ABDM3234 International Business Planning

Tutorial 3
Multiple Choice Questions
1) Most of the world merchandise trade is composed of trade in ________.
A) minerals
B) services
C) manufactured goods
D) agricultural products
2)The danger of trade dependency is that ________.
A) it often leads to the exploitation of developed countries
B) political turmoils in a country might affect all dependent countries
C) the countries involved in trade often get into rivalry over trade tariff
issues
D) it is difficult to end trade activities with current trade partners and find
new trade partners
3) ________ says that nations should accumulate financial wealth, usually in
the form of gold, by encouraging exports and discouraging imports.
A) Absolute advantage theory
B) Factor proportions theory
C) Mercantilism
D) Communism
4) The condition that results when the value of a nation's exports is greater
than the value of its imports is called ________.
A) a trade deficit
B) a trade surplus
C) mercantilism
D) dumping
5)The condition that results when the value of a country's imports is greater
than the value of its exports is called ________.
A) a trade deficit
B) economies of scale
C) a break-even point
D) absolute advantage
6) Which of the following refers to the ability of a nation to produce a good
more efficiently than any other nation?
A) mercantilism
B) comparative advantage
C) absolute advantage

D) neomercantilism
7) The theory of absolute advantage measures a nation's wealth by
determining the ________.
A) amount of gold it has on reserve
B) quantity of minerals it has on reserve
C) total trade volume in the country
D) living standards of its people
8)The international product life cycle theory was put forth for ________.
A) service goods
B) abundant resources
C) manufactured goods
D) natural resources
9)During which of the following stages of the international product life cycle
theory does high purchasing power and buyer demand in an industrialized
nation encourage a company to design and introduce a product concept?
A) product decline stage
B) new product stage
C) maturing product stage
D) standardized product stage
10) When a nation cannot produce a good more efficiently than other
nations, but it can produce that good more efficiently than it does any other
good, we say this is a case of __________.
a. Absolute advantage
b. Comparative advantage
c. Mercantilism

Discussion Questions
11) Discuss the three essential pillars of the theory of mercantilism.
12) Explain how the theory of absolute advantage conflicts with the theory of
mercantilism.
13)Briefly describe the new trade theory. Does its focus on productivity put it
at odds with the theory of comparative advantage and factor proportions
theory?