GUESS THE CLASSICAL TRADE THEORIES

Country X imposes heavy tariffs on imported goods to protect its gold reserves and promote local industries.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Country Y’s king orders colonies to only sell raw materials to the home country, keeping all wealth within the empire.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Country A can produce 10 tons of cocoa using the same resources that Country B uses to make only 3 tons.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Country B can produce ships at a lower cost and in less time compared to any other country in the region. This makes Country B the most efficient shipbuilder.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Even though Country C can produce both coffee and cheese more efficiently than Country D, it specializes in coffee because its opportunity cost of producing coffee is lower than producing cheese.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Country D is less efficient than Country E in producing both shoes and electronics, but it specializes in shoes because the opportunity cost of producing shoes is lower than producing electronics.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Country F exports wheat because it has abundant fertile land and a relatively small population.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY

Country G focuses on producing and exporting software because it has a large, highly skilled tech workforce.

• MERCANTILISM

• ABSOLUTE ADVANTAGE

• COMPARATIVE ADVANTAGE

• FACTOR ENDOWMENT THEORY