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WorksheetsClassical theories of International Trade
Total questions: 13
Worksheet time: 7mins
Theory of comparative advantage was given by ______
A. Philip Kotler
B. Adam Smith
C. Peter Drucker
D. David Ricardo
Theory of absolute advantage was given by ______
A. Philip Kotler
B. Adam Smith
C. Peter Drucker
D. David Ricardo
Who has the COMPARATIVE ADVANTAGE in making bracelets?
A. Marie
B. Isabella
When determining comparative advantage one must determine
Opportunity cost
Specialization
Absolute Advantage
Embargos
If I am better at all types of production, I have the ______ in all forms of production.
Comparative advanatage
Specialization
Absolute Advantage
Developed nation
_________ stresses on the ‘relative cost difference’ rather than ‘absolute cost difference’ between the goods as the basis for carrying out trade.
A. Theory of absolute advantage
B. Theory of comparative advantage
C. Hecksher Ohlin Theory
D. Theory of mercantilism
________ advocates that a country should focus and specialize in the production of goods that it can produce relatively at a lower cost than other countries.
A. Theory of absolute advantage
B. Theory of comparative advantage
C. Hecksher Ohlin Theory
D. Theory of mercantilism
The theory of 'absolute advantage':
Best describes a situation where there are two countries, A and B, and potentially two goods which can be traded, X and Y. A is absolutely better at producing X and B is absolutely better at producing Y, and so if A specializes in producing X and B in Y, and they trade together, then both countries will gain.
Best describes the global strategy of businesses who always seek to gain an absolute advantage over their rivals.
Explains why developed countries have a competitive advantage over poorer countries
Best describes a situation where there are two countries, A and B, and potentially two goods which can be traded, X and Y. If A was absolutely better at producing both X and Y compared to B then there would be no advantage in A trading with B.
Assume that there are two countries, A and B, and that they can both produce two goods, X and Y. The theory of comparative advantage predicts that:
Trade can only take place if country A has an absolute advantage in producing one of the goods, and country B has an absolute advantage in producing the other.
Trade can take place even if country A has an absolute advantage in both providing that B chooses to specialize in the good in which it has the least comparative disadvantage, and A specializes in the one in which it has the greater comparative advantage
Trade between A and B will only take place if both countries are at a comparatively similar stage in the development of their economies
None of the above.
Who has the ABSOLUTE advantage in making bracelets?
Marie
Isabella
The producer that can produce the most output OR requires the least amount of inputs (resources) has
Comparative Advantage
Trade Offs
Absolute Advantage
Opportunity Cost
The producer with the lowest opportunity cost.
Comparative Advantage
Trade Offs
Absolute Advantage
Opportunity Cost
The US can produce 1 ton of sugar using 4 acres of land, or they can produce 1 ton of avocados using 6 acres. Ecuador can produce 1 ton of sugar using 5 acres of land or 1 ton of avocados using 4 acres. Which country should produce avocados?
Ecuador
US
not enough information
