BELLNER BUSMHR 2000 EXAM 2
(FINAL) QUESTIONS AND CORRECT
ANSWERS. VERIFIED 2025/2026.
CH 5 - Theories of International Trade and Investment
National industrial policy - ANS A proactive economic development plan a government
initiates to build or strengthen a particular industry.
Mercantilism - ANS The belief that national prosperity is the result of a positive balance of
trade, achieved by maximizing exports and minimizing imports.
Internalization theory - ANS An explanation of the process by which firms acquire and retain
one or more value-chain activities inside the firm, minimizing the disadvantages of dealing with
external partners and allowing for greater control over foreign operations.
Industrial cluster - ANS A concentration of businesses, suppliers, and supporting firms in the
same industry at a particular location, characterized by a critical mass of human talent, capital,
or other factor endowments.
Free Trade - ANS Relative absence of restrictions to the flow of goods and services between
nations.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Competitive advantage - ANS Assets or capabilities of a firm that are difficult for competitors
to imitate. They are typically derived from specific knowledge, competencies, skills, or superior
strategies.
ex: knowledge, capabilities, skills, strategies, networks, assets
Comparative advantage principle - ANS It may be beneficial for two countries to trade with
each other as long as one is relatively more efficient at producing a product needed by the
other.
Comparative advantage - ANS Superior features of a country that provide unique benefits in
global competition, typically derived from either natural endowments or deliberate national
policies.
ex: resources, land, location, climate, labor (low cost & skilled)
Absolute advantage principle - ANS The idea that a country benefits by producing only those
products it can produce using fewer resources.
National Classical Theories - ANS -Mercantilism
-Absolute Advantage Principle
-Comparative Advantage Principle
-Factor Proportions Theory
-International Product Life Cycle Theory
-New Trade Theory
National Contemporary Theories - ANS -Competitive Advantage of Nations
-Michael Porter's Diamond Model
-National Industrial Policy
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
(FINAL) QUESTIONS AND CORRECT
ANSWERS. VERIFIED 2025/2026.
CH 5 - Theories of International Trade and Investment
National industrial policy - ANS A proactive economic development plan a government
initiates to build or strengthen a particular industry.
Mercantilism - ANS The belief that national prosperity is the result of a positive balance of
trade, achieved by maximizing exports and minimizing imports.
Internalization theory - ANS An explanation of the process by which firms acquire and retain
one or more value-chain activities inside the firm, minimizing the disadvantages of dealing with
external partners and allowing for greater control over foreign operations.
Industrial cluster - ANS A concentration of businesses, suppliers, and supporting firms in the
same industry at a particular location, characterized by a critical mass of human talent, capital,
or other factor endowments.
Free Trade - ANS Relative absence of restrictions to the flow of goods and services between
nations.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Competitive advantage - ANS Assets or capabilities of a firm that are difficult for competitors
to imitate. They are typically derived from specific knowledge, competencies, skills, or superior
strategies.
ex: knowledge, capabilities, skills, strategies, networks, assets
Comparative advantage principle - ANS It may be beneficial for two countries to trade with
each other as long as one is relatively more efficient at producing a product needed by the
other.
Comparative advantage - ANS Superior features of a country that provide unique benefits in
global competition, typically derived from either natural endowments or deliberate national
policies.
ex: resources, land, location, climate, labor (low cost & skilled)
Absolute advantage principle - ANS The idea that a country benefits by producing only those
products it can produce using fewer resources.
National Classical Theories - ANS -Mercantilism
-Absolute Advantage Principle
-Comparative Advantage Principle
-Factor Proportions Theory
-International Product Life Cycle Theory
-New Trade Theory
National Contemporary Theories - ANS -Competitive Advantage of Nations
-Michael Porter's Diamond Model
-National Industrial Policy
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
