INTB Exam #1 Questions with correct answers
free trade - ✔✔a situation where a government doesn't attempt to restrict what
its population or business can buy/sell from another country
trade policy instruments - ✔✔tariffs, subsidies, quotas, voluntary export
restraints, local content requirements, anti dumping
mercantilism - ✔✔trade as a zero sum game, one in which a gain by on country
results in the loss of another
Absolute advantage - ✔✔he ability to produce more of a good or service than
competitors using the same or fewer resources.
Comparative advantage - ✔✔the ability to produce a good at a lower opportunity
cost—meaning giving up less of another good—than a competitor
product lifecycle theory - ✔✔(vernon) as products mature both the location of
sales and the optimal production location will change affecting the flow and
direction of trade
new trade theory - ✔✔(krugman) economies of scale and first mover advantages
are additional important predictors of international trade patterns
Porter's Diamond of Competitive Advantage - ✔✔explains why certain countries
are better at producing specific industries/products than others.
1. factor conditions
, - tools/talent needed to do something well
2. demand conditions
- customers need to demand high quality
3. related & supp industries
- suppliers, partner companies, investors
4. firm strat, structure & rivalry
- more competition = better companies
tariffs - ✔✔taxes imposed on foreign products at the time of their import into a
country or territory
quotas - ✔✔restrictions on the quantity of foreign goods that may be imported
into a country or territory (ban on import of product is a quota of 0)
3 types of tariffs - ✔✔1.) Ad Valorem - based on a % of the determined value of
the imports
2.) Specific - flat amount per unit, weight, or other measures
3.) Compound/mixed - a combination of the two
tariff-rate quotas - ✔✔a hybrid of a quota and a tariff where a lower tariff is
applied to imports within the quota than to those over the quota. (first 10 lemons
cheap, after you exceed the quota it becomes expense to import)
anti-dumping duties - ✔✔fee added to prevent people from selling things really
cheaply ->
free trade - ✔✔a situation where a government doesn't attempt to restrict what
its population or business can buy/sell from another country
trade policy instruments - ✔✔tariffs, subsidies, quotas, voluntary export
restraints, local content requirements, anti dumping
mercantilism - ✔✔trade as a zero sum game, one in which a gain by on country
results in the loss of another
Absolute advantage - ✔✔he ability to produce more of a good or service than
competitors using the same or fewer resources.
Comparative advantage - ✔✔the ability to produce a good at a lower opportunity
cost—meaning giving up less of another good—than a competitor
product lifecycle theory - ✔✔(vernon) as products mature both the location of
sales and the optimal production location will change affecting the flow and
direction of trade
new trade theory - ✔✔(krugman) economies of scale and first mover advantages
are additional important predictors of international trade patterns
Porter's Diamond of Competitive Advantage - ✔✔explains why certain countries
are better at producing specific industries/products than others.
1. factor conditions
, - tools/talent needed to do something well
2. demand conditions
- customers need to demand high quality
3. related & supp industries
- suppliers, partner companies, investors
4. firm strat, structure & rivalry
- more competition = better companies
tariffs - ✔✔taxes imposed on foreign products at the time of their import into a
country or territory
quotas - ✔✔restrictions on the quantity of foreign goods that may be imported
into a country or territory (ban on import of product is a quota of 0)
3 types of tariffs - ✔✔1.) Ad Valorem - based on a % of the determined value of
the imports
2.) Specific - flat amount per unit, weight, or other measures
3.) Compound/mixed - a combination of the two
tariff-rate quotas - ✔✔a hybrid of a quota and a tariff where a lower tariff is
applied to imports within the quota than to those over the quota. (first 10 lemons
cheap, after you exceed the quota it becomes expense to import)
anti-dumping duties - ✔✔fee added to prevent people from selling things really
cheaply ->
