WorksheetsInternational Trade
Total questions: 31
Worksheet time: 16mins
The _____ theory viewed international trade as a zero-sum game.
comparative advantage
mercantilism
strategic trade
national competitive advantage of industries
Which theory suggests that nations will develop comparative advantages based on their locally abundant factors?
Heckscher-Ohlin theory
Absolute advantage theory
Comparative advantage theory
Strategic trade theory
Which theory is based on the notion that competitive advantage is dependant on the four interacting aspects of factor endowments, domestic demand, firm strategy, and related and supporting industries?
Strategic trade theory
Comparative advantage theory
National competitive advantage of industries theory
Product life cycle theory
Protectionism is similar to mercantilism as they both advocated _____.
dividing the nations of the world into three categories based on its innovation capabilities
developing comparative advantages based on a nation’s locally abundant factors
specializing in economic activities in which a nation can have an absolute advantage
government involvement in international trade
Which of the following ideas is closely linked to the theory of absolute advantage?
All international trade must be closely regulated by governments.
Governments should actively protect domestic industries from imports and vigorously promote exports.
Free market forces should determine how much to trade with minimal government intervention.
Nations should specialize in economic activities in which they have comparative advantage.
Which of the following is true of the absolute advantage theory of international trade?
It emphasizes relative advantage in one economic activity that one nation enjoys in comparison with other nations.
It divides the countries of the world into three categories based on innovation.
It advocates extensive government intervention in international trade.
It was the first theory that advocated free trade.
Factor endowment is _____.
the amount of change that patterns of trade undergo over time
the extent to which different countries possess various factors of production
the degree to which the government allows free trade to exist in its international trade
the cost of pursuing one activity at the expense of another given alternative activity
-------- is the earliest theories on international trade.
Comparative advantage
Absolute Advantage
Mercantilism
Competitive advantage
Countries adopting mercantilism favor:
trade deficit
import more than export
trade surplus
budget surplus
The followings are true about Mercantilism EXCEPT:
It believes that national prosperity is the result of a positive balance of trade.
The mercantilist government see import as good and export as bad.
It lead to a situation of zero sum game for some nations.
Mercantilist countries colonized other countries to gain resources and market finished goods.
Absolute advantage theory was proposed by ________ in 1776.
David Ricardo
Adam Smith
John Dunning
Karl Marx
Based on ------- theory, each country can increase its wealth by specializing in the production of good that it is less efficient at.
absolute advantage
comparative advantage
competitive advantage
mercantilism
Based on Absolute Advantage theory, India should produce _____, while Brazil should produce -------
corn, corn
wheat, wheat
wheat, corn
corn, wheat
Comparative advantage theory was proposed by ________ in 1817
Adam Smith
John Dunning
Eli Hecksher
David Ricardo
Which of the following statement is true about Comparative Advantage theory?
The most efficient country is the one that can produce goods at the lowest opportunity cost.
A country should import goods that it is most efficient in production.
Countries should not trade with each other and produce all goods independently.
It does not support free trade among nation.
Based on Comparative Advantage theory, Vietnam should produce ______, while Sri Lanka should produce ______.
coffee, tea
coffee, coffee
tea, coffee
tea, tea
All of the followings are assumptions in the absolute advantage theory EXCEPT
There are only three countries in the world
Only two goods are produced
Free trade exists between these two countries
No transportation costs are involved
Tax on imported goods is known as
Quota
Tariff
Embargo
Licensing
Based on the table provided, which one of the following statements is correct?
Japan has the absolute advantage in producing cars
Japan has the comparative advantage in producing cars
The United States has the absolute advantage in producing both cars and computers
The opportunity cost of producing a car in Japan is 1/2 a computer
The producer that can produce the most output OR requires the least amount of inputs (resources)
Comparative Advantage
Trade Offs
Absolute Advantage
Opportunity Cost
Which country has the absolute advantage in producing airplanes?
Japan
United States
Both of them
None of them
What is the opportunity cost of producing a car in the U.S.?
0.5 tools
0.5 cars
0.75 cars
1.3 tools
The U.S. can produce 10 iPad or 20 phones. China can produce 20 iPad or 30 phones. Who should produce what?
U.S. - iPad
China - phones
U.S. - phones
China- iPad
both should produce iPad
they should not specialize
In Mercantilism theory, trade surplus condition is a situation where:
Export = Import
Export > Import
Import < Export
Holding of gold/silver
Country will produce only ONE product that it has absolute advantage. This refers to:
Absolute advantage
Comparative advantage
Efficiency
Specialization
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 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
Which of the following is not classified as Classical Country based theory?
Mercantilism
Comparative Advantage
Factor Proportions Theory
Country Similarity
The _____ theory viewed international trade as a zero-sum game.
comparative advantage
strategic trade
mercantilism
national competitive advantage of industries
