International Trade

Question 1

Absolute Advantage

Answer 1

Producing a given product more cost effectively than another

Question 2

Comparative Advantage

Answer 2

The ratio of costs for producing one product relative to another is less than the same ratio in another country’s economy

Question 3

Extra purchasing power that trade makes possible is?

Answer 3

Gains from trade

Question 4

Extra purchasing power added by specializing production

Answer 4

Gains from specialization

Question 5

Only claim in economics which is both non-obvious and important

Answer 5

Theory of comparative advantage

Question 6

Trade expands?

Answer 6

Consumption

Question 7

Trade redistributes?

Answer 7

Income and opportunity

Question 8

Heckscher-Ohlin trade theory characterizes states by

Answer 8

1. land
2. Labor
3. Capital for investment
4. Human capital

Question 9

Stolper-Samuelson says trade interests are organized around

Answer 9

1. Labor
2. capital
3. Land

Question 10

This person suggests a world in which factors of production are specific to particular industries

Answer 10

Ricardo Viner

Question 11

Melitz model says

Answer 11

1. Some firms are more productive than others
2. only the most productive and largest firms export