Intrenational Trade Quiz

What does opportunity cost theory refer to in economics?

• The value of the next best alternative that is forgone when a choice is made.

• The total cost of production.

• The benefits of a decision.

• The cost of resources.

What does factor endowment theory explain?

• How a country's resources influence its trade patterns.

• The importance of labor in production.

• The role of technology in trade.

• The impact of tariffs on trade.

What is the Leontief Paradox?

• A contradiction where a capital-abundant country exports labor-intensive goods.

• A theory about trade patterns.

• A model of economic growth.

• A principle of factor endowment.

What does the factor price equalization theorem state?

• Prices of labor and capital will be equalized across nations.

• Trade will always benefit all countries.

• Countries will always specialize in one good.

• Economic growth is always beneficial.

What does international trade and factor mobility theory explore?

• How the movement of goods and factors of production interact.

• The impact of tariffs on trade.

• The role of technology in production.

• The importance of labor in economic growth.

What is the main premise of the Heckscher-Ohlin model?

• Countries export goods that utilize their abundant factors of production.

• Economic growth is independent of trade.

• Trade is determined solely by comparative advantage.

• All countries will have the same production technology.

What is the significance of the Ricardian model of comparative advantage?

• It illustrates how countries can benefit from trade by specializing in goods they produce most efficiently.

• It shows that all countries will produce the same goods.

• It emphasizes the role of government in trade.

• It argues that trade leads to economic isolation.

Who proposed the theory of Absolute Advantage?

• a) David Ricardo

• b) Adam Smith

• c) Bertil Ohlin

• 
  d) John Stuart Mill

According to the theory of Absolute Advantage, trade is beneficial when a country can produce goods at:

• a) Higher cost
  
  
  

• b) Equal cost

• c) Lower cost

• d) Marginal cost

The theory which shows that growth can worsen a country’s welfare is:

• a) Leontief paradox

• b) Immiserizing growth theory

• c) Comparative cost theory

• d) Opportunity cost theory