Economics MCQs

Page No. 210

Country A has an absolute advantage in ?


aBeer


bWine


cBoth products


dneither products


View Answer neither products

If countries were to trade along the lines of comparative advantage ?


aA would export X to B


b A would export Y to B


cNeither country would want to trade


dNone of the above



Country B has an absolute advantage in ?


aProduct X


bProduct Y


cNeither X nor Y


dBoth X and Y


View Answer Product X

Comparative advantage is determined by ?


aactual differences in labor productivity between countries


brelative differences in labor productivity between countries


c Both (a) and (b)


d Neither (a) nor (b)



In the classical model of Ricardo, the direction of trade is determined by ?


aAbsolute advantage


bComparative advantage


cPhysical advantage


dWhich way the wind blows


View Answer Comparative advantage

The gains from international trade are closely related to ?


aThe labor theory of value


bHow much the autarky price differs from international terms of trade change


cThe fact that a country must lose from trade


dAll of the above



Mercantilism ?


aIs the philosophy of free international trade?


bWas a system of export promotion and barriers to imports practiced by governments?


c Was praised by Adam Smith in the Wealth of Nations


dBoth (a) and (c)



If the international terms of trade settle at a level that is between each country’s opportunity cost ?


aThere is no basis for gainful trade for either country


bBoth countries gain from trade


cOnly one country gains from trade


dOne country gain and the other country loses from trade



The earliest statement of the principle of comparative advantage is associated with ?


aAdam Smith


bDavid Ricardo


cEli Heckscher


dBerti IOhlin


View Answer David Ricardo

According to the principle of comparative advantage ?


a South Korea should export steel


b South Korea should export steel and DVDs


cJapan should export steel


d Japan should export steel and DVDs



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