Economics MCQs

Page No. 210

Country A has an absolute advantage in ?


aBeer

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bWine

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cBoth products

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dneither products

✓


View Answer neither products

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


aA would export X to B

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b A would export Y to B

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cNeither country would want to trade

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dNone of the above

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Country B has an absolute advantage in ?


aProduct X

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bProduct Y

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cNeither X nor Y

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dBoth X and Y

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View Answer Product X

Comparative advantage is determined by ?


aactual differences in labor productivity between countries

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brelative differences in labor productivity between countries

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c Both (a) and (b)

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d Neither (a) nor (b)

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


aAbsolute advantage

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bComparative advantage

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cPhysical advantage

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dWhich way the wind blows

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View Answer Comparative advantage

The gains from international trade are closely related to ?


aThe labor theory of value

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

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cThe fact that a country must lose from trade

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dAll of the above

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Mercantilism ?


aIs the philosophy of free international trade?

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

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c Was praised by Adam Smith in the Wealth of Nations

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dBoth (a) and (c)

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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

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bBoth countries gain from trade

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cOnly one country gains from trade

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dOne country gain and the other country loses from trade

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


aAdam Smith

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bDavid Ricardo

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cEli Heckscher

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dBerti IOhlin

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View Answer David Ricardo

According to the principle of comparative advantage ?


a South Korea should export steel

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b South Korea should export steel and DVDs

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cJapan should export steel

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d Japan should export steel and DVDs

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