28 Questions
When a country requires fewer resources to produce a product than other countries, it is said to have a(n):
Absolute advantage in the production of the product
When a country requires more resources to produce a product than other countries, it is said to have a(n):
Absolute disadvantage in the production of the product
The primary explanation of trade among nations is Ricardo's theory of:
Comparative advantage
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
Comparative costs
According to Ricardo:
All countries can gain from trade if they export goods for which they have a comparative advantage
According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because:
The nation's resources are used where they are most productive
Which of the following is NOT a reason why countries trade goods with one another (from an economist’s point of view)?
Differences in countries' political systems
A country's factors of production include its:
Labor, capital, and natural resources
Which of the following is NOT considered to be a factor of production?
Government
In trade, if a nation can produce a good with the fewest resources due to technology, it is known as a(n):
Absolute advantage
The focus of the Ricardian model is on how:
Countries' resource bases explain international trade
Which of the following is a reason why countries might not trade goods with one another based on the economist’s point of view?
Differences in countries' land area
Which of the following is considered a factor of production according to the text?
Energy
Based on the text, what is the focus of the Ricardian model?
Explaining differences in international trade patterns
In trade, if a nation can produce a good with fewer resources due to technology, it is known as a(n):
Technology advantage
What is NOT a reason why countries trade goods with one another according to the text?
Differences in countries' languages and cultures
Which of the following is NOT considered a factor of production according to the text?
Government
According to the text, which of the following is NOT a reason why countries trade goods with one another?
The proximity of countries to one another
What is the primary explanation of trade among nations according to Ricardo's theory?
Comparative advantage.
In trade, if a nation can produce a good with the fewest resources due to technology, it is known as a(n):
Absolute advantage in the production of the product.
According to Ricardo, all countries can gain from trade if they export goods for which they have:
A comparative advantage.
When a country requires more resources to produce a product than other countries, it is said to have a(n):
Absolute disadvantage in the production of the product.
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
Comparative costs
According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because:
The nation's resources are used where they are most productive.
What is meant by a country having an absolute disadvantage in the production of a product?
The country requires more resources to produce the product than other countries.
What does it mean when a country is said to have an absolute advantage in the production of a product?
The country requires fewer resources to produce the product than other countries.
What is David Ricardo's belief about trade according to his theory of comparative advantage?
All countries can gain from trade if they export goods for which they have a comparative advantage.
According to Ricardo's theory, what increases a nation's total output through international trade?
The nation's resources are used where they are most productive.
Study Notes
Comparative Advantage and International Trade
- A country has an absolute advantage when it requires fewer resources to produce a product than other countries.
- A country has an absolute disadvantage when it requires more resources to produce a product than other countries.
- Ricardo's theory of trade among nations is based on the concept of comparative advantage.
- The focus of the Ricardian model is on how differences in labor productivity influence international trade patterns.
- According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because countries specialize in producing goods for which they have a lower opportunity cost.
- A country's factors of production include its labor, capital, and natural resources.
- Technology is not considered a factor of production.
- If a nation can produce a good with the fewest resources due to technology, it is known as having an absolute advantage.
- Countries trade goods with one another because of differences in opportunity costs, not because of differences in absolute costs.
- Countries might not trade goods with one another due to transportation costs, tariffs, and quotas.
- According to Ricardo, all countries can gain from trade if they export goods for which they have a comparative advantage.
- International trade increases a nation's total output because countries specialize in producing goods for which they have a comparative advantage.
Test your knowledge of international economics with this multiple choice quiz based on R.C. Feenstra and A. M. Taylor's book 'International Trade, 2nd Edition'. The questions cover topics from Chapter 1, including comparative advantage and the Ricardian Model.
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