NAME ___________________________
Chapter 5
TRADING INTERNATIONALLY
REVIEW QUESTION ANSWERS
1. International trading is quite complex, so why do nations routinely engage in this
activity?
2. Name and describe the two key components of a balance of trade.
3. Briefly summarize the three classical theories of international trade.
4. Compare and contrast the three modern theories of international trade.
5. How is the concept of opportunity cost related to the theories of absolute advantage and
comparative advantage?
6. Is it possible for all of a country’s resources to be completely mobile? Why or why not?
7. Define tariff and nontariff barriers and list types of each.
8. What are the two primary economic arguments that critics use against free trade?
9. Summarize the four political arguments against free trade.
10. What are some of the factors managers might need to consider when assessing the
comparative advantage of various locations around the world?
11. Why is it necessary for business people to monitor political activity concerning
international trade?
12. What determines the success and failure of a firm’s exports around the globe?