Business 111 Chapter 3 first then 2

Which of the following statements best describes the theory of comparative advantage?

• The best way for a nation to ensure full employment is to be totally self-sufficient rather than relying on other nations to obtain goods and services.

• Each nation should produce those goods that it can produce more efficiently and effectively than other nations, and buy the goods it cannot produce efficiently from other nations.

• The nation that has the largest reserves of gold and other natural resources will enjoy a position of comparative advantage in trade relationships.

• A nation should produce those goods for which domestic demand is comparatively strong, and should import those goods for which domestic demand is comparatively weak.

Peru and Bolivia account for almost 97% of the production of quinoa seed, and most of it is sold to the U.S., Japan, and other wealthy nations. According to a former Colorado State agronomist who helped introduce the product into the U.S. several years ago, “This food is about the most perfect you can find for human diets.” Although there are other areas where the seed will grow (including higher elevations in Colorado), the majority of the quinoa sold in the U.S. is imported from Peru and Bolivia. These two nations have a(n)

• absolute advantage

• comprehensive advantage

• comparative advantage

• tertiary advantage

Climate and terrain in several South American countries are conducive to growing coffee efficiently. While other countries can grow coffee, they are not as efficient and effective at coffee growing because of short seasons and climate concerns. This fact would lead you to believe that South American countries have a(n) __________ advantage in the production of coffee.

• comparative

• absolute

• unprotected

• progressive

The only deposits of a rare and sought-after mineral known as Yuksporite are found in Russia. Since no other nation has deposits of Yuksporite, Russia has a(n)__________ in this mineral.

• protected advantage

• diversified benefit

• absolute advantage

• relative internal benefit

After finishing college, Nathan joined his uncle's company in Miami, FL, a(n) _______ of bauxite, copper, and other minerals from the Chile. Every day, he brokers trades with mines in Chile to buy and transport these minerals into the U.S.

• exporter

• quota manager

• importer

• domestic trader

Current trade data indicates that the nation of Bogusland exports more to other nations than it imports. Bogusland has:

• an unfavorable balance of trade.

• a trade surplus.

• a trade deficit.

• a low balance of trade.

Japanese automobile producers sold more of their Japanese production overseas than they sold in Japan. Their business strategy emphasizes:

• importing.

• licensing.

• exporting.

• dumping.

Last year, the nation of Kwansai reported that it had a favorable balance of trade even though it imported $11 billion worth of goods. This indicates that Kwansai:

• exported $11 billion worth of goods.

• exported more than $11 billion worth of goods.

• overpriced the value of its exports.

• exported less than $11 billion worth of goods.

A major concern voiced by U.S. critics of the North American Free Trade Agreement (NAFTA) was that it would result in:

• higher prices for consumer goods.

• loss of jobs in the U.S. economy.

• national security problems.

• increased illegal immigration from Mexico.

One objective of NAFTA is:

• increase trade barriers between the countries involved.

• decrease investment opportunities in the countries involved.

• promote conditions of fair competition for the three trading partners.

• improve working conditions in Central America.