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A Framework for International Business (Cavusgil/Knight/Riesenberger)
Chapter 2 Theories of International Trade and Investment

1) Farm land, diamond mines, and good climate conditions would all be categorized as comparative advantages for a region.
Answer: TRUE
Diff: 1 Page Ref: 28-29
Skill: Concept
Objective: 2-1
AACSB: Dynamics of the global economy

2) The earliest efforts to explain international business emerged in the early 20th century.
Answer: FALSE
Diff: 1 Page Ref: 27
Skill: Concept
Objective: 2-1
AACSB: Dynamics of the global economy

3) Modern business executives use the term comparative advantage when referring to the assets of individual firms.
Answer: FALSE
Diff: 2 Page Ref: 25
Skill: Concept
Objective: 2-1
AACSB: Dynamics of the global economy

4) Specialization prohibits industries and laborers from being productive and profitable in the arena of international trade.
Answer: FALSE
Diff: 2 Page Ref: 144
Skill: Concept
Objective: 5.1, 5..2, 5.3, 5.4
AACSB: Dynamics of the global economy

5) In Adam Smith's opinion, mercantilism has a positive impact on a nation's wealth because it makes many wealthy people wealthier.
Answer: FALSE
Diff: 1 Page Ref: 26-27
Skill: Concept
Objective: 2-2
AACSB: Dynamics of the global economy

6) In theory, nations which adhere to the absolute advantage principle will have higher standards of living than nations which follow principles of mercantilism.
Answer: TRUE
Diff: 2 Page Ref: 27
Skill: Concept
Objective: 2-2
AACSB: Dynamics of the global economy
7) Modern globalization is associated with efforts by many governments to develop policies intended to encourage competitive advantage.
Answer: TRUE
Diff: 1 Page Ref: 31
Skill: Concept
Objective: 2-3
AACSB: Dynamics of the global economy

8) Successful software and computer firms in the United States and India sustain competitive advantages by investing in research and development.
Answer: TRUE
Diff: 2
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