International trade Quiz 3

What does the Heckscher-Ohlin theory explain?

• • A. The impact of technological advancements on international trade.

  
  

• • B. The role of government subsidies in promoting exports.

  
  

• • C. The pattern of international trade based on differences in national factor endowments.

  
  

• • D. The importance of cultural factors in determining trade patterns.

  
  

According to the Heckscher-Ohlin theory, why do countries export certain goods?

• • A. Because those goods are produced using advanced technology.

  
  

• • B. Because they have a comparative advantage in those goods.

  
  

• • C. Because they receive government incentives for exporting.

  
  

• • D. Because those goods are in high demand globally.

  
  

What is the main difference between Ricardo’s theory and the Heckscher-Ohlin theory?

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• • A. Ricardo’s theory focuses on differences in productivity, while the Heckscher-Ohlin theory emphasizes factor endowments.

  
  

• • B. Ricardo’s theory explains trade patterns based on cultural factors, while the Heckscher-Ohlin theory considers technological advancements.

  
  

• • C. Ricardo’s theory argues against free trade, while the Heckscher-Ohlin theory supports it.

  
  

• • D. Ricardo’s theory is outdated, while the Heckscher-Ohlin theory is more relevant today.

  
  

What does Porter’s diamond seek to explain?

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• • A. Why some nations succeed in international competition.

  
  

• • B. The impact of exchange rates on trade balances.

  
  

• • C. The role of multinational corporations in global markets.

  
  

• • D. The effect of government regulations on exports.

  
  

Why did Michael Porter develop the concept of the diamond?

• • A. To challenge existing theories of international trade.

  
  

• • B. To promote protectionist policies.

  
  

• • C. To explain the impact of cultural factors on trade.

  
  

• • D. To analyze the role of labor unions in export industries.

  
  

What are the four broad attributes of a nation in Porter’s diamond theory?

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• • A. Factor endowments, demand conditions, related industries, and firm strategy.

  
  

• • B. Infrastructure, skilled labor, rivalry, and government policies.

  
  

• • C. Factor endowments, demand conditions, supplier industries, and cultural factors.

  
  

• • D. Factor endowments, demand conditions, related industries, and chance events.

  
  

Which attribute refers to a nation’s position in factors of production, such as skilled labor or infrastructure?

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• • A. Factor endowments

  
  

• • B. Demand conditions

  
  

• • C. Relating and supporting industries

  
  

• • D. Firm strategy

  
  

According to Porter, in which industries are firms most likely to succeed?

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• • A. Industries with high government support

  
  

• • B. Industries with favorable demand conditions

  
  

• • C. Industries with low rivalry

  
  

• D. Industries where the diamond is most favorable

  
  

What does Porter mean by the diamond being a mutually reinforcing system?

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• • A. The effect of one attribute depends on the state of others.

  
  

• • B. The diamond shape represents cooperation among firms.

  
  

• • C. The diamond theory is universally applicable.

  
  

• • D. The diamond attributes reinforce each other through government policies.

  
  

Why does favorable demand conditions alone not result in competitive advantage, according to Porter?

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• • A. Because demand conditions are influenced by chance events.

  
  

• • B. Because rivalry is necessary for firms to respond to demand.

  
  

• • C. Because supplier industries are more critical for success.

  
  

• • D. Because government policies override demand conditions.