Question :
91.Vernon predicts that as the demand for a new product : 1299292
91.Vernon predicts that as the demand for a new product starts to grow in other advanced countries, in the long run,:
A. the cost of labor in these advanced countries begins to increase.
B. it becomes profitable for foreign firms to invest in production facilities in the United States.
C. the firms in the United States begin to gain an absolute advantage.
D. it begins to limit the potential for exports from the United States.
E. the same product will begin command a higher price.
92.Vernon theorizes that as the market in the U.S. and other advanced nations matures:
A. it necessitates exports from the United States to those countries.
B. it becomes worthwhile for foreign producers to begin producing for their home markets.
C. it obviates the need to look for low-cost production sites in other countries.
D. the product becomes more standardized, and price becomes the main competitive weapon.
E. the resource used in the production begin to become scarce.
93.According to Vernon, which of the following influences the movement of the locus of global production from advanced countries to developing countries?
A. Cost considerations
B. Factor endowments
C. Domestic competition
D. Supporting industries
E. Firm structure
94.According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. Which of the following is most likely to be a consequence of these trends?
A. U.S. imports become less capital intensive than U.S. exports.
B. The pattern of international trade get affected by differences in factor endowments rather than differences in productivity.
C. Over time, the U.S. switches from being an exporter of a product to an importer of the product.
D. The wage rates in the United States decrease.
E. Developing nations fail to upgrade their skill levels to compete with advanced countries.
95.Which of the following is a drawback of the product life-cycle theory?
A. Its relevance in the modern world seems limited.
B. It makes many simplifying assumptions.
C. It fails to explain the pattern of international trade during the period of American global dominance.
D. It fails to explain what happens when a product’s market in the United States and other advanced nations matures.
E. It fails to account for diminishing returns.
96.The _____ theory began to emerge when economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade.
A. comparative advantage
B. Heckscher-Ohlin
C. new trade
D. product life-cycle
E. absolute advantage
97._____ are unit cost reductions associated with a large scale of output.
A. Comparative advantages
B. Factor endowments
C. Economies of scale
D. Diminishing returns
E. Absolute advantages
98.New trade theory argues that, through its impact on economies of scale, trade can:
A. increase the average costs of goods.
B. enable the global market to support a wide range of enterprises.
C. negatively affect the first-mover advantage for all products.
D. increase the variety of goods available to consumers.
E. prevent diminishing of returns and promote constant returns to specialization.
99.The _____ theory states that in those industries where the output required to attain economies of scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises.
A. Heckscher-Ohlin
B. comparative advantage
C. product life-cycle
D. new trade
E. absolute advantage
100.The new trade theory states that:
A. the locus of global production initially switches from the United States to other advanced nations.
B. world trade in certain products may be dominated by countries whose firms were first movers in their production.
C. differences in technology may lead to differences in productivity, which in turn, drives international trade patterns.
D. differences in labor productivity between nations underlie the notion of comparative advantage.
E. a rich country might actually be worse off by switching to a free trade regime with a poor nation.
