WorksheetsTopic 5 - International Trade Theory
Total questions: 10
Worksheet time: 5mins
What is the primary goal of mercantilism?
Encouraging free trade among all nations
Accumulating wealth by maintaining a trade surplus
Reducing government involvement in the economy
Promoting equal trade between nations
Which of the following statements best describes absolute advantage?
The ability of a nation to produce a good more efficiently than any other nation
The ability of a nation to produce a good at a lower opportunity cost than another nation
The ability of a nation to restrict imports to maintain domestic industry
The process of acquiring raw materials from colonies for economic gain
What does comparative advantage suggest?
A country should focus on producing goods that it can produce at the highest efficiency
A country should specialize in goods that it can produce at a lower opportunity cost than other nations
A country should produce all goods domestically to avoid foreign dependence
A country should always maintain a trade surplus to be competitive
According to the factor proportions theory, what determines the goods that a country exports?
The level of technological innovation in the country
The availability of abundant production resources
The level of government intervention in the economy
The historical trade relationships between nations
What does the Leontief Paradox reveal about the factor proportions theory?
The United States exports more capital-intensive goods than labor-intensive goods
The United States exports more labor-intensive goods than capital-intensive goods
Countries with abundant resources do not trade internationally
Trade policies do not influence the types of goods a country exports
Which of the following best describes the International Product Life Cycle Theory?
Companies begin exporting products and later shift production to foreign markets
The production of goods is based solely on factor proportions
The trade of goods and services is determined by government policies
Countries only trade goods that are already mass-produced
What is the key idea behind New Trade Theory?
Nations should only trade with neighboring countries
First-mover advantage provides significant economic and strategic benefits
All countries should impose tariffs to protect domestic industries
Trade should be regulated by the government to control market conditions
According to Porter’s National Competitive Advantage Theory, which of the following is NOT a key factor in determining a nation’s competitiveness?
Demand conditions
Factor conditions
Political ideology
Firm strategy, structure, and rivalry
Which of the following is an example of first-mover advantage?
A company waiting for a market to mature before launching its product
A company that enters a market early and establishes strong brand recognition
A country that increases tariffs to protect local businesses
A company that imports raw materials to produce goods for domestic consumption
Why is trade interdependence between nations important?
It allows developed nations to dominate world trade
It ensures that countries are self-sufficient
It increases economic stability and growth through mutual benefits
It eliminates the need for international business regulations
