#1
Which theory suggests that a country should specialize in producing goods for which it has the lowest opportunity cost?
Comparative advantage theory
ExplanationCountries specialize in goods with lowest opportunity cost.
#2
Which of the following is NOT a benefit of international trade?
Job losses in domestic industries
ExplanationJob losses are a drawback, not a benefit.
#3
Which theory suggests that countries should specialize in producing goods where they have a comparative advantage?
Comparative Advantage
ExplanationCountries should focus on their comparative advantage.
#4
Who introduced the concept of comparative advantage?
David Ricardo
ExplanationDavid Ricardo introduced it.
#5
What does the term 'trade deficit' mean?
A situation where a country imports more goods and services than it exports
ExplanationImports exceed exports.
#6
Which economist is credited with the theory of comparative advantage?
David Ricardo
ExplanationDavid Ricardo formulated the theory.
#7
Which factor is NOT considered in determining comparative advantage?
Transportation costs
ExplanationTransportation costs are not factored.
#8
In international trade, what does 'absolute advantage' refer to?
The ability to produce more of a good than another producer using the same amount of inputs
ExplanationAbility to produce more with same inputs.
#9
What does the law of comparative advantage state?
Countries should specialize in producing goods where they have the lowest opportunity cost
ExplanationSpecialize in goods with lowest opportunity cost.
#10
What is a tariff?
A tax imposed on imported goods
ExplanationTax on imported goods.
#11
According to the Heckscher-Ohlin model, what determines a country's comparative advantage?
Labor and capital intensity
ExplanationLabor and capital intensity determine it.
#12
Which of the following is not a factor affecting comparative advantage?
Government subsidies
ExplanationGovernment subsidies don't affect it.
#13
What is dumping in international trade?
Selling goods abroad at a lower price than the domestic market
ExplanationSelling cheaper abroad than domestically.
#14
What is the primary goal of export subsidies?
To boost exports by domestic producers
ExplanationStimulate domestic exports.
#15
What is the primary objective of a trade embargo?
To restrict or prohibit trade with a particular country
ExplanationLimit or ban trade with specific countries.