#1
Which theory suggests that a country should specialize in producing goods for which it has the lowest opportunity cost?
Absolute advantage theory
Comparative advantage theory
Mercantilism
Protectionism
#2
Which of the following is NOT a benefit of international trade?
Increased variety of goods
Lower prices for consumers
Job losses in domestic industries
Access to resources not available domestically
#3
Which theory suggests that countries should specialize in producing goods where they have a comparative advantage?
Mercantilism
Absolute Advantage
Comparative Advantage
Protectionism
#4
Who introduced the concept of comparative advantage?
David Ricardo
Adam Smith
John Maynard Keynes
Karl Marx
#5
What does the term 'trade deficit' mean?
A situation where a country exports more goods and services than it imports
A situation where a country imports more goods and services than it exports
A situation where a country's total exports equal its total imports
A situation where a country has a surplus in its balance of trade
#6
Which economist is credited with the theory of comparative advantage?
Adam Smith
David Ricardo
John Maynard Keynes
Milton Friedman
#7
Which factor is NOT considered in determining comparative advantage?
Labor productivity
Technological advancement
Climate
Transportation costs
#8
In international trade, what does 'absolute advantage' refer to?
The ability to produce a good using fewer inputs than another producer
The ability to produce more of a good than another producer using the same amount of inputs
The ability to produce a good at a lower opportunity cost than another producer
The ability to set prices lower than competitors
#9
What does the law of comparative advantage state?
Countries should produce only what they can produce most efficiently
Countries should produce all goods domestically to protect their industries
Countries should specialize in producing goods where they have the lowest opportunity cost
Countries should focus on exporting goods that are in high demand globally
#10
What is a tariff?
A tax imposed on imported goods
A subsidy provided to domestic producers
A limit on the quantity of imports
A financial incentive for exports
#11
According to the Heckscher-Ohlin model, what determines a country's comparative advantage?
Labor and capital intensity
Natural resources abundance
Geographic location
Government subsidies
#12
Which of the following is not a factor affecting comparative advantage?
Natural resources
Technological innovation
Government subsidies
Labor productivity
#13
What is dumping in international trade?
Selling goods abroad at a lower price than the domestic market
Exporting goods at a higher price than the domestic market
Trading goods at their market equilibrium price
Subsidizing domestic production
#14
What is the primary goal of export subsidies?
To increase government revenue
To encourage domestic consumption
To reduce the prices of imported goods
To boost exports by domestic producers
#15
What is the primary objective of a trade embargo?
To encourage trade between countries
To regulate the flow of goods and services
To restrict or prohibit trade with a particular country
To eliminate tariffs and quotas