Chapter 5

6435 Words Jan 10th, 2015 26 Pages
Chapter 5
Student: ___________________________________________________________________________


The success of the rose industry in Ecuador is a good example of the economic benefits of what?
A. Free trade
B. Restrictive government regulations
C. New tax rules
D. Technological advancements
E. Firm rivalry


Propagated in the 16th and 17th centuries, __________ advocated that countries should simultaneously encourage exports and discourage imports.
A. ethnocentrism
B. capitalism
C. collectivism
D. nationalism
E. mercantilism


Which of the following statements accurately characterizes mercantilism?
A. It is a new but largely discredited doctrine
B. It is a new, highly credible doctrine
C. It is an old yet highly credible doctrine
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David Ricardo
16. Which of the following international management scholars first argued that countries differ in their ability to produce goods efficiently?
A. David Ricardo
B. Eli Heckscher
C. Michael Porter
D. Adam Smith
E. Raymond Vernon
17. According to Smith, countries should specialize in the production of goods for which they have an absolute advantage and then:
A. retain these goods for strictly domestic sales
B. trade these goods for the goods produced by other countries
C. sell these goods to the highest domestic or international bidder
D. prohibit the import of these goods from other countries
E. stockpile these goods until international demand increases
18. __________ basic argument, articulated through the theory of absolute advantage, is that a country should never produce goods at home that it can buy at a low cost from another country.
A. David Ricardo 's
B. Michael Porter 's
C. Bertil Ohlin 's
D. Adam Smith 's
E. John Vernon 's
19. _______ is a situation in which one country is more efficient at producing a product than any other country. A. Absolute advantage
B. Relative advantage
C. Comparative advantage
D. Pertinent advantage
E. Favourable factor endowment
20. In his 1817 book entitled Principles of Political Economy, __________ introduced the theory of comparative advantage.
A. Adam Smith
B. David Ricardo
C. Raymond Vernon
D. Max Weber
E. Michael Porter

21. A situation in which a country specializes in producing the goods it produces most

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