BAIB3004 Week 2 Seminar 24/25

Which of the following best exemplifies the application of the theory of comparative advantage in the real world?

• The United States exporting aircraft while importing electronics from China

• Both countries producing and exporting the same products

• Countries only engaging in barter trade

• Countries refusing to engage in international trade

According to Porter's Diamond Model, which factor is NOT considered when analysing a country's competitive advantage in an industry?

• Factor conditions

• Demand conditions

• Currency exchange rates

• Related and supporting industries

Which of the following is a real-world application of the Heckscher-Ohlin model?

• A labour-abundant country exporting labour-intensive goods

• A capital-abundant country exporting labour-intensive goods

• Countries only trading in finished goods

• Countries refusing to trade based on factor endowments

How has the Heckscher-Ohlin model been applied to understand trade patterns between developed and developing countries?

• It explains why developed countries export capital-intensive goods

• It justifies protectionist policies

• It suggests that all countries should specialise in the same industries

• It proves that international trade is always detrimental

How might a company like McDonald's use Porter's Diamond Model in practice?

• To analyse potential markets for expansion

• To understand its competitive advantages in different countries

• To identify synergies in domestic markets

• All of the above

Which of the following represents a practical application of Samuelson's factor price equalisation theorem?

• The gradual rise in labour costs in China as it engaged in international trade

• Countries maintaining constant wage levels regardless of trade

• The complete elimination of all international trade

• Factors of production becoming more scarce in all countries

Which theory suggests that countries should specialise in producing goods they can make most efficiently?

• Comparative advantage theory

• Absolute advantage theory

• Heckscher-Ohlin theory

• New trade theory

Which of the following scenarios best illustrates the concept of "first-mover advantage" as explained in the New Trade Theory?

• A country with abundant natural resources dominating the global market for those resources

• A developing country attracting foreign investment by offering tax incentives

• A company establishing a global brand and network effects before competitors enter the market

• A country implementing protectionist policies to support its infant industries

How does the concept of "national diamond" in Porter's theory relate to the phenomenon of industrial clusters?

• It suggests that industrial clusters are detrimental to national competitiveness

• It explains why industrial clusters tend to form and contribute to national competitive advantage

• It argues that industrial clusters are irrelevant in the global economy

• It proposes that industrial clusters only benefit multinational corporations

According to the Heckscher-Ohlin model, a country will export goods that:

• Use its abundant factors intensively

• Use its scarce factors intensively

• Have the highest absolute advantage

• Have the lowest opportunity cost