International Trade Theory

Which trade theory was prevalent in the 16th and 17th centuries and emphasized increasing exports while limiting imports?

• Mercantilism

• Absolute Advantage

• Comparative Advantage

• Product Life-Cycle Theory

According to Adam Smith, a country has absolute advantage in producing a product when it is more efficient than any other country in producing it. True or False?

• Not mentioned

• Cannot be determined

• False

• True

Who proposed the theory of Comparative Advantage in 1817?

• Heckscher and Ohlin

• David Ricardo

• Raymond Vernon

• Adam Smith

According to the Heckscher–Ohlin theory, what do countries export and import based on?

• Currency value

• National factor endowments

• Consumer demand

• Government policies

In a study on international trade, the Leontief Paradox challenged the predictions of which trade theory?

• Comparative Advantage

• Absolute Advantage

• Heckscher–Ohlin Theory

• Mercantilism

According to Raymond Vernon's Product Life-Cycle Theory, what happens as products mature?

• They become less competitive

• The location of sales and optimal production location change

• They become less standardized

• They become more expensive

What is a key criticism of the Product Life-Cycle Theory?

• It is too complex

• It is considered ethnocentric

• It is not relevant in the modern world

• It is too simplistic

The New Trade Theory suggests that countries can benefit from trade even if they have similar levels of resources and technology. True or False?

• Cannot be determined

• Not mentioned

• False

• True

What is a potential advantage of being the first mover in the electric vehicle industry according to the New Trade Theory?

• Market exclusivity

• Government subsidies

• Scale-based cost advantage

• Tax breaks

Porter's Diamond attributes are crucial for understanding a country's competitive advantage. Which of the following is NOT one of these attributes?

• Related and supporting industries

• Demand conditions

• Factor endowments

• Government regulations