Which trade theory advocates that a nation should export more than it imports to build wealth?A) Factor Endowment TheoryB) MercantilismC) Absolute Cost TheoryD) Opportunity Cost Theory
Question
Which trade theory advocates that a nation should export more than it imports to build wealth?A) Factor Endowment TheoryB) MercantilismC) Absolute Cost TheoryD) Opportunity Cost Theory
Solution
To answer the question, we need to understand the different trade theories and identify which one advocates for a nation to export more than it imports to build wealth.
A) Factor Endowment Theory: This theory suggests that a country should specialize in producing and exporting goods that utilize its abundant factors of production, such as natural resources or skilled labor. However, it does not specifically advocate for exporting more than importing to build wealth.
B) Mercantilism: This theory, which was prominent during the 16th to 18th centuries, emphasizes the accumulation of wealth through a positive balance of trade. It advocates for a nation to export more than it imports in order to build wealth.
C) Absolute Cost Theory: This theory, also known as the classical theory of international trade, states that a country should specialize in producing and exporting goods that it can produce at a lower absolute cost compared to other countries. It does not explicitly advocate for exporting more than importing to build wealth.
D) Opportunity Cost Theory: This theory suggests that a country should specialize in producing and exporting goods that it can produce at a lower opportunity cost compared to other countries. It does not specifically advocate for exporting more than importing to build wealth.
Based on the above explanations, the trade theory that advocates for a nation to export more than it imports to build wealth is B) Mercantilism.
Similar Questions
Which of the following statements regarding new trade theory is NOT true?Select one:a.The theory asserts that a country may dominate in the export of a good simply because it was lucky enough to have one or more firms among the first to produce that goodb.The theory highlights the value of economies of scale and first mover advantagesc.First movers can gain a scale-based cost advantage that later entrants find difficult to matchd.The theory argues that resource endowments and technological advantages are vital to succeed in international tradeClear my choice
n economic theory that trade generates wealth and that trade should be mostly focused on exports to protect the national economy.Group of answer choicesColonialismInvisible handMercantilismTariff
"The theory assumes that the price of the factors depends only on the factor endowment, that is the amount of a particular factor such as land or labor available in the country. This assumption is flawed because factor prices are not set in a perfect market. For example, prices also vary based on access to information about the factors. There could be labor available in a country, but not accessible at the time they are needed. This will lead to changes in the price of labor."Which trade theory is being referred to here?Group of answer choicesHeckscher-Ohlin theoryTheory of Absolute AdvantageNew Trade TheoryTheory of comparative advantage
International trade theories only consider the benefits of trade and ignore any drawbacks.Question 26Answera.Trueb.False
In a short essay, discuss the theory of mercantilism, and discuss favorable and unfavorablebalances of trade as they apply to international business.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.