International Business 15Th Edition Daniels Test Bank Full Chapter PDF
International Business 15Th Edition Daniels Test Bank Full Chapter PDF
International Business 15Th Edition Daniels Test Bank Full Chapter PDF
2) In the text, Costa Rica devised a strategic trade policy to accomplish what goals?
A) attract industries that promised high growth and higher wages
B) develop and grow local industries to keep capital in Costa Rica
C) attract industries that were "green" and produced sustainable products
D) attract companies that were acceptable to the U.S.
Answer: A
Diff: 2
Learning Outcome: Define the fundamental concepts of international business
Skill: Concept
Objective: 3
AACSB: Application of knowledge
3) Which of the following statements about Costa Rica and its approach to trade and factor-
mobility strategy is true?
A) Costa Rica decided to select industries that would produce competitive products and improve
workers' skills.
B) Costa Rica decided to attract industries acceptable to its major trading partners.
C) Costa Rica decided to select industries on a least cost basis.
D) Costa Rica decided to invite industries that were highly technical.
Answer: A
Diff: 3
1
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Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 3
AACSB: Application of knowledge
2
Copyright © 2015 Pearson Education, Inc.
4) All countries face the questions of what, how much, and with whom they should import and
export. How they answer these questions primarily affects whether ________.
A) nontradable goods become tradable
B) products go through a lengthy life cycle
C) companies adhere to laissez-faire export policies
D) a company's present production location will be competitive
Answer: D
Diff: 2
Skill: Concept
Objective: 1
5) The trade theory that says a country should export more than it imports is known as ________.
A) mercantilism
B) absolute advantage
C) comparative advantage
D) import substitution
Answer: A
Diff: 1
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Application of knowledge
7) Which of the following UNDESIRABLE results will most likely occur for a country running a
favorable balance of trade?
A) higher unemployment
B) higher domestic interest rates
C) fewer funds to invest abroad
D) granting credit that may be risky
Answer: D
Diff: 2
Skill: Application
Objective: 1
AACSB: Analytical thinking
3
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8) Neomercantilism describes the approach of countries that try to run a favorable balance of
trade to ________.
A) build up gold reserves
B) achieve a social or political objective
C) lower their rates of inflation
D) buy raw materials more cheaply
Answer: B
Diff: 1
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Application of knowledge
10) Which of the following is most likely a basis for a Jamaican natural advantage in
international trade?
A) product technology developed by a Jamaican company
B) high literacy rates among Jamaican citizens
C) the use of English as the primary language
D) beautiful beaches and climate
Answer: D
Diff: 2
Skill: Application
Objective: 1
AACSB: Reflective thinking
4
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11) As a leading exporter of luxury automobiles, Germany has built a strong reputation in
engineering. Germany's trade most likely relies on a(n) ________.
A) outward immigration restriction
B) natural advantage
C) acquired advantage
D) neomercantilist policy
Answer: C
Diff: 2
Skill: Application
Objective: 1
AACSB: Application of knowledge
12) Assume the following conditions: In the United States it takes 5 units of resources to produce
a ton of potatoes and 10 to produce a ton of coal. In Canada it takes 6 units of resources to
produce a ton of potatoes and 9 to produce a ton of coal. According to the theory of absolute
advantage, ________.
A) the United States should export potatoes to Canada and import coal from Canada
B) the United States should export coal to Canada and import potatoes from Canada
C) the United States should import both potatoes and coal from Canada, while concentrating on
production of more valuable goods
D) there would be no basis for trade
Answer: A
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Application
Objective: 1
AACSB: Analytical thinking
13) Comparative advantage differs from absolute advantage in that the former ________,
whereas the latter ________.
A) holds that countries should specialize their production; does not
B) holds that trade should be kept as nearly in balance as possible; says countries should seek a
favorable balance of trade
C) bases trade on natural advantages; bases trade on acquired advantage
D) states that there is a basis of trade even if one country can produce everything more
efficiently than another country; does not deal with this issue
Answer: D
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Analytical thinking
5
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14) The comparative advantage theory holds that a country will gain from trade ________.
A) when it exports products for which it has an acquired advantage and imports products for
which another country has a natural advantage
B) if it exports goods it can produce more efficiently than other countries and imports goods
other countries can produce more efficiently than it can
C) even though it can produce all goods more efficiently than other countries
D) if it exports products using its abundant production factors in exchange for products for which
it has scarce production factors
Answer: C
Diff: 1
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Application of knowledge
15) According to the theory of comparative advantage, a country gains from foreign trade even
though it may have an absolute advantage in the production of all products because ________.
A) the country will forego producing its less efficient output in order to produce its more
efficient output
B) workers become more efficient through specialization
C) economies of scale will reduce cost
D) there will be more incentive to develop cost-saving technologies
Answer: A
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Analytical thinking
16) Assume the following conditions: In the United States it takes 4 units of resources to produce
a ton of potatoes and 5 to produce a ton of coal. In Canada it takes 6 units of resources to
produce a ton of potatoes and 10 to produce a ton of coal. According to the theory of
comparative advantage, ________.
A) there would be no basis for trade
B) the United States should import potatoes from Canada and export coal to Canada
C) the United States should export both potatoes and coal to Canada
D) the United States should export potatoes to Canada and import coal from Canada
Answer: B
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Analytical thinking
6
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17) Which of the following assumptions was made in the original theories of absolute and
comparative advantage?
A) Specialized labor seeks efficiency.
B) Labor resources are fully employed.
C) Countries pursue objectives other than economic efficiency.
D) Production networks enable countries to concentrate on particular functions.
Answer: B
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1
AACSB: Analytical thinking
18) The free trade theories of specialization primarily assume that ________.
A) specialization leads to unemployment, but production gains compensate for job losses
B) resources can move internationally from the production of one good to another
C) resources can move domestically from the production of one good to another
D) countries have objectives other than economic efficiency
Answer: C
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 2
AACSB: Application of knowledge
19) The free trade theories of specialization primarily assume that ________.
A) domestic resources are unable to move from the production of one good to another
B) countries have objectives other than economic efficiency
C) specialization triggers unemployment
D) resources are immobile internationally
Answer: D
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 2
AACSB: Analytical thinking
7
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21) Countries with varied climates and varied natural resources generally ________ than
countries with less varied climates and natural resources.
A) have lower per capita incomes
B) depend less heavily on trade
C) have more ethnic subgroups
D) have higher endowments of capital relative to labor
Answer: B
Diff: 2
Skill: Concept
Objective: 3
AACSB: Analytical thinking
22) Countries with large land areas are generally less dependent on trade than countries with
small land areas because of ________.
A) highly restricted economic scales
B) self-sufficiency with natural resources
C) higher transportation costs related to foreign trade
D) the development of unique products that have a limited demand
Answer: C
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 3
AACSB: Analytical thinking
23) Eight of the top 10 exporting and importing countries are countries with ________.
A) cheap labor forces
B) small land masses
C) natural advantages
D) developed economies
Answer: D
Diff: 2
Skill: Concept
Objective: 3
AACSB: Application of knowledge
8
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24) The trade theory that says countries should concentrate production on those products using
their most abundant production factors is the ________.
A) factor proportions theory
B) theory of comparative advantage
C) theory of absolute advantage
D) theory of nontradable goods
Answer: A
Diff: 1
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 3
AACSB: Application of knowledge
25) El Salvador has a population density of about 620 people per square mile and neighboring
Honduras a population density of about 115 people per square mile. According to the factor
proportions theory of trade, one would expect El Salvador's exports to Honduras to ________.
A) have a lower labor-to-land ratio than its imports from Honduras
B) have a higher labor-to-land ratio than its imports from Honduras
C) embody more capital per square mile than its imports from Honduras
D) embody more capital per worker than its imports from Honduras
Answer: B
Diff: 3
Learning Outcome: Compare and contrast theories of international trade
Skill: Critical Thinking
Objective: 3
AACSB: Reflective thinking
26) Tests to substantiate the factor proportions theory have had mixed results most likely because
________.
A) labor migration quickly outdates any studies
B) most countries have a favorable balance of trade
C) labor skills and education are not homogeneous
D) large and small countries have different trade policies
Answer: C
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 3
AACSB: Analytical thinking
9
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27) Most world trade takes place ________.
A) between developed countries and developing countries
B) among developed countries
C) among developing countries
D) between raw material exporters and manufacturing exporters
Answer: B
Diff: 2
Skill: Concept
Objective: 3
AACSB: Application of knowledge
28) One way that developed countries specialize in order to gain acquired advantages is by
________.
A) allocating research efforts more heavily in specific sectors
B) emphasizing production in natural resource endowments
C) restricting imports to those in the service sector
D) subsidizing the transport of exports
Answer: A
Diff: 3
Skill: Concept
Objective: 3
AACSB: Analytical thinking
29) Why is the United States both an exporter and importer of such products as vehicles and
passenger aircraft?
A) Buyers procure similar products for replacement parts.
B) Transportation costs and cultural differences limit exporters.
C) Companies differentiate products to appeal to different consumers.
D) Bilateral trading agreements require this interchange for a number of products.
Answer: C
Diff: 2
Skill: Concept
Objective: 3
AACSB: Analytical thinking
10
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31) According to the product life cycle theory, production and sales are primarily domestic in the
introductory stage because ________.
A) businesses need quick market feedback
B) tariff reductions remain under negotiation
C) international transport costs are too high
D) international patents have not been approved
Answer: A
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 4
AACSB: Application of knowledge
32) According to the PLC theory, at an early stage of a product's life cycle the product is likely
to be made in a more ________ method than in its later stages.
A) capital-intensive
B) labor-intensive
C) land-intensive
D) low-cost
Answer: B
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 4
AACSB: Analytical thinking
33) According to the PLC theory, what is the most likely reason that companies manufacture
products in locations with high labor rates during the introductory stage of a product's life cycle?
A) Doing so allows use of long production runs using capital-intensive methods.
B) Many consumers are willing to pay high costs for the newest products.
C) Transportation costs are reduced by focusing on markets in developed countries.
D) Import restrictions prevent production in countries other than the ones making product
innovations.
Answer: B
Diff: 3
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 4
AACSB: Analytical thinking
11
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34) According to the PLC theory, developing countries have their best production advantage in
which stage of the product life cycle?
A) growth
B) maturity
C) decline
D) introduction
Answer: C
Diff: 2
Skill: Concept
Objective: 4
AACSB: Application of knowledge
35) Which of the hypothetical new products, if successful, would most likely diffuse its
production and sales according to the product life cycle theory?
A) a Ferrari sports car selling for $200,000 to a niche, upper-end market
B) a Sony television that receives global transmissions without a satellite dish or cable
connection, introduced at a high price but targeted eventually for sale to a mass market
C) a new Diet Coca-Cola soft drink flavored with cranberries
D) a Kyocera plastic chip carrier, which is expected to be quickly obsolete because of
innovations
Answer: B
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Application
Objective: 4
AACSB: Reflective thinking
36) All of the following are types of products that are usually exceptions to what is predicted by
the product life cycle theory EXCEPT ________.
A) trendy clothing
B) luxury items
C) differentiated products
D) consumer durables
Answer: D
Diff: 2
Skill: Concept
Objective: 4
AACSB: Analytical thinking
12
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37) Contrary to the product life cycle theory, there has been an increased tendency for companies
to ________.
A) sell products only in their home markets throughout the cycle
B) produce and sell products in countries where counterfeiting is low
C) introduce new products simultaneously in domestic and foreign markets
D) sell new products in developing countries before expanding into developed countries
Answer: C
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 4
AACSB: Analytical thinking
38) All of the following are features of the diamond of national advantage theory EXCEPT
________.
A) firm strategy, structure, and rivalry
B) strategic trade policy regulations
C) related and supporting industries
D) demand conditions
Answer: B
Diff: 1
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 4
AACSB: Analytical thinking
39) The diamond of national advantage would be best used to answer which of the following
questions?
A) How do developed countries prevent the trade of blood diamonds?
B) How can developing countries create a significant trade surplus?
C) Why do specialized competitive advantages differ among countries?
D) Why do most innovative products originate in developed countries?
Answer: C
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Application
Objective: 4
AACSB: Reflective thinking
13
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40) According to the diamond of national advantage theory, the domestic existence of all four
conditions best explains ________.
A) the essence of an industry's development
B) the position of a product in its life cycle
C) where globally competitive firms develop and sustain themselves
D) why countries rely on abundant factor endowments
Answer: C
Diff: 2
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 4
AACSB: Reflective thinking
41) Costa Rica applied the concepts of the diamond of national advantage theory to help
transform its economy by ________.
A) building domestic demand for its products and services
B) looking globally to develop favorable conditions
C) following import substitution policies
D) concentrating on nontradable goods
Answer: B
Diff: 2
Skill: Application
Objective: 4
AACSB: Application of knowledge
42) Which of the following best supports a nation's decision to implement a strategic trade
(industrial) policy?
A) The policies have usually resulted in big payoffs.
B) Governments, rather than entrepreneurs, should take the risks of developing new industries.
C) Consumer needs would otherwise not be met.
D) Government actions should target industries that are believed to give the country its best
export advantages.
Answer: D
Diff: 3
Learning Outcome: Compare and contrast theories of international trade
Skill: Critical Thinking
Objective: 4
AACSB: Analytical thinking
14
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43) A governmental strategic trade (industrial) policy is one that ________.
A) lessens dependence on foreign military goods
B) seeks reciprocal free trade agreements between developed and developing countries
C) targets the resources needed to support industries that seem to fit best with the country's
advantages
D) limits imports to encourage domestic production of what would otherwise be imported
Answer: C
Diff: 2
Skill: Concept
Objective: 4
AACSB: Application of knowledge
44) Which of the following statements most likely undermines the arguments for a strategic trade
policy?
A) Entrepreneurs, rather than governments, should take business risks.
B) Developed countries have production lead time over developing countries.
C) If big companies can figure out what products to develop, so can governments.
D) Governments have limited resources, so industries with greater growth potential should be
targeted.
Answer: A
Diff: 3
Skill: Critical Thinking
Objective: 4
AACSB: Analytical thinking
45) Between now and 2050, countries undergoing a simultaneous population reduction and an
increased percentage of retirees in the population most likely will need more ________.
A) imports
B) immigrants
C) domestic products
D) favorable balances of trade
Answer: B
Diff: 2
Skill: Concept
Objective: 5
AACSB: Reflective thinking