Unit 7: International Trade (IN1/IN2)

To focus on producing one thing to improve productivity is known as:

• Specialization
• International trade
• Absolute Advantage
• Supply and Demand

When determining comparative advantage one must determine 

• Opportunity cost
• Specialization
• Absolute Advantage
• Embargos 

If I am better at all types of production, I have the ______ in ALL forms of production.

• Comparative advantage
• Specialization
• Absolute advantage
• developed nation

This is a tax on imports that is used to increase price of foreign products and raise government revenue. 

• tariff
• quota
• subsidy
• embargo

Infant industries can be helped financially in the world market by giving those industries a 

• subsidy
• quota
• embargo
• tariff

Who will be hurt by a tariff on medicine coming into the US.

• US medical companies
• US government revenue
• Sick people in US 

What is one of the benefits of international trade?

• Decreased production due to market saturation

• Increased production and consumption due to efficiency gained through specialisation

• Limited range of goods and services available in the market

• Higher costs of production due to increased competition

Answer explanation

The benefit of international trade is increased production and consumption due to efficiency gained through specialization.

How can firms experience greater economies of scale?

• By reducing their market size

• By limiting their customer base

• By having access to larger (international) markets

• By trading only within domestic markets

Answer explanation

Firms can experience greater economies of scale by having access to larger (international) markets, allowing for increased production and cost efficiencies.

Why does the United States need to import products?

• The US does not import products
• Some are easier and cheaper to make in other countries
• The US makes all of its own products

The government tells people what to buy and how much to buy:

• Traditional Economy

• Market Economy

• Command Economy