Question 1

Europe and Asia have a relative advantage in producing steel, primarily because factories in those regions are newer and more efficient. This is an example of

Accepted Answer

A)  relative advantage. 
B)  comparative advantage. 
C)  factor endowments. 
D)  money laundering.

Question 2

Government policies, like minimum wage, will tend to throw off production preferences based upon comparative advantage.

Accepted Answer

A) True 
 B)False

Question 3

Nations may produce goods where they have disadvantages due to demand biases or even trade barriers.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following theorists state the following: "the more similar the demand preferences for manufactured goods in two countries, the more intensive is the potential trade in manufactures between them"

Accepted Answer

A)  Vernon's 
B)  Adam's 
C)  Leontief 
D)  Linder's

Question 5

Which of the following statement is true?

Accepted Answer

A)  A country has a comparative advantage in producing a good if the opportunity cost for producing the good is higher at home than in the other country. 
B)  A country has a comparative advantage in producing a good if the opportunity cost for producing the good is the same at home and in the other country. 
C)  A country has a comparative advantage in producing a good if the opportunity cost for producing the good is lower at home than in the other country. 
D)  None of the above are true.

Question 6

Production function shows the amount of output that can be produced by using a given quantity of capital and labor.

Accepted Answer

A) True 
 B)False

Question 7

In today's world economy, comparative advantage must be explained by reference to differences in

Accepted Answer

A)  comparative production cost. 
B)  production factors. 
C)  both A and B. 
D)  none of the above.

Question 8

The product life cycle theory was introduced by

Accepted Answer

A)  Adam Smith. 
B)  Michael Porter. 
C)  John Vernon. 
D)  Raymond Vernon

Question 9

According to New Trade Theory, nations trade because of national advantages only.

Accepted Answer

A) True 
 B)False

Question 10

H-O theory, according to the text, is

Accepted Answer

A)  entirely correct. 
B)  not entirely obsolete. 
C)  predictive of all trade. 
D)  false.

Question 11

An example of a factor that will likely perpetuate production is

Accepted Answer

A)  a natural resource like lumber or water power. 
B)  plentiful labor. 
C)  a mineral resource like gold or tin. 
D)  all of the above.

Question 12

Accepted Answer

A)  new-product stage 
B)  growth stage 
C)  maturity stage 
D)  decline stage

Question 13

The more correct purpose of international trade theory is to

Accepted Answer

A)  bore everyone thoroughly. 
B)  explain, predict and control international trade practice 
C)  promote academics in their respective professions. 
D)  explain why at least one company trades with another.

Exam 2: International Trade Theory and Application

Europe and Asia have a relative advantage in producing steel, primarily because factories in those regions are newer and more efficient. This is an example of

Government policies, like minimum wage, will tend to throw off production preferences based upon comparative advantage.

Nations may produce goods where they have disadvantages due to demand biases or even trade barriers.

Which of the following theorists state the following: "the more similar the demand preferences for manufactured goods in two countries, the more intensive is the potential trade in manufactures between them"

Which of the following statement is true?

Production function shows the amount of output that can be produced by using a given quantity of capital and labor.

In today's world economy, comparative advantage must be explained by reference to differences in

The product life cycle theory was introduced by

According to New Trade Theory, nations trade because of national advantages only.

H-O theory, according to the text, is

An example of a factor that will likely perpetuate production is

The __________ is associated with the later portion of the export monopoly (A-B) and the start of foreign production ©

The more correct purpose of international trade theory is to