Grade 12 Economics Quiz: Trade

What is specialization in economics?

• Trading goods without any specialization

• Investing in multiple industries for growth

• Focusing on a limited scope of products for maximum efficiency

• Producing a wide range of products for flexibility

What is the main benefit of specialization?

• Decreases productivity

• Reduces trade opportunities

• Encourages isolation

• Improves productivity

What is the difference between absolute advantage and comparative advantage?

• Both focus on opportunity cost

• Absolute advantage focuses on opportunity cost, while comparative advantage focuses on output

• Absolute advantage focuses on output, while comparative advantage focuses on opportunity cost

• Both focus on output

When should countries trade according to comparative advantage?

• When they have a higher opportunity cost

• When they have a lower opportunity cost

• When they have a trade deficit

• When they have a trade surplus

What does a country have if the value of its imports exceeds the value of its exports?

• Foreign currency surplus

• Trade surplus

• Trade deficit

• Balance of trade

What is a tariff?

• A tax on exported goods

• A fee on domestic goods

• A fee on foreign currency

• A tax on imported goods

Why does the government impose tariffs?

• To protect domestic industries

• To encourage imports

• To lower revenue

• To protect foreign industries