Title: International Trade
Course: TEST Course

Q: If a country can produce a good with fewer resources than another country, the first country is said to have a/an ________.
- comparative advantage
- production advantage
- absolute advantage
A: absolute advantage

Q: When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) ________ in producing that product.
- relative advantage
- economy of scale
- absolute advantage
A: absolute advantage

Q: Ghana produces cocoa for chocolate with less land and labor in comparison with all countries. If cocoa labor and cocoa land cost the same in every country, then Ghana has
- a comparative advantage in cocoa production.
- both a comparative and absolute advantage in cocoa production.
- an absolute advantage in cocoa production.
A: an absolute advantage in cocoa production.

Q: Colombia produces coffee with less labor and land than any other country; it therefore necessarily has
- both a comparative and absolute advantage in coffee production.
- an absolute advantage and comparative disadvantage in coffee production.
- an absolute advantage in coffee production
A: an absolute advantage in coffee production

Q: Compare the following answers and select the one which is correct when it comes to comparative and absolute advantage.
- It is possible for a country to produce every good and have an absolute advantage in every good.
- It is not possible for a country to produce every good and have a comparative advantage in every good.
- A country producing products at a lower opportunity cost than other nations has comparative advantage with those products.
A: A country producing products at a lower opportunity cost than other nations has comparative advantage with those products.

Q: Which of the following is true?
- A nation can have a comparative advantage in the production of every good, but not an absolute advantage.
- A nation cannot have a comparative advantage in the production of every good.
- A nation cannot have an absolute advantage in the production of every good.
A: A nation cannot have an absolute advantage in the production of every good.

Q: Julia is an expert with lab experiments in her chemistry class. She is the fastest at reading and comprehending the experiment, setting up the equipment, conducting the experiment, writing notes, making observations, and in cleaning up an experiment. Julia has a(n) ________ in chemistry experiments.
- production advantage
- speed advantage
- absolute advantage
A: absolute advantage

Q: Jethro has a(n) ________ in all aspects of camping: he is faster at carrying a backpack, gathering firewood, paddling a canoe, setting up tents, making a meal, and washing up.
- relative advantage
- opportunity cost
- absolute advantage
A: absolute advantage

Q: Using the same resources, the country of Zanzibarus produces 12 million pounds of beef or 5 million pounds of pork. Zanizibarus has a (n) ________ in beef in contrast with pork production.
- total advantage
- absolute advantage
- comparative advantage
A: comparative advantage

Q: The fictional country of Anastialia is a small country with rich resources in minerals. In an 8 hr work day it can produce 100 pounds of silver or 50 pounds of copper. If Anastialia decides to produce copper instead of silver it is ignoring the fact that its silver production has a (n)________ to copper.
- production advantage
- absolute advantage
- comparative advantage
A: comparative advantage

Q: Assuming that Brazil can produce 100 pounds of beef or 10 autos and the United States can produce 40 pounds of beef or 30 autos, what is the opportunity cost of producing one pound of beef in Brazil?
- 3/4 of an auto.
- 1/5 of an auto.
- 1/10 of an auto.
A: 1/10 of an auto.

Q: Here are alternate outputs from one day's labor input: USA: 12 bushels of wheat OR 3 yards of textiles. India: 3 bushels of wheat OR 12 yards of textiles. The opportunity cost of one bushel of wheat in India is ________.
- 1 yard of textiles
- 12 yards of textiles
- 4 yards of textiles
A: 4 yards of textiles

Q: Argentina can produce 150 pounds of beef or 20 cars; in contrast the United States can produce 90 pounds of beef or 80 cars. Which country has the absolute advantage in producing beef?
- United States
- Neither country has an absolute advantage.
- Argentina
A: Argentina

Q: Here are alternate outputs from one day's labor input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. From the data, the USA
- has an absolute advantage over India in the production of textiles.
- should export textiles to India.
- has an absolute advantage over India in the production of wheat.
A: has an absolute advantage over India in the production of wheat.

Q: Say that Aliceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 16 units of food per year or 8 units of clothing. Which of the following is true?
- Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing.
- Aliceland has a comparative advantage, but not an absolute advantage, in producing food.
- Aliceland has an absolute advantage, but not comparative advantage, in producing food.
A: Aliceland has an absolute advantage, but not comparative advantage, in producing food.

Q: In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?
- China has a comparative advantage in the production of rice.
- China has both an absolute and comparative advantage in the production of rice.
- India has a comparative advantage in the production of rice.
A: India has a comparative advantage in the production of rice.

Q: Zenobia can manufacture 4 ships or 20 computers in a week. Meanwhile, in the neighboring country of Azarmidok, 10 ships or 12 computers are produced per week. Which country has the largest opportunity cost to produce a ship and what is the opportunity cost to that country?
- Azarmidok; 5 computers
- Azarmidok; 1.2 computers
- Zenobia; 5 computers
A: Zenobia; 5 computers

Q: Yekutia has the resources to manufacture 320 motorcycles or 570 lawn-mowers per year. The country of Bezanitia, has the capability of producing 230 motorcycles or 410 lawn-mowers per year. Which country has the largest opportunity cost to produce one more motorcycle and what is the opportunity cost to that country?
- Yekutia has the largest opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year.
- Bezanitia has the largest opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year.
- Bezanitia and Yekutia have equal opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year.
A: Bezanitia and Yekutia have equal opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year.

Q: When complimentary trading firms have specialized workers and processes in a particular product, and they engage in intra-industry trade, it creates benefits from working together by creating ________.
- a competitive advantage
- value chain
- innovation and learning
A: innovation and learning

Q: Intra-industry trade between similar trading partners allows the gains from ________ that arise when firms and workers specialize in the production of a certain product.
- comparative advantage
- creating the value chain
- learning and innovation
A: learning and innovation

Q: An economic benefit to engaging in intra-industry trade between countries includes ________.
- diseconomies of scale
- the value chain
- division of labor
A: division of labor

Q: Which of the following is an economic benefit when countries participate in intra-industry trading?
- Diseconomies of scale
- The value chain
- Division of labor
A: Division of labor

Q: An advantage to engaging in intra-industry trade between countries includes ________.
- diseconomies of scale
- the value chain
- economies of scale
A: economies of scale

Q: ________ is one of the prevalent advantages for countries to engaging intra-industry trade.
- Duplication of efforts
- Rising opportunity cost
- Economies of scale
A: Economies of scale

Q: One of the advantages of intra-industry trade is the division of labor which leads to ________.
- increased output and decreased costs
- increases in the value chain
- learning, innovation, and unique skills
A: learning, innovation, and unique skills

Q: What does the benefit of division of labor that comes from intra-industry foster and lead to?
- Decreased costs and increased output
- Value chain increases
- Development of unique skills, innovation and learning
A: Development of unique skills, innovation and learning

Q: A broad reason that intra-industry trade between similar nations produces economic gains involves ________ because it allows producers to supply the market and variety to consumers.
- specialization
- learning
- economies of scale
A: economies of scale

Q: Intra-industry trade provides a way to combine the lower average production costs that come from ________ and still have competition and variety in the market.
- learning
- specialization
- economies of scale
A: economies of scale

Q: Together, intra-industry trade and economies of scale provide ________.
- no variety to consumers
- specialization through machinery
- competition between producers
A: competition between producers

Q: Economies of scale and intra-industry trade combine to produce ________.
- no competition between producers
- specialization through machinery
- variety for consumers
A: variety for consumers

Q: The fictional global firm of Knickerbockers Socks established itself in the international trade industry ten years ago and has been an active participant with intra-industry trade in developed countries. Because of the way Knickerbockers operates, it can take advantage of economies of scale. What do economies of scale make possible for its sock customers?
- A fun website where kids can play games and post pictures of their favorite socks.
- Great marketing campaign which generates more sales in the US.
- A large variety of sock styles and sizes at competitive prices.
A: A large variety of sock styles and sizes at competitive prices.

Q: The large business Paddle Anywhere, Inc. is in the process of creating, with intra-industry trade, better economies of scale for its folding kayak and paddle business. What do you expect better economies of scale in this company could create for its consumers?
- It could reduce the number of other firms in competition with Paddle Anywhere.
- It could increase the prices of Paddle Anywhere’s products as they adopt better business processes.
- It could increase product options and decrease prices of Paddle Anywhere’s products.
A: It could increase product options and decrease prices of Paddle Anywhere’s products.

Q: The large global firm, Hyundai, sells its cars along with other car manufacturers around the globe through intra-industry trading. Hyundai takes advantage of economies of scale by having car plants in various parts of the world. How would Hyundai become more globally competitive through more intra-industry trade and better economies of scale?
- It would make more ad campaigns in a variety of languages in its currently established countries.
- It would offer a streamlined choice of colors for its cars where customer could select between four colors.
- It would expand into new countries and offer more variety to its customers in established markets.
A: It would expand into new countries and offer more variety to its customers in established markets.

Q: If a large firm plans to become more competitive in its market space and has already decreased its production costs using economies of scale, what would happen in relation to its intra-industry trade?
- It would foster less competition by creating a successful marketing campaign in the US.
- It would buy more machinery and equipment to produce its products faster.
- It would work to expand its competitive products into other countries and offer variety to customers.
A: It would work to expand its competitive products into other countries and offer variety to customers.

Q: The reasons that nations trade includes the fact that
- the wants of their citizens exceeds their productive capacity.
- different countries have different levels of greed.
- no one country produces all of what citizens within the country want.
A: no one country produces all of what citizens within the country want.

Q: What is one of the reasons nations trade with each other?
- A country’s ability to produce tends to be equal to what its citizens want.
- Resources are spread out evenly among countries.
- No country can create or produce everything its citizens desire.
A: No country can create or produce everything its citizens desire.

Q: Trade allows each country to take advantage of ________ than the other country.
- economies of scale
- specialization
- lower opportunity costs
A: lower opportunity costs

Q: ________ allows a country to seize the market opportunity and trade with other countries which have easier production and lower cost of certain goods in its marketplace.
- Protectionist policies
- In depth education
- Lower opportunity costs
A: Lower opportunity costs

Q: Free trade results in ________.
- losses from trade
- gains from only exports
- gains from trade
A: gains from trade

Q: Overall, free trade results in ________.
- an increase in price and an decrease in quantity
- a decrease in price and a decrease in quantity
- a decrease in price and an increase in quantity
A: a decrease in price and an increase in quantity

Q: If Canada has a surplus of paper products produced but its consumers demand more cleaning solutions, and the US has an abundance of cleaning solutions but consumers are demanding more paper products, how would trade benefit both countries?
- Trade would assist both countries by creating excess demand.
- Trade would assist both countries by strengthening their natural resources.
- Trade would assist both countries to both reduce excess supply and satisfy market demand.
A: Trade would assist both countries to both reduce excess supply and satisfy market demand.

Q: Guatemala produces an excess supply of coffee but has consumers demanding electronics. Mexico generates a large supply of electronics but its market demands more coffee. What would happen if both countries traded?
- Assist both countries by creating excess supply.
- Assist both countries by strengthening marketplace innovation.
- Assist both countries in reducing excess supply and satisfying market demand.
A: Assist both countries in reducing excess supply and satisfying market demand.