The ability of a country to produce goods at a lower opportunity cost than another country is called

• Comparative advantage

• Absolute advantage

All of the followings are assumptions in the absolute advantage theory EXCEPT

• There are only three countries in the world

• Only two goods are produced

• Free trade exists between these two countries

• No transportation costs are involved

Tax on imported goods is known as

• Quota

• Tariff

• Embargo

• Licensing

Physical control to ban the imports of certain goods because of economics, social and politics is known as

• Tariff

• Quota

• Embargo

• License

The followings are reasons for international trade EXCEPT

• Encourage opportunity in local direct investment

• Increase productivity

• Make the market more competitive

• Increased efficiency

Based on the table provided, which one of the following statements is correct?

• Japan has the absolute advantage in producing cars
• Japan has the comparative advantage in producing cars
• The United States has the absolute advantage in producing both cars and computers
• The opportunity cost of producing a car in Japan is 1/2 a computer

The producer that can produce the most output OR requires the least amount of inputs (resources)

• Comparative Advantage

• Trade Offs

• Absolute Advantage

• Opportunity Cost

Which country has the absolute advantage in producing airplanes? 

• Japan
• US

What is the opportunity cost of producing a car in the U.S.?

• 0.5 tools

• 0.5 cars

• 0.75 cars

• 1.3 tools

The U.S. can produce 10 iPad or 20 phones. China can produce 20 iPad or 30 phones. Who should produce what?

• U.S. - iPad

  China - phones

• U.S. - phones

  China- iPad

• both should produce iPad

• they should not specialize