Unit 4 Review Game

When choosing to specialize and trade with another country, which of the following is the most important thing a country should consider?

• Its absolute advantage.

• Its comparative advantage.

• The currency exchange rate with that country.

• How skilled its workers are compared to those of the other country.

If a country has an absolute advantage in the production of a particular good, it means:

• It has more workers than another country.

• It has more resources than another country.

• It is able to produce more of a particular product than another country.

• It is more popular to tourists and other visitors than another country.

When a country has a comparative advantage with a particular product, it:

• Should not consider trading with another country.

• Should specialize in producing that product and trade it with another country.

• Is able to produce more of a particular product than another country.

• Is more technically advanced than another country.

If a country has an absolute advantage in producing good X, then which of the following is true:

• It is still possible for that country to not have a comparative advantage in producing X.

• The country must also have a comparative advantage in producing X.

• There is no reason for that country to trade with another country.

• None of the above.

Who has the absolute advantage in making pancakes and key lime pies?

• Kelly

• Peter

• Both Kelly and Peter

• Neither Kelly, nor Peter

Who has BOTH the absolute AND comparative advantage in making pancakes and key lime pies?

• Kelly

• Peter

• Both Kelly and Peter

• Neither Kelly, nor Peter

One of the ways most countries protect their domestic producers is by:

• Having high import tariffs on foreign goods.

• Refusing to export domestic goods for trade.

• Sabotaging foreign production of the same good.

• Having low import tariffs on foreign goods.

Which of the following is an example of a free trade agreement that has increased the competition for agricultural industries in the United States?

• NATO

• OPEC

• The EU

• NAFTA

The North American Free Trade Agreement (NAFTA) comprises of a trading bloc which has:

• Resulted in the movement of service industries from Mexico to the USA.

• Resulted in an increase in trade between the three countries.

• Increased trade barriers and tariffs between the three countries.

• Resulted in the movement of secondary economic activities from Mexico to the USA.

One major economic influence of a company deciding to move its production overseas is:

• The level of domestic unemployment.

• Its comparative advantage.

• Its absolute advantage.

• The exchange rate.