Question 1

According to Porter's diamond,a nation's position in elements of production such as skilled labor or the infrastructure necessary to compete in a given industry is best referred to as:

Accepted Answer

Porter defines factor endowments,one of the four attributes of a nation that shape the environment in which local firms compete,as a nation's position in factors of production such as skilled labor or the infrastructure necessary to compete in a given industry.

Question 2

Which of the following theorists published the results of an intensive research effort that attempted to determine why some nations succeed and others fail in international competition,in addition to,proposing an explanation in the form of a "diamond" of four national attributes?

Accepted Answer

In 1990 Michael Porter of the Harvard Business School published the results of an intensive research effort that attempted to determine why some nations succeed and others fail in international competition.

Question 3

The new trade theory is at variance with the _____ theory,which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture.

Accepted Answer

New trade theory is at variance with the Heckscher-Ohlin theory,which suggests that a country will predominate in the export of a product when it is particularly well endowed with those factors used intensively in its manufacture.

Question 4

Porter suggested four attributes making up the "diamond" consist of factor endowments,relating and supporting industries,firm strategy,structure,and rivalry,and:

Accepted Answer

Porter theorizes that four broad attributes of a nation shape the environment in which local firms compete,and these attributes promote or impede the creation of competitive advantage,namely factor endowments,related and supporting industries,firm strategy,structure,and rivalry,and demand conditions.

Question 5

Porter maintains that two additional variables can influence the "diamond" of attributes in important ways.These two variables are _____ and ______.

Accepted Answer

In addition to the four attributes that constitute the national diamond,Porter maintains that two variables can influence the national diamond in important ways: chance and government.

Question 6

One of the implications of the new trade theory is that:

Accepted Answer

The new trade theory suggests that nations may benefit from trade even when they do not differ in resource endowments or technology.

Question 7

One of the themes in new trade theory is that the pattern of trade we observe in the world economy may be the result of _____ and _____.

Accepted Answer

A theme in new trade theory is that the pattern of trade we observe in the world economy may be the result of economies of scale and first-mover advantages.For those products where economies of scale are significant and represent a substantial proportion of world demand,the first movers in an industry can gain a scale-based cost advantage that later entrants find almost impossible to match.

Question 8

According to the new trade theory,how does trade offer an opportunity for mutual gain even when countries do not differ in their resource endowments or technology?

Accepted Answer

As the size of the market expands due to trade,individual firms may be able to better attain economies of scale.The implication,according to new trade theory,is that each nation may be able to specialize in producing a narrower range of products,buying goods that it does not make from other countries.Thus,each nation can simultaneously increase the variety of goods available to its consumers and lower the costs of those goods-thus trade offers an opportunity for mutual gain even when countries do not differ in their resource endowments or technology.

Question 9

Porter's thesis was that four broad attributes of a nation shape the environment in which local firms compete,and that these attributes promote or impede the creation of competitive advantage.All of the following are attributes EXCEPT:

Accepted Answer

Porter theorizes that four broad attributes of a nation shape the environment in which local firms compete,and these attributes promote or impede the creation of competitive advantage,namely factor endowments,related and supporting industries,firm strategy,structure,and rivalry,and demand conditions.

Question 10

Assuming a world without trade,in industries where economies of scale are important,both the variety of goods that a country can produce and the scale of production are limited by the _____.

Accepted Answer

In a world without trade,and in industries where economies of scale are important,both the variety of goods that a country can produce and the scale of production are limited by the size of the market.

Question 11

According to the new trade theory,countries whose firms establish a(n)_____ advantage with regard to the production of a particular new product may subsequently dominate global trade in that product.

Accepted Answer

Countries may dominate in the export of certain goods because economies of scale are important in their production and because firms located in those countries were the first to capture scale economies,giving them a first-mover advantage.

Question 12

According to new trade theory,which of the following could be a result of the economies of scale that may be achieved by individual firms as the size of the market expands due to trade?

Accepted Answer

As the size of the market expands due to trade,individual firms may be able to better attain economies of scale.The implication is that each nation may be able to specialize in producing a narrower range of products than it would in the absence of trade,yet by buying goods that it does not make from other countries,each nation can simultaneously increase the variety of goods available to its consumers and lower the costs of those goods.

Question 13

The new trade theory diverts from its advocacy of free trade by:

Accepted Answer

By stressing first mover advantages in certain industries,new trade theory provides a rationale for government intervention to increase the chances of its domestic firms becoming first movers in newly emerging industries,as the U.S.government apparently did with Boeing.

Question 14

With regard to first-mover advantages and international trade,a study by Harvard business historian Alfred Chandler suggests the existence of first-mover advantages is an important factor in explaining:

Accepted Answer

With regard to first-mover advantages and international trade,a study by Harvard business historian Alfred Chandler suggests the existence of first-mover advantages is an important factor in explaining the dominance of firms from certain nations in specific industries.

Question 15

If a national market is small,there may not be enough demand to enable producers to realize _____ for certain products.

Accepted Answer

In the absence of trade,if a national market is small,there may not be enough demand to enable producers to realize economies of scale for certain products.

Question 16

The economic and strategic advantages that accrue to early entrants in an industry are called:

Accepted Answer

First-mover advantages are the economic and strategic advantages that accrue to early entrants into an industry.The ability to capture scale economies ahead of later entrants,and thus benefit from a lower cost structure,is an important first-mover advantage.

Question 17

Which of the following is an advantage that first-movers enjoy?

Accepted Answer

First-mover advantages are the economic and strategic advantages that accrue to early entrants into an industry.The ability to capture scale economies ahead of later entrants,and thus benefit from a lower cost structure,is an important first-mover advantage.

Question 18

The most contentious implication of the new trade theory is perhaps the argument that it generates for _____ and _____.

Accepted Answer

Perhaps the most contentious implication of the new trade theory is the argument that it generates for government intervention and strategic trade policy.

Question 19

Which of the following best describes the essential task of Porter's 1990 study of national competitive advantage?

Accepted Answer

Like the work of the new trade theorists,Porter's work was driven by a belief that existing theories of international trade told only part of the story.For Porter,the essential task was to explain why a nation achieves international success in a particular industry.

Question 20

According to the new trade theory,the dominance of America and Europe in the trade of mid-sized and large aircraft is largely a product of:

Accepted Answer

In the commercial aircraft industry,the fact that Boeing and Airbus are already in the industry and have the benefits of economies of scale discourages new entry and reinforces the dominance of America and Europe in the trade of midsized and large jet aircraft.This dominance is further reinforced because global demand may not be sufficient to profitably support another producer of midsized and large jet aircraft in the industry.

Quiz 5: International Trade Theory