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
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Chapter 2: Economic Models of Trade-Offs and Trade Models in Economics: * Model: a simplified representation of a real situation that is used to better understand real-life situations * Other things equal assumption: all other relevant factors remain unchanged Trade-offs and the Production Possibility Frontier: * Production Possibility Frontier: illustrates the trade-offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for
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teach us about the pattern of trade in the world economy? 3. 6 4. What are the main differences among mercantilism, Adam Smith’s theory of absolute advantage, and David Ricardo’s theory of comparative advantage? 5. Why is the theory of comparative advantage so important in today’s world? 6. According to the theory of comparative advantage, what is the relationship between free trade and economic growth? Does the empirical evidence support this prediction? 7. What is the criticism
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LA TROBE UNIVERSITY SCHOOL OF ECONOMICS AND FINANCE SEMESTER ONE 2010 MID-SEMESTER EXAMINATION ECO2GLO: GLOBALISATION Solution guide You must give reasons for your answers; no marks are given if no reasons are given or if the reasons given are incorrect. 1. Are the following statements correct? 1. During the first wave of globalisation, Britain was the only country in Europe that supported free trade. (1 mark) No, many other countries supported free trade until disrupted by
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the production possibilities frontier inward. 3) A person has an absolute advantage in an activity if that person can 3) A) perform that activity at a higher opportunity cost than anyone else. B) perform the activity at a lower opportunity cost than anyone else. C) produce fewer goods in a given amount of time than another person. D) produce more goods in a given amount of time than another person. 4) Comparative advantage is 4) A) the ability to perform an activity at a zero opportunity
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Behavioral Finance: Key Concepts - Prospect Theory Key Concept No.8: Prospect Theory Traditionally, it is believed the net effect of the gains and losses involved with each choice are combined to present an overall evaluation of whether a choice is desirable. Academics tend to use "utility" to describe enjoyment and contend that we prefer instances that maximize our utility. However, research has found that we don't actually process information in such a rational way. In 1979, Kahneman and
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policy and comparative advantage are all macroeconomic theories and/or concepts that play a large role in our current economy. The Federal Reserve has a large impact on the banking system and how they create money to have a positive output where the fiscal policy takes a slower rate to get started (Amadeo, 2011) but once executed can be extremely productive. As long as the US has an absolute advantage in some industries and can produce at a lower opportunity cost then they can have a comparative advantage
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International trade not only helps the United States economy but, also it helps the global economy as well. International trade provides numerous advantages to the United States economy but many limitations also exist so economic leaders must be aware of the pros and cons when negotiating these trades. Advantages and Limitations of International Trade The advantage of a free trade agreement will lower trade barriers, increase trade volume, open different markets, provide more products for consumers, and
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makes them hire more workers to help with the demand. The more people that are hired, the lower unemployment percentages. 3. Absolute advantage is when one company produces a good using less inputs than another company. Comparative advantage is when one company can produce a product with a lower opportunity cost that the other company. 4. Comparative advantage is more important for trade. It takes in both the idea of time and if it makes sense for that person to make a good when they can
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Free Trade Free trade may also be called International Trade. Free Trade occurs when goods and services are traded between countries without the use of import controls. For most of the late twentieth century, the prevailing wisdom has been that free trade can lead to improvements in economic welfare in the global economy. However this has not prevented regular trade disputes between countries - often when one country feels that unfair trade practices have caused the benefits from trade to become
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