Unit 2 Test Review - Eco

With a given amount of resources, a country with a comparative advantage will produce a product with:

• cheaper natural resources
• higher quality specifications
• decreased demand
• lower opportunity costs

Country A can produce more coal than Country B an economist would say that Country A has _______ over country B.

• production possibility advantage
• export advantage
• comparative advantage
• absolute advantage

Why do nations trade?

• because they believe that the products they receive are worth more than the products they give up
• because they need to acquire certain raw materials
• so they can specialize
• all of the above

Which of the following factors can slow or halt the process of globalization in the world?

• growth in number of multinationals
• more specialization
• perceived threat to a nation's culture, politics or religion
• growth in population control

_______ are taxes on _______ .

• tariffs, exports
• quotas, imports
• tariffs, imports
• quotas, exports

What would a free-trader most likely support?

• NAFTA
• revenue tariff
• embargo
• infant industries argument

What is the world's largest free trade area?

• MFN
• NAFTA
• GATT
• WTO

Which of the following statements best describes trade between two nations?

• legally required
• avoids specialization
• mutually beneficial
• involves low cost for both nations

Who is most likely to place an embargo

• a national government
• an infant industry
• an importer of luxury goods 
• a multinational corporation

A farmer can grow wheat or corn. She grows corn because it will make more money than wheat. The value of the wheat crop she chose not to grow could best be described as _______ .

• a comparative advantage
• all answers are correct
• comprative disadvantage
• opportunity cost