Questions 1. Describe mercantilism, and explain why mercantilism has been argued to be a poor approach to use in order t

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Questions 1 Describe Mercantilism And Explain Why Mercantilism Has Been Argued To Be A Poor Approach To Use In Order T 1 (59.25 KiB) Viewed 36 times

Questions 1. Describe mercantilism, and explain why mercantilism has been argued to be a poor approach to use in order to promote economic development and prosperity. 2. a. Explain Adam Smith's theory of absolute advantage. b. How does Ricardo's theory of comparative advan- tage differ from the theory of absolute advantage? c. Using the example from the chapter, explain why no gains from specialization exist (and thus why two countries could not trade in a manner that benefits each) if there is no pattern of comparative advantage lif the ratios of soybeans to cloth production are the same in the two countries). 3. Consider the case in which a country does not have a comparative advantage in the production of a product, such as apples, because its soils or climate are not appropriate. Explain who would be likely to favor free trade, and who would be likely to oppose free trade, in this product 4. What is the relationship between the Heckscher-Ohlin factor endowment theory and the theories in question 2? 5. Why were Leontief's empirical results considered to be paradoxical? 6. Why does most of the world's international trade take place between economies that are similar in their level of economic development? 7. Name some products that you believe have passed through the four stages of the international product life cycle. 8. Use Porter's Diamond Model of national advantage to explain why an emerging market such as Indonesia would be expected to experience great difficulty in achieving global competitiveness in a new industry sector such as "smart" cell phones or hybrid electric- gasoline automobile engines. 9. "A firm entering the market first will soon dominate it, and the large market share it acquires will enable it to obtain the benefits of economies of scale." True or false? Remember that there are at least two studies showing that first movers held large market shares. 10. According to theories presented in this chapter, why do companies engage in foreign direct investment?