lesson 2: classical vs. neo classical theories

Question 1

• is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners.
• introduces opportunity cost as a factor for analysis in choosing between different options for production

Answer 1

Comparative Advantage

Question 2

The production of goods and services requires capital and workers. Some goods need more capital-technical equipment and machinery and are considered

Answer 2

capital intensive

Question 3

Refusal to sell to a specific country

Answer 3

EMBARGOES

Question 4

restrictions on the trading of goods among countries applied explicitly in terms of quantitative restrictions (Tariffs) and implicitly as in the case of stringent standard requirements (non-tariff barriers)

Answer 4

protectionism

Question 5

According to this theory, one condition for trade is that the countries differ with respect to the availability of the factors of production. They differ if one country, for example, has many machines (capital) but few workers while another country has a lot of workers but few machines

Answer 5

theory of factors proportions

Question 6

One country will impose a tariff or any trade barrier if it feels that the other country unduly puts tariffs on the former’s products

Answer 6

RETALIATION

Question 7

NON-TARIFF BARRIERS

Answer 7

1. quotas
2. monetary barriers
3. embargoes
4. boycott

Question 8

kind of dumping that the firm discriminates in favor of some foreign buyers temporarily for the purpose of eliminating some competitors and of later raising its price when the competition is trounces

Answer 8

PREDATORY

Question 9

The first major empirical test of the H-O theory was conducted by

Answer 9

Wassily Leontief (1954)

Question 10

creation of more local companies creates more employment opportunities. The higher the employment, the higher is the probability of economic progress

Answer 10

Industrialization

Question 11

Refers to the wise use and management of valuable natural resources

Answer 11

CONSERVATION OF NATURAL RESOURCES

Question 12

TARIFF BARRIERS

Answer 12

1. specific duty
2. ad valorem duty
3. compound tariff

Question 13

Is an international price discrimination practice in which an exporting firm deliberately sells merchandise at a lower price in a foreign market than it charges in other markets, specifically and usually its home market

Answer 13

DUMPING

Question 14

are government-induced restrictions on international trade, which generally decrease overall economic efficiency

Answer 14

trade barriers

Question 15

• refers to the uncontested superiority of a country or business to produce a particular good, better.
• looks at the efficiency of producing a single product.
• refers to the ability of an individual, group, or nation to produce a product or service more cheaply than another.

Answer 15

Absolute Advantage Theory

Question 16

Refer to restrictions imposed by a government on the amount, number of pieces, or weight of goods or services that may be traded within a given period

Answer 16

QUOTAS

Question 17

Other goods require less equipment and rely mostly on the efforts of the workers to be produced. These goods are regarded

Answer 17

labor-intensive

Question 18

Import barriers would help the nation accumulate more crucial materials for future economic or military welfare in the form of either stockpiles or emergency capacity to produce

Answer 18

NATIONAL DEFENSE

Question 19

kind of dumping that goes on indefinitely

Answer 19

PERSISTENT

Question 20

in the 1950’s and 1960’s, most of the manufacturing industries in the Philippines enjoyed protection in the sense that competing imported products were subjected to high duties and taxes before they could enter the Philippine market. This was done to encourage domestic consumption of locally manufactured products

Answer 20

Infant Industry

Question 21

Refusal to buy goods from a certain country. can be voluntary actions or movements that may not need government authorization or involvement.

Answer 21

BOYCOTT

Question 22

Spearheaded the conservation efforts for the Philippine Eagle (non-exportation) as well as marine conservation, coral reef management, national park conservation, etc

Answer 22

HARIBON FOUNDATION

Question 23

proponent of absolute advantage theory

Answer 23

adam smith

Question 24

title of his book and year published

Answer 24

wealth of nations, london in 1776

Question 25

proponent of comparative advantage

Answer 25

david ricardo

Question 26

It is a statement of all transactions made between entities in one country and the rest of the world over a defined period, such as a quarter or a year.

Answer 26

BALANCE OF PAYMENTS

Question 27

Neo-classical trade theory proponent / theory of factors proportions

Answer 27

• Eli Heckscher and Bertil Ohlin

Question 28

The Philippines is always deficit-ridden

Answer 28

true