#1
What is the concept of comparative advantage?
Producing goods at the lowest absolute cost
Producing goods at the highest relative cost
Producing goods at a lower opportunity cost
Producing goods without considering costs
#2
What does opportunity cost refer to?
The cost of an opportunity
The value of the next best alternative foregone
The total cost of production
The market price of goods
#3
Which economist is most closely associated with the concept of comparative advantage?
Karl Marx
Adam Smith
John Maynard Keynes
David Ricardo
#4
Which of the following is an example of a country benefiting from comparative advantage?
A country imports all of its goods from abroad to support domestic industries
A country produces all goods domestically to avoid reliance on other nations
A country exports goods that it can produce more efficiently than other countries
A country imposes tariffs on imported goods to protect domestic industries
#5
Which of the following is NOT a factor influencing comparative advantage?
Labor productivity
Natural resources
Government regulations
Technological advancements
#6
In the context of opportunity cost, if a farmer can produce either 20 bushels of wheat or 10 bushels of corn in a day, what is the opportunity cost of producing 1 bushel of wheat?
2 bushels of corn
1/2 bushel of corn
10 bushels of corn
20 bushels of corn
#7
In the context of comparative advantage, what is autarky?
A state of self-sufficiency where a country does not engage in international trade
A type of trade agreement between two countries
The process of outsourcing production to other countries
A measure of a country's economic growth rate
#8
Which of the following best describes absolute advantage?
Producing a good at the lowest opportunity cost
Producing a good using fewer resources than another producer
Producing a good with the highest quality standards
Producing a good using the latest technology
#9
What is the relationship between comparative advantage and specialization?
Specialization occurs when a country has an absolute advantage
Comparative advantage leads to specialization in the production of goods
Specialization eliminates the concept of comparative advantage
Specialization is irrelevant in the context of comparative advantage
#10
Which of the following scenarios would lead to a country losing its comparative advantage in a particular industry?
Increased investment in education and training
A decrease in the cost of imported goods
A decrease in the cost of production due to technological advancements
A natural disaster that disrupts production
#11
Which of the following statements is true regarding comparative advantage?
Every country has a comparative advantage in producing all goods
Countries should produce goods for which they have the lowest opportunity cost
Comparative advantage can only exist between countries with similar economies
Comparative advantage is based solely on technological advancements
#12
How does trade affect overall welfare according to the theory of comparative advantage?
Trade always leads to a decrease in overall welfare
Trade can lead to an increase in overall welfare through specialization and comparative advantage
Trade has no impact on overall welfare
Trade leads to a redistribution of wealth, but not an increase in overall welfare
#13
What is the main assumption underlying the theory of comparative advantage?
Resources are perfectly mobile between industries
Countries have identical production possibilities frontiers
Labor productivity is the same across all industries
Opportunity costs are constant
#14
What is the relationship between comparative advantage and trade barriers?
Trade barriers are necessary to maintain comparative advantage
Trade barriers prevent countries from realizing the benefits of comparative advantage
Trade barriers enhance the ability of countries to specialize and trade based on comparative advantage
Trade barriers have no impact on comparative advantage
#15
Which of the following is NOT a condition necessary for the existence of comparative advantage?
Different opportunity costs between countries
Identical production technologies
Immobility of resources between industries
Free trade between countries
#16
Which of the following statements is true regarding the gains from trade?
Gains from trade are maximized when countries produce all goods domestically
Gains from trade are based solely on absolute advantage
Gains from trade occur because countries have different opportunity costs
Gains from trade are only possible in the absence of comparative advantage