Worksheetsinternational trade chap.2
Total questions: 27
Worksheet time: 15mins
Why is international trade beneficial for countries?
It creates opportunities for countries to specialize in producing goods they have a comparative advantage in.
It allows for the exchange of unique products and services between countries.
It promotes economic growth and development through increased market access.
It fosters cultural exchange and understanding between nations.
How does international trade theory influence a country’s economic policy formulation?
A) By promoting self-sufficiency (autarky).
B) By guiding decisions on tariffs and quotas.
C) By advocating for protectionism.
D) By having no impact on economic policy.
What's the main idea behind international trade theory?
A) All countries will export the same goods.
B) Reasons for trade imbalances are outlined.
C) Trade flows are influenced by factors like comparative advantage and factor endowments.
D) Trade is irrelevant for economic growth.
What was the main idea behind mercantilism in terms of trade surplus?
A) Keeping a trade deficit
B) Selling more than buying
C) Balancing exports and imports
D) Disregarding trade balance
What was the role of government intervention in mercantilism?
Encouraging free trade
Achieving a trade balance
Promoting autarky
Restricting exports
How did mercantilism view trade?
As a positive-sum game
As a zero-sum game
As irrelevant for economic growth
As a cooperative endeavor
What did Adam Smith criticize in 1776?
The concept of absolute advantage
The assumption that trade is a zero-sum game
The idea of specialization
The role of government in trade
Which of the following represents a country's superior efficiency in producing a product?
Comparative advantage
Absolute advantage
Autarky
Trade surplus
According to Adam Smith, what should countries specialize in?
Producing all goods equally
Producing goods with the highest demand
Producing goods for which they have an absolute advantage
Producing goods with the lowest cost
What is the term for when a country is able to produce a product using fewer resources than another country?
Comparative advantage
Absolute advantage
Autarky
Trade surplus
What did David Ricardo believe is the foundation of international trade?
Absolute advantage
Comparative advantage
Autarky
Trade surplus
What effect do tariffs have on international trade?
They promote free trade
They cause trade imbalances
They limit imports and exports
They do not impact trade
What is the main idea behind the theory of absolute advantage?
Countries should produce all goods equally
Countries should produce goods with the highest demand
Countries should produce goods for which they have an absolute advantage
Countries should produce goods with the lowest cost
Consider two countries: Country A and Country B. They both produce two goods: Cars © and Computers (PC).
Production possibilities for each country (units per day):
Country A:
Cars: 10 Computers: 20
Country B:
Cars: 15 Computers: 30
Opportunity cost (in terms of the other good) for each country:
Opportunity cost of producing cars in Country A: 0.50 computers per car
Opportunity cost of producing computers in Country A: 2.00 cars per computer
Opportunity cost of producing cars in Country B: 0.67 computers per car
Opportunity cost of producing computers in Country B: 0.50 cars per computer
Which country has an absolute advantage in each good?
Country A has an absolute advantage in Cars.
Country A has an absolute advantage in Computers.
Country B has an absolute advantage in Computers.
Country B has an absolute advantage in Cars.
According to Ricardo’s theory of comparative advantage, why does it make sense for a country to specialize in the production of certain goods and trade with other countries?
A) Because it allows the country to produce everything more efficiently than other nations.
B) Because it ensures self-sufficiency and reduces dependence on imports.
C) Because it allows the country to focus on producing goods it can make most efficiently.
D) Because it encourages protectionism and restricts international trade.
What does it mean when a country has an absolute advantage in the production of a product?
A) It uses more resources than other countries.
B) It uses fewer resources than other countries.
C) It produces all goods more efficiently than other nations.
D) It specializes in producing luxury goods.
What is the basis of comparative advantage in the production of a good?
A) Producing everything more efficiently than other nations.
B) Focusing on self-sufficiency and reducing imports.
C) Producing goods at a lower cost in terms of other goods (opportunity cost).
D) Encouraging protectionism and restricting international trade.
What is comparative advantage?
A. The ability of a country to produce all goods efficiently.
B. The ability of a country to produce a specific good at a lower opportunity cost than any other country.
C. The ability of a country to produce goods without any trade.
D. The ability of a country to produce goods with the highest market demand.
What does the concept of comparative advantage imply for trade?
A. Countries should produce everything domestically.
B. Countries should specialize in producing goods where they have a relative advantage.
C. Trade is not beneficial for any country.
D. Comparative advantage does not affect trade.
If Egypt has to sacrifice 5 tons of wheat to produce 1 ton of rice ,while china has to sacrifice 10 tons of wheat to produce 1 ton of rice , then china has a comparative advantage in producing rice.
True
False
A country enjoys an absolute advantage over another country in the production of a product when it uses more resources to produce that product than the other country does.
true
false
according to Adam Smith viewed trade as a zero-sum game.
true
false
International trade theory explains why it is beneficial for countries to engage in international trade
true
false
Mercantilism asserted that it is in a country’s best interest to maintain a trade deficit, to import more than it exports.
true
false
-If to produce 1 computer, Egypt uses 100 units of resource while korea uses 200 units ofresource, then Egypt has an absolute advantage in producing computers over Korea.
true
false
Acountry enjoys a comparative advantage in the production of a good when that good can be produced at a greater opportunity cost.
true
false
Mercantilism viewed trade as a zero-sum game.
true
false
