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Quick Study Ques Chap 6

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Quick Study Questions- Chapter 6

1. What is the major benefit of trade identified in the theories of international trade? 2. What do theories of international trade 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 that Paul Samuelson made of theories that advocate free trade? 8. How is the Heckscher- Ohlin theory different from the theory of comparative advantage? 9. What is the Leontief paradox? Why is it important? 10. What are central predictions of the product life- cycle theory? What are the limitations of this theory? 11. What does new trade theory tell us about the pattern of trade in the world economy? 12. What are the implications of new trade theory for government policy? 13. According to Porter’s theory of national competitive advantage, what elements explain why different countries achieve international success in certain industries? 14. What are the implications of Porter’s theory for government policy? 15. What are the implications of theories of international trade such as the theory of comparative advantage for the location of the different value creation activities performed by an international business? 16. What does the new trade theoty teach us about first mover advantages for business firms? 17. How might an understanding of theories of international trade influence the public policies that international businesses try to get government to adopt

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