Question 1

Absolute advantage occurs when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.

Accepted Answer

Absolute advantage refers to the ability of a country to produce a good more efficiently (using fewer resources) than other countries. It does not necessarily imply a monopoly but indicates superior production capabilities for a specific product.

Question 2

Free trade is the movement of goods and services among nations without political or economic trade barriers.

Accepted Answer

Free trade implies the absence of trade barriers, such as tariffs, quotas or other restrictions that could limit or prohibit the free flow of goods and services among countries.

Question 3

Global trade is the exchange of goods and services across national borders.

Accepted Answer

Global trade refers to the import and export of goods and services between countries.

Question 4

Every country has a comparative advantage in something.

Accepted Answer

The theory of comparative advantage argues that each country should specialize in producing and exporting goods and services for which they have a lower opportunity cost than other countries, resulting in overall gains from trade. This means that every country has a comparative advantage in something, whether it is a natural resource, a skilled workforce, or a particular industry that can produce goods at a lower cost.

Question 5

A trade surplus occurs when the value of the country's exports exceeds that of its imports.

Accepted Answer

A trade surplus occurs when a country is selling more goods and services to foreign buyers than it is purchasing from foreign sources. This can result in an increase in the country's foreign exchange reserves and a boost to its economy.

Question 6

Economics tells us that it is a poor idea to trade globally.

Accepted Answer

Economics generally supports global trade as it allows countries to specialize in products they can produce efficiently and exchange them for products they cannot produce efficiently. This leads to increased productivity, innovation, and improved living standards for all countries involved. However, there can be challenges and negative effects such as job displacement and environmental concerns which need to be addressed through appropriate policies.

Question 7

Importing is buying products from another country.

Accepted Answer

Importing involves purchasing goods or services from a foreign country.

Question 8

Comparative advantage theory states that some countries have a monopoly on producing a specific product.

Accepted Answer

Comparative advantage theory states that countries should specialize in producing goods that they can produce more efficiently and effectively than other countries, not that they have a monopoly on a specific product. Countries may have a comparative advantage in producing multiple goods, but this does not mean they have a monopoly on any particular product.

Question 9

A trade deficit occurs when the value of the country's imports exceeds that of its exports.

Accepted Answer

A trade deficit occurs when a country imports more goods and services than it exports, resulting in a negative balance of trade. This means that the country is buying more goods from other countries than it is selling to them, resulting in more money leaving the country than coming in.

Question 10

Global trade only includes the trade of manufactured goods.

Accepted Answer

Global trade includes the trade of both manufactured and non-manufactured goods, such as raw materials, agricultural products, and services.

Question 11

Comparative advantage theory states that a country should sell to other countries those products that it produces most effectively and efficiently.

Accepted Answer

Comparative advantage theory is based on the principle that a country should focus on producing and exporting products in which it has a comparative advantage, i.e. where it can produce the products more efficiently and effectively than other countries. By doing so, the country can obtain a higher level of productivity, lower production cost, and better international trade terms, leading to an overall economic growth.

Question 12

One advantage of engaging in business globally is the businesses have entirely new markets in which to sell their products.

Accepted Answer

Engaging in business globally allows businesses to access new markets that they otherwise would not have been able to reach in their domestic market. This can result in increased sales and revenue for the business.

Question 13

Exporting is buying products from another country.

Accepted Answer

Exporting is selling products to another country, not buying.

Question 14

One disadvantage of global business is that labor is more expensive overseas.

Accepted Answer

The statement is false. Labor is often cheaper in foreign countries, which is why many businesses choose to outsource or relocate their operations to countries with lower labor costs.

Question 15

Global business is the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.

Accepted Answer

Global business refers to the exchange of goods, services, technology, capital, and/or knowledge across national borders and at a global or transnational scale. It involves understanding the international trade environment, including economic, political, and cultural differences. The definition provided more accurately describes economics, which is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

Question 16

The balance of trade is a nation's ratio of imports to exports.

Accepted Answer

The balance of trade is the difference between a nation's exports and imports, not just a ratio.

Question 17

Many Middle Eastern countries have a comparative advantage in the production of oil.

Accepted Answer

The answer of Many Middle Eastern countries have a comparative...

Question 18

Global business is any activity that seeks to provide goods and services to others across national borders while operating at a profit.

Accepted Answer

Global business involves engaging in economic transactions across international borders with the intention of earning a profit. This can include importing and exporting goods, establishing production facilities in foreign countries, and conducting business operations in multiple countries.

Question 19

Global business is not particularly competitive because the market is so big.

Accepted Answer

Global business is very competitive because companies from around the world are all vying for a piece of the global market. The size of the market does not diminish the competition, but rather increases it as businesses compete on a global scale.

Question 20

The global market is smaller than the American market.

Accepted Answer

This statement is false. The global market is much larger than just the American market.

Quiz 11: Creating Products and Pricing Strategies to Meet Customers Needs