International Business, 14e (Daniels et al.)
Chapter 6 International Trade and Factor-Mobility Theory

1) Which of the following is NOT a reason that international trade theory is useful for managers to understand?
A) Countries use trade theories to help them decide how to improve their competitive positions, such as improving the quantity and quality of production factors.
B) Countries' trade policies affect whether imports are allowed to compete against domestic production, thus affecting where companies need to produce to serve given markets.
C) Countries use laissez-faire policies to intervene in the free movement of international trade, thus affecting where companies can produce most efficiently.
D) Countries wrestle with the questions and set policies on what, with whom, and how much they should import and export, thus affecting companies' abilities to produce given products efficiently and sell them into given markets.
Answer: C
Diff: 3
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1

2) Why should managers in international business understand international trade theories?
A) Countries' trade policies, based on trade theories, influence which products companies might export to given countries.
B) The understanding helps managers decide whether their companies should follow laissez-faire management practices.
C) The theories help managers decide whether to use large-scale versus small-scale technologies for serving their export markets.
D) The comprehension is useful when deciding whether to transfer managers abroad to manage foreign operations.
Answer: A
Diff: 3
Learning Outcome: Compare and contrast theories of international trade
Skill: Concept
Objective: 1

3) Because all countries face the questions of what, how much, and with whom they should import and export,