AGB 302 EXAM WITH 100% CORRECT ANSWERS 2026

AGB 302 EXAM WITH 100% CORRECT ANSWERS 2026 free trade - Correct Answer-a situation in which a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country comparative advantage - Correct Answer-the intellectual basis of modern argument for unrestricted free trade David Ricardo - Correct Answer-comparative advantage Heckscher-Ohlin Theory - Correct Answer-The theory that a country will export goods that make intensive use of the factors of production in which it is well endowed. Thus, a labor-rich country will export goods that make intensive use of labor. New trade theory - Correct Answer-countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can support only a limited number of firms Paul Krugman - Correct Answer-New trade theory Micheal Porter - Correct Answer-Theory of national competitive advantage Mercantillism - Correct Answer-a country should sell more goods to another country than it buys zero-sum game - Correct Answer-a situation in which an economic gain by one country results in an economic loss by another absolute advantage - Correct Answer-the ability to produce a good using fewer inputs than another producer production possibilities frontier - Correct Answer-the line on a production possibilities graph that shows the maximum possible output comparative advantage - Correct Answer-potential world production is greater with unrestricted free trade than with restricted trade Constant Returns to Specialization - Correct Answer-The units of resources required to produce a good are assumed to remain constant no matter where one is on a country's production possibility frontier. Factor Endowments - Correct Answer-A country's endowment with resources such as land, labor, and capital. Leontief Paradox - Correct Answer-The empirical finding that, in contrast to the predictions of the Heckscher-Ohlin theory, US exports are less capital intensive than US imports. economies of scale - Correct Answer-unit cost reductions associated with a large scale of output first-mover advantage - Correct Answer-The ability of an innovative company to achieve long-term competitive advantages by being the first to offer a certain product in the marketplace Theory of Absolute Advantage - Correct Answer-suggests that a country should specialize in producing goods in areas where it has an absolute advantage and import goods in areas where other countries have absolute advantages. Theory of Comparative Advantage - Correct Answer-suggests that opening a country to free trade stimulates economic growth, which creates dynamic gains from trade. Heckscher-Ohlin Theory - Correct Answer-argues that the pattern of international trade is determined by differences in factor endowments. Product Life Theory - Correct Answer-suggests that trade patterns are influenced by where a new product is introduced. New trade theory - Correct Answer-states that trade allows a nation to specialize in the production of certain goods, attaining scale economies and lowering the costs of producing those goods, while buying goods that it does not produce from other nations that are similarly specialized. Porter's Theory of National Competitive Advantage - Correct Answer-A) factor endowments B) domestic demand conditions C) related and supporting industries D) firm strategy, structure, and rivalry Theories of international trade - Correct Answer-important to international trade can and do exert a strong influence on government policy toward trade General Agreement on Tariffs and Trade (GATT) - Correct Answer-International treaty that committed signatories to lowering barriers to the free flow of goods across national borders and led to the WTO Tariff