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Questions and Answers
What determines whether a country will engage in export or import, according to the text?
What determines whether a country will engage in export or import, according to the text?
The difference between the domestic market price (DMP) and the world market price (WMP).
What is the economic philosophy that advocates for a government to stimulate exports and restrict imports?
What is the economic philosophy that advocates for a government to stimulate exports and restrict imports?
Mercantilism
What is the area 'D' in the diagram and table representing?
What is the area 'D' in the diagram and table representing?
The increase in total surplus, which represents the gains from trade.
What is the main argument presented by Adam Smith in 'The Wealth of Nations'?
What is the main argument presented by Adam Smith in 'The Wealth of Nations'?
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What is the term for the situation where a country exports more than it imports, resulting in an inflow of precious metal?
What is the term for the situation where a country exports more than it imports, resulting in an inflow of precious metal?
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What is the purpose of trade policy, according to the text?
What is the purpose of trade policy, according to the text?
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What is the concept where countries produce commodities in which they have an absolute advantage and import those in which they have an absolute disadvantage, leading to an increase in world output?
What is the concept where countries produce commodities in which they have an absolute advantage and import those in which they have an absolute disadvantage, leading to an increase in world output?
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According to Ricardo, what should a nation specialize in producing and exporting if it has an absolute disadvantage in the production of all commodities with respect to another nation?
According to Ricardo, what should a nation specialize in producing and exporting if it has an absolute disadvantage in the production of all commodities with respect to another nation?
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What is the term for the economic policy that advocates for minimizing government interference in domestic economy and international trade?
What is the term for the economic policy that advocates for minimizing government interference in domestic economy and international trade?
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What is the result of international trade when countries specialize in producing commodities in which they have an absolute advantage?
What is the result of international trade when countries specialize in producing commodities in which they have an absolute advantage?
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What is the term for the increase in output resulting from international trade, which is shared by all trading nations?
What is the term for the increase in output resulting from international trade, which is shared by all trading nations?
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According to Adam Smith, what is the condition for maximizing the gains from trade?
According to Adam Smith, what is the condition for maximizing the gains from trade?
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What is the basis for international trade according to the Law of Comparative Advantage?
What is the basis for international trade according to the Law of Comparative Advantage?
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What is the result of specialization according to comparative advantage?
What is the result of specialization according to comparative advantage?
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What is the purpose of tariffs, quotas, and non-tariff barriers?
What is the purpose of tariffs, quotas, and non-tariff barriers?
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What is the difference between a tariff and a quota?
What is the difference between a tariff and a quota?
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What is the opportunity cost approach in the context of international trade?
What is the opportunity cost approach in the context of international trade?
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Why is free trade not widely accepted as completely beneficial to all parties?
Why is free trade not widely accepted as completely beneficial to all parties?
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