#1
What is the basic principle of comparative advantage in international trade?
Equal distribution of resources
Maximization of domestic production
Specialization based on opportunity cost
Equal distribution of goods
#2
How does technological advancement impact the principle of comparative advantage?
Reduces the importance of comparative advantage
Enhances the relevance of absolute advantage
Leads to increased specialization
Has no effect on comparative advantage
#3
Which factor is NOT considered in determining comparative advantage?
Labor costs
Climate conditions
Technological capabilities
Transportation costs
#4
According to the principle of comparative advantage, what happens if two countries have the same opportunity costs for producing goods?
They will not engage in international trade.
They will specialize in producing the same goods.
Specialization and trade will not occur.
They will engage in trade based on their absolute advantages.
#5
Who introduced the concept of comparative advantage?
Adam Smith
John Maynard Keynes
David Ricardo
Karl Marx
#6
What is the opportunity cost in the context of comparative advantage?
The cost of producing one additional unit of a good
The cost of producing one unit of a good in terms of another forgone good
The cost of transporting goods internationally
The cost of labor in production
#7
What role does the terms of trade play in the context of international trade?
It determines the currency exchange rates
It establishes the rules of trade agreements
It influences the ratio at which countries exchange their goods
It regulates the trade balance
#8
According to the principle of comparative advantage, should a country produce all goods internally or specialize in production and engage in trade?
Produce all goods internally
Specialize in production and engage in trade
Depends on the country's size
Depends on the country's population
#9
What is the primary goal of the World Trade Organization (WTO)?
To regulate domestic trade policies
To facilitate global economic cooperation and trade negotiations
To establish a global currency
To control international migration
#10
In international trade, what does absolute advantage refer to?
Ability to produce a good using fewer resources than others
Ability to produce all goods more efficiently than others
Equal production capabilities among trading partners
Exclusive trading rights between two countries
#11
How does the principle of comparative advantage support the concept of free trade?
It promotes protectionist policies
It encourages self-sufficiency
It emphasizes mutual benefits through specialization and trade
It advocates for trade restrictions
#12
What is a trade deficit, and how does it relate to the principle of comparative advantage?
Excess of exports over imports
Excess of imports over exports
Balance between exports and imports
Absence of international trade
#13
In the context of international trade, what is the Smoot-Hawley Tariff Act known for?
Promoting free trade
Implementing low tariffs
Raising tariffs, contributing to the Great Depression
Establishing a global trade organization
#14
How does the concept of comparative advantage relate to the concept of economic efficiency?
It promotes inefficiency by encouraging specialization
It emphasizes efficient resource allocation through specialization
It has no impact on economic efficiency
It leads to overproduction and waste