Back 24

Raymond Vernon

Front 25

theory was based on the observation that formost of the twentieth century a very large proportion of the world's newproducts had been developed by U.S. firms and sold first in the U.S. market(e.g., mass-produced automobiles, televisions, instant cameras, photocopiers,personal computers, and semiconductor chips).

Back 25

product life-cycle theory

Front 26

theory began toemerge in the 1970s when a number of economists pointed out that the ability offirms to attain economies of scale might have important implications forinternational trade.29

Back 26

new trade theory

Front 27

are unit cost reductions associated with a large scale of output.

Back 27

economies of scale

Front 28

are the economic and strategic advantages thataccrue to early entrants into an industry.

Back 28

first-mover advantages

Front 29

The theory suggests that nations may benefitfrom trade even when they do not differ in resource endowments or technology.

Back 29

new trade theory

Front 30

a nation's position in factors of production,such as skilled labor or the infrastructure necessary to compete in a givenindustry.

Back 30

factor endowments

Front 31

the nature of home demand for the industry'sproduct or service

Back 31

demand conditions

Front 32

the presence or absence of supplier industriesand related industries that are internationally competitive.

Back 32

related and supporting industries

Front 33

the conditions governing how companies arecreated, organized, and managed and the nature of domestic rivalry

Back 33

firm, strategy, structure, and rivalry