International Trade Quiz

What is the difference between absolute and comparative advantage?

• Absolute advantage is about producing more, comparative is about producing at lower cost

• Both are the same

• Absolute advantage is about lower cost, comparative is about producing more

• Neither has to do with cost.

China currently imports more goods into America than the US exports to China. What is this called in economics?

• A) Trade surplus

• B) Trade deficit

• C) Balanced trade

• D) Trade embargo

What are the benefits of conducting business in less developed countries?

• Lower labor costs

• Higher taxes

• Less market access

• More regulations

What are the downsides of conducting business in less developed countries?

• Political instability

• High labor costs

• Abundant resources

• Strong infrastructure

What is a quota in international trade?

• A limit on the amount of goods that can be imported

• A tax on imports

• A subsidy for exports

• A free trade agreement.

What is a tariff in international trade?

• A) A tax on imports

• B) A limit on exports

• C) A subsidy for local businesses

• D) A free trade agreement.

In what ways do political barriers to international business affect companies?

• Increase costs

• Decrease market access

• Improve relations

• Enhance trade opportunities

In what ways do social and cultural barriers to international business affect companies?

• Create misunderstandings

• Enhance communication

• Reduce costs

• Increase efficiency

Most of the world's population lives in ________ and ________.

• A) China and India

• B) USA and Canada

• C) Brazil and Argentina

• D) Russia and Germany

Specialization and division of labor ________ productivity and economic output.

• A) Increases

• B) Decreases

• C) Has no effect

• D) Reduces