#1
What does the concept of comparative advantage suggest?
Each country should produce only what it can produce most efficiently.
ExplanationEfficient production allocation across countries.
#2
In economics, what does specialization refer to?
Producing only one type of good or service.
ExplanationFocusing on a specific production area.
#3
What is the main benefit of specialization in production?
Lower opportunity costs
ExplanationReduced alternative costs.
#4
Which of the following best describes the term 'opportunity cost'?
The cost of choosing one alternative over another.
ExplanationAlternative choice expense.
#5
How does specialization contribute to economic growth?
By increasing productivity and efficiency
ExplanationEnhanced productivity and efficiency.
#6
What does the production possibility frontier (PPF) illustrate?
The maximum output an economy can produce with its available resources.
ExplanationResource utilization boundary.
#7
What is the opportunity cost of a decision?
The cost of the next best alternative foregone.
ExplanationThe alternative sacrifice cost.
#8
What is absolute advantage in economics?
The ability of a country to produce more of a good using the same amount of resources as another country.
ExplanationRaw production superiority.
#9
Which of the following is NOT a determinant of comparative advantage?
Tariffs and trade barriers
ExplanationExternal market restrictions.
#10
How does international trade affect consumer choice?
It expands consumer choice by offering a wider variety of goods.
ExplanationIncreasing consumer options.
#11
According to the principle of comparative advantage, why do countries engage in international trade?
To increase their production possibility frontier (PPF).
ExplanationExpanding production potential through trade.
#12
Which concept in economics suggests that both parties can benefit from trade even if one of them is more efficient in producing all goods?
Gains from trade
ExplanationMutually beneficial trade outcomes.
#13
What does the law of comparative advantage suggest about trade between two countries?
Countries should only trade if they have different production capacities.
ExplanationTrade based on differing capacities.
#14
What role does technological advancement play in comparative advantage?
Technological advancement increases comparative advantage.
ExplanationEnhanced efficiency through technology.