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WorksheetsTrade theories International Business Grade 12
Total questions: 36
Worksheet time: 20mins
Theory of Absolute advantage was developed by
David Ricardo
Adam Smith
Michael Porter
Mr Preston
Theory of Comparative advantage was developed by
David Ricardo
Adam Smith
Michael Porter
Mr Preston
To focus on producing one thing to improve productivity is known as
International Trade
Specilisation
Absolute Advantage
Supply and Demand
When determining comparative advantage one must determine
Opportunity Cost
Absolute Advantage
Specilisation
International Trade
1. Mercantilism is the earliest theories on international trade.
TRUE
FALSE
Countries adopting mercantilism:
favour trade surplus
favour trade deficit
encourage import more than export
encourage export more than import
The followings are true about Mercantilism EXCEPT:
It believes that national prosperity is the result of a positive balance of trade.
It lead to a situation of zero sum game for some nations.
The mercantilist government see import as good and export as bad.
Mercantilist countries colonized other countries to gain resources and market finished goods.
Absolute advantage theory was proposed by ________ in 1776.
David Ricardo
Adam Smith
John Dunning
Karl Marx
Based on absolute advantage theory, each country can increase its wealth by specializing in the production of good that it is less efficient at.
TRUE
FALSE
Comparative advantage theory was proposed by ________ in 1817
Adam Smith
John Dunning
Eli Hecksher
David Ricardo
Which of the following statement is true about Comparative Advantage theory?
The most efficient country is the one that can produce goods at the lowest opportunity cost.
It does not support free trade among nation.
A country should import goods that it is most efficient in production.
Countries should not trade with each other and produce all goods independently.
Based on Comparative Advantage theory, Vietnam should produce ______, while Sri Lanka should produce ______.
coffee, tea
coffee, coffee
tea, coffee
tea, tea
The trade theory that premises a country's wealth is measured by its holdings of treasure, usually in gold, is known as _______.
Bullionism
Mercantilism
the Porter Diamond
Monetarism
When the value of export is greater than the value of import, it is called__________________________?
Trade surplus
Trade deficit
Protectionism
The idea of establishing Aibus by 4 European governments is an example of
strategic trade theory
product life cycle trade theory
Military orders during WW2 helped this company survive
Airbus
Boeing
product life cycle trade theory divides world into
leading innovation USA
developed Europe
developing - the rest of the world
undeveloped- the rest of the world
according to product life cycle, price premium will always be in
the USA
Europe
Asia
according to the product life cycle, the price premium will always be in
the USA
Europe
Asia
The main criticism of the Strategic theory is caused by lack of detailed information about costs of production and difficulty to determine what business deserves to be called "strategic"
yes
no
"Strategic" industries are the ones that usually require high start-up costs and investments in innovations and research.
yes
no
Product life cycle theory was based on the results of
Civil War
WW 2
Product life cycle theory doesn't work today because
the USA is no longer the only leading innovation nation
movement of product from new to -maturing-standardized happens today fast
it is morally wrong to show domination of one nation over another
National Competitive Advantage theory
founded by Poter
is known as diamond
pays attention to domestic market
rejects all other theories
what is not a part of diamond model?
natural resources
domestic demand
domestic competitors
supporting industries
strategic industries
modern days mercantilism is reflected in protectionism
yes
no
High requests of technological Japanese society guaranteed
domestic demand
domestic competition
human resources
China, Japan, and Korea are lagging in developing aerospace because they are missing
natural and human resources
domestic demand
supporting industries
National Competitive advantage trade theory corresponds with
factor endournment
mercantilism
According to Smith, international trade is
win-win game
0-sum game
Absolute advantage offered by Smith
supports free trade
supports specialization
offers England produce only grapes and Portugal produce wool
reflects main ideas of WTO
According to comparative advantage trade theory offered by Ricardo
nation should produce one good only
produce most of what it is the best + some other goods and trade for the rest
produce equal amount of all goods
be completely self-sufficient
selling goods abroad
export
import
to have import greater than export
trade deficit
trade proficite
What is a classical trade theory?
resource endournment
product life cycle
diamond theory
strategic theory
absolute advantage
Resource endournment was offered by
Ohlin
Porter
Vernon
Ricardo
