05 Jun GBM 381 Week 1 Quiz
1. _____________ explains how mutually beneficial trade can take place even when one nation is less efficient than another nation in the production of all commodities.
- Mercantilism
- The law of comparative advantage
- The labor theory of value
- The law of absolute advantage
2. The ability of one nation to produce a commodity using fewer resources than another nation is:
- absolute advantage
- comparative advantage
- mercantilism
- specialization
3. According to the following table, the US can gain from trade with the UK by getting how much cloth for 9 bushels of wheat?
|
U.S. |
U.K. |
|
| Wheat (bushels/hr) |
9 |
3 |
| Cloth (yards/hr) |
5 |
4 |
- Only less than 12 yards of cloth
- Only greater than 9 yards of cloth
- Anything less than 5 yards of cloth
- Anything greater than 5 yards of cloth
4. In a two-nation world, if Nation A’s export prices increase relative to their import prices, which of the following will occur?
- Terms of trade improve for both nations
- Terms of trade worsen for Nation A and improve for their trade partner
- Terms of trade improve for Nation A and worsen for their trade partner
- Terms of trade worsen for both nations
5. Which of the following would least likely apply to the product cycle theory?
- Digital cameras
- Coal
- Televisions
- Computers
6. Mexico is relatively abundant in labor, while Canada is relatively abundant in capital. In both nations, the production of televisions is relatively more capital intensive than the production of corn. According to the factor endowment theory, Mexico will have a(n):
- absolute advantage in the production of corn and computers
- absolute advantage in the production of corn
- comparative advantage in the production of corn
- comparative advantage in the production of computers
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