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Multiple Choice Quiz
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1
_______ occurs when a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another.
A)Mercantilism
B)Zero-sum game
C)Free trade
D)Absolute advantage
E)The Leontief Paradox
2
McCain Foods of Canada complained to CBSA that U.S. producers were dumping pizzas in Canada, this means
A)Canadian producers were selling pizzas to Canada for a price cheaper than in their home U.S. market
B)U.S. producers were selling pizzas to Canada for a price cheaper than in their home U.S. market
C)Canadian producers were selling pizzas to Canada for a price cheaper than in their home Canadian market
D)U.S. producers were selling pizzas to Canada for a price more expensive than in their home U.S. market
E)U.S. producers were selling pizzas to Canada at a volume amount greater than in their home U.S. market
3
The _______ theory of international trade believes it is in a country's best interest to export more than it imports.
A)free trade
B)comparative advantage
C)Heckscher-Ohlin Theory
D)absolute advantage
E)mercantilism
4
A situation in which a gain by one country results in a loss by another refers to:
A)zero-sum game.
B)free trade.
C)comparative advantage.
D)positive-sum game.
E)absolute advantage.
5
A country is said to have a(n) _______ when it is more efficient at producing a product than any other country.
A)comparative advantage
B)mixed advantage
C)absolute advantage
D)positive-sum game
E)zero-sum game
6
What is it called when a country specializes in producing the goods it produces most efficiently and buys the products it produces less efficiently, even if it could produce the goods more efficiently?
A)Absolute advantage
B)Mercantilism
C)Free trade
D)Comparative advantage
E)Restricted trade
7
Differences in labour productivity between nations underlie the notion of:
A)mercantilism.
B)comparative advantage.
C)Heckscher-Ohlin theory.
D)restricted trade theory.
E)hybrid market economy.
8
In the explanation of comparative advantage using Ghana and South Korea, the result of trade is that:
A)consumers in each country have slightly less product available
B)manufacturers have uncompetitive prices
C)the government makes more money taxing businesses
D)consumers in both nations can consumer more of both goods
E)consumers in both nations have only one source of goods
9
Which of these is the basic message of the theory of comparative advantage?
A)Potential world production is greater with unrestricted free trade than it is with restricted trade.
B)Consumers in all nations can consume more if there are restrictions on trade where inefficiencies exist.
C)Countries that lack an absolute advantage in the production of any good should be from trade.
D)Trade is a zero-sum game.
E)None of these.
10
Life Savers moved from Michigan to Canada, mainly because:
A)they can buy sugar at a lower world market price in Canada.
B)Canadian corporate taxes are lower.
C)the Canadian dollar is cheaper.
D)Canada has better workers in the candy industry.
E)of government incentives.
11
Which theory argued that comparative advantage arises from differences in national factor endowments?
A)Mercantilism
B)Comparative advantage
C)Heckscher-Ohlin theory
D)Restricted trade theory
E)Hybrid market economy
12
This theory has been one of the most influential theories in international economics. Most economists prefer the _______ theory to Ricardo's theory because it makes fewer simplifying assumptions.
A)Heckscher-Ohlin
B)Michael Porter
C)Adam Smith
D)David Hume
E)Raymond Vernon
13
Who proposed the product life-cycle theory?
A)Michael Porter
B)Adam Smith
C)David Ricardo
D)Raymond Vernon
E)David Hume
14
The product becomes _______, according to Vernon, as the market in the United States and other advanced nations matures.
A)more expensive
B)more standardized
C)totally obsolete
D)new and improved
E)more differentiated
15
Economies of Scale is a term associated with
A)Customer savings associated with large scale output
B)Unit cost reductions associated with minimal scale output
C)Unit cost reductions associated with large scale output
D)Unit cost increases associated with large scale output
E)Customer savings associated with small scale output
16
New trade theorists stress the role of ______ in giving a firm first-mover advantages.
A)luck, restricted trade, and innovation
B)innovation, luck, and entrepreneurship
C)entrepreneurship, restricted trade, and luck
D)innovation, restricted trade, and entrepreneurship
E)restricted trade, government intervention, and luck
17
According to Porter's diamond, all of these attributes, except _______, are determinants of national competitive advantage.
A)government intervention
B)firm strategy structure and rivalry
C)demand conditions
D)factor endowments
E)relating and supporting industries
18
Which of these, according to Porter, is a part of advanced factors?
A)Natural resources
B)Location
C)Demographics
D)Communications infrastructure
E)Climate
19
_____ advantages are economic and strategic advantages that accrue to early entrants into an industry.
A)Mercantile
B)Free-trade
C)First-mover
D)Absolute
E)Comparative







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