Question 1

The L in OLI theory stands for loyalty,and this factor makes it more difficult for firms to substitute foreign operations for domestic as they fear a loss of sales due to negative publicity.

Accepted Answer

The L in OLI theory stands for Location, which refers to the advantages of conducting operations in a specific location due to factors like market access, resources, and legal/regulatory environment.

Question 2

The bulk of offshoring is vertical,relating to producing a component piece in an overall supply chain production.

Accepted Answer

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Question 3

Chinese exports of toys and footwear can be explained by factor endowments,while Chinese exports of telecommunications equipment and computers and accessories can be explained by product-cycle analysis.

Accepted Answer

Factor endowments refer to the availability of resources in a particular country, such as cheap labor and natural resources, which make the production of certain goods more efficient and cost-effective. China has a comparative advantage in the manufacturing of toys and footwear due to its abundant supply of low-cost labor. On the other hand, product-cycle analysis accounts for the stages of a product's life cycle, from innovation to maturity, and how a country's comparative advantage may change as the product progresses through these stages. China's relatively advanced technology and skilled workforce enable it to produce and export telecommunications equipment and computers and accessories.

Question 4

Forces inside a nation that cause people to think about leaving that nation are called what in migration theory?

Accepted Answer

The answer of Forces inside a nation that cause people...

Question 5

The relocation of service industry functions to another country is called what?

Accepted Answer

The answer of The relocation of service industry functions to...

Question 6

Offshoring required which types of advances?

Accepted Answer

The answer of Offshoring required which types of advances?...

Question 7

The O in OLI theory stands for ownership,and the asset owned can be tangible or intangible.

Accepted Answer

This is correct. The O in OLI theory stands for ownership, and the asset owned can be tangible (such as a factory or equipment) or intangible (such as intellectual property or a brand name).

Question 8

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad.

Accepted Answer

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad.

Question 9

According to OLI theory,a firm might be unwilling to license its production to a foreign firm for fear that its technology may be stolen or its brand name harmed,which leads the firm to internalize control over its asset and set up its own foreign subsidiary.

Accepted Answer

This statement is consistent with the ownership, location and internalization (OLI) theory, which suggests that firms decide whether to internationalize based on the ownership advantages of their unique assets, the location advantages of foreign markets, and the internalization advantages of controlling their assets internally rather than licensing them to others. Fear of intellectual property theft or damage to brand reputation may be seen as ownership advantages that make it more beneficial for the firm to set up its own foreign subsidiary rather than license production to a foreign firm.

Question 10

Offshoring by domestic firms causes job losses rather than job expansion in the home market.

Accepted Answer

Offshoring can lead to job losses in certain sectors, but it can also create jobs in others by allowing firms to reduce costs, increase competitiveness, and expand operations.

Question 11

OLI theory is a direct contradiction of trade theory,especially trade theory based on comparative advantage.

Accepted Answer

The OLI theory (also known as the eclectic paradigm) is not a direct contradiction of trade theory based on comparative advantage, but rather complements it. In fact, OLI theory builds on the idea of comparative advantage by emphasizing the importance of ownership advantages (O), location advantages (L), and internalization advantages (I) in determining why firms engage in foreign direct investment (FDI) rather than just trade. Thus, both comparative advantage and OLI theory are relevant in explaining international trade and FDI patterns.

Question 12

If General Motors imports parts from its plants in Canada and Mexico for finished trucks that it will sell across the NAFTA region,what type of trade does this represent?

Accepted Answer

The answer of If General Motors imports parts from its...

Question 13

The United States has the largest percentage of foreigners in its overall population of any nation.

Accepted Answer

According to data from the United Nations, the United States does not have the largest percentage of foreigners in its overall population of any nation. As of 2021, countries such as Qatar, United Arab Emirates, and Kuwait have higher percentages of foreigners in their populations.

Question 14

How is offshoring of services different from past trade patterns?

Accepted Answer

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Question 15

What does research thus far suggest about job loss and offshoring?

Accepted Answer

The answer of What does research thus far suggest about...

Question 16

Most migrants move from developing to developed nations.

Accepted Answer

This is generally true as people often leave developing nations due to lack of opportunities, poverty, and other factors, and seek better living conditions and economic prospects in developed countries.

Question 17

The opportunity cost of producing in low-income,developing countries rises over the product cycle,according to theory.

Accepted Answer

The answer of The opportunity cost of producing in low-income,developing...

Question 18

If the case study on U.S./ China trade is correct in its analysis of factor abundance,
A)Chinese capital owners should see their income rise as trade increases.
B)U)S. skilled labor inputs should see their incomes fall as trade increases.
C)U)S. capital owners should see their income fall as trade increases.
D)Chinese unskilled labor should see their income rise as trade increases.

Accepted Answer

According to the Heckscher-Ohlin model, countries will export goods that use their abundant factors intensively. China, being abundant in unskilled labor, will see an increase in income for unskilled labor as trade increases.

Question 19

The primary interest of firms engaging in offshoring is to find lower wages and to decrease production costs.

Accepted Answer

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Question 20

Describe the product cycle,including addressing the various inputs that are required over time and the resulting production location decisions.

Accepted Answer

The answer of Describe the product cycle,including addressing the various...

Quiz 4: Comparative Advantage and Factor Endowments

The L in OLI theory stands for loyalty,and this factor makes it more difficult for firms to substitute foreign operations for domestic as they fear a loss of sales due to negative publicity.

The bulk of offshoring is vertical,relating to producing a component piece in an overall supply chain production.

Chinese exports of toys and footwear can be explained by factor endowments,while Chinese exports of telecommunications equipment and computers and accessories can be explained by product-cycle analysis.

Forces inside a nation that cause people to think about leaving that nation are called what in migration theory?

The relocation of service industry functions to another country is called what?

Offshoring required which types of advances?

The O in OLI theory stands for ownership,and the asset owned can be tangible or intangible.

Offshoring became a concern in the 1980s when modern communication and transport technology made it possible for firms to relocate production abroad.

According to OLI theory,a firm might be unwilling to license its production to a foreign firm for fear that its technology may be stolen or its brand name harmed,which leads the firm to internalize control over its asset and set up its own foreign subsidiary.

Offshoring by domestic firms causes job losses rather than job expansion in the home market.

OLI theory is a direct contradiction of trade theory,especially trade theory based on comparative advantage.

If General Motors imports parts from its plants in Canada and Mexico for finished trucks that it will sell across the NAFTA region,what type of trade does this represent?

The United States has the largest percentage of foreigners in its overall population of any nation.

How is offshoring of services different from past trade patterns?

What does research thus far suggest about job loss and offshoring?

Most migrants move from developing to developed nations.

The opportunity cost of producing in low-income,developing countries rises over the product cycle,according to theory.

If the case study on U.S./ China trade is correct in its analysis of factor abundance,

The primary interest of firms engaging in offshoring is to find lower wages and to decrease production costs.

Describe the product cycle,including addressing the various inputs that are required over time and the resulting production location decisions.