#1
Which theory suggests that countries should specialize in producing goods in which they have the lowest opportunity cost?
Comparative advantage theory
ExplanationCountries focus on producing goods with the least forgone alternatives.
#2
Who proposed the theory of absolute advantage?
Adam Smith
ExplanationAdam Smith introduced the concept of a nation's inherent efficiency in producing certain goods.
#3
Which theory suggests that countries will specialize in producing and exporting goods for which they have a comparative advantage?
Comparative advantage theory
ExplanationCountries specialize in goods with comparative advantage in production and export.
#4
According to the theory of comparative advantage, which of the following statements is true?
Countries can benefit from trade even if they are less efficient in producing all goods.
ExplanationTrade benefits nations despite differing production efficiencies for all goods.
#5
Which theory suggests that the pattern of international trade is determined by differences in factor endowments?
Heckscher-Ohlin theory
ExplanationTrade patterns arise from dissimilarities in countries' resources.
#6
What is the main assumption of the Heckscher-Ohlin theory?
Factors of production are mobile between industries.
ExplanationHeckscher-Ohlin assumes factors can shift easily between different sectors.
#7
Which of the following is NOT a factor of production according to the Heckscher-Ohlin theory?
Technology
ExplanationTechnology is not considered a factor in Heckscher-Ohlin's production resource categories.
#8
Which theory suggests that economies of scale can explain the pattern of international trade?
New trade theory
ExplanationInternational trade patterns can be elucidated by economies of scale, as proposed by the New Trade Theory.
#9
The concept of 'national competitive advantage' is associated with which theory?
Porter's diamond theory
ExplanationNational advantage is shaped by Porter's diamond factors: demand, factor conditions, related and supporting industries, and firm strategy.
#10
Who developed the theory of national competitive advantage in industries?
Michael Porter
ExplanationMichael Porter introduced the theory explaining a nation's competitive advantage in specific industries.
#11
Which theory suggests that countries may benefit from strategic trade policies to enhance their competitive advantage?
Strategic trade theory
ExplanationCountries can boost competitiveness through strategic trade policies, as proposed by the Strategic Trade Theory.
#12
Which theory argues that governments should strategically intervene in trade to promote certain industries?
Strategic trade theory
ExplanationGovernments should intervene strategically to uplift specific industries, as per the Strategic Trade Theory.
#13
What is the key assumption of strategic trade theory?
Governments are rational actors seeking to maximize national welfare.
ExplanationStrategic Trade Theory assumes governments act rationally, striving to maximize the nation's well-being.