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WorksheetsTopic 5 International Trade Theories
Total questions: 20
Worksheet time: 11mins
In Mercantilism theory, trade surplus condition is a situation where:
Export = Import
Export > Import
Import < Export
Holding of gold/silver
Zero-sum game is a 'win-lose' situation
True
False
Which are true about Mercantilism theory?
Country’s wealth is measured by its holding of gold and silver
Government does not imposed any control
Among the first theory and served as the foundation towards trading activities
Countries will try to be in a trade deficit condition
Absolute advantage theory was introduced by
Michael Porter
David Ricardo
Adam Smith
Raymond Vernon
Country will produce only ONE product that it has absolute advantage. This refers to:
Absolute advantage
Comparative advantage
Efficiency
Specialization
Resources available = 200 units for each country
Production in Ghana
Cocoa = 10 tons
Rice = 5 tons
Production in South Korea
Cocoa = 2.5 tons
Rice = 10 tons
Question: Which country should specialize in producing Cocoa?
Ghana
South Korea
Resources available = 200 units for each country
Production in Ghana
Cocoa = 10 tons
Rice = 5 tons
Production in South Korea
Cocoa = 2.5 tons
Rice = 10 tons
Question: Which country should specialize in producing Rice?
Ghana
South Korea
Resources available = 200 units for each country
Production in Ghana
Cocoa = 10 tons
Rice = 5 tons
Production in South Korea
Cocoa = 2.5 tons
Rice = 10 tons
Question: South Korea has the absolute advantage in producing which product?
Cocoa
Rice
Resources available = 200 units for each country
Production in Ghana
Cocoa = 10 tons
Rice = 5 tons
Production in South Korea
Cocoa = 2.5 tons
Rice = 10 tons
Question: After specialization, which country will import Cocoa?
Ghana
South Korea
Resources available = 200 units for each country
Production in Ghana
Cocoa = 10 tons
Rice = 5 tons
Production in South Korea
Cocoa = 2.5 tons
Rice = 10 tons
Question: After specialization, which country will export Rice?
Ghana
South Korea
In absolute advantage theory, with specialization, total world output will _______.
increase
decrease
remain unchanged
fluctuate
Which are TRUE about comparative advantage theory?
Initiated by David Ricardo
When a country has absolute advantage in more than 1 product, they should not specialize
When a country has absolute advantage in more than 1 product, they should specialize goods they most efficient
When a country has absolute advantage in more than 1 product, they should buy goods that they produce less efficiently from other countries
In Heckscher-Ohlin theory, factor endowments normally refers to ______, ______ and ______.
land
money
labor
capital
When countries make intensive use of locally scarce factors, they should ______ that product.
import
export
produce
specialize
Product life cycle theory was introduced by
Michael Porter
David Ricardo
Adam Smith
Raymond Vernon
Four main stages in product life cycle theory:
Introduction - Maturity - Decline - Growth
Introduction - Growth - Decline - Maturity
Introduction - Growth - Maturity - Decline
Introduction - Maturity - Growth - Decline
In product life cycle theory, a products mature, both the ______ and the optimal _____ will change affecting the flow and direction of trade.
location of sales
location of packaging
location of production
location of distribution
In Porter's diamond of competitive advantage theory, a nation’s position in factors of production necessary to compete in a given industry refers to:
Supply Conditions
Strategy, Structure and Rivalry
Supporting Industries
Factor Endowments
Which is NOT part of Porter's diamond of competitive advantage theory?
Supply Conditions
Strategy, Structure and Rivalry
Supporting Industries
Factor Endowments
In Porter's diamond of competitive advantage theory, the conditions governing how companies are created, organized, and managed, and the nature of domestic rivalry refers to:
Supply Conditions
Strategy, Structure and Rivalry
Supporting Industries
Factor Endowments
