Question 1

Which of the following is NOT considered to be a factor of production?

Accepted Answer

Government may be involved in regulating the factors of production, but it is not a factor of production itself. The traditional factors of production are labor, capital, and natural resources.

Question 2

When a country requires more resources to produce a product than other
Countries, it is said to have a(n):

Accepted Answer

When a country requires more resources to produce a product than other countries, it has an absolute disadvantage in the production of that product.

Question 3

Mercantilists believed that:

Accepted Answer

Mercantilists believed that exporting goods is beneficial for the economy as it brings in gold and other valuable resources, while importing goods is seen as a drain on resources and wealth. Therefore, exports are good and imports are bad according to the mercantilist ideology.

Question 4

Which of the following is the MOST likely explanation for a Detroit
Construction company's imports of Canadian concrete blocks made in
Windsor, Ontario?

Accepted Answer

The most likely explanation is proximity, as the Canadian supplier of concrete blocks is located in Windsor, Ontario, which is close to Detroit.

Question 5

The primary explanation of trade among nations is Ricardo's theory of:

Accepted Answer

Ricardo's theory of comparative advantage states that countries should specialize in producing goods and services that they can produce most efficiently (i.e. at the lowest opportunity cost) and trade with countries that have a comparative advantage in producing other goods and services. This leads to increased efficiency and overall economic welfare for all countries involved in trade.

Question 6

What is the MOST likely reason neighboring nations engage in trade?

Accepted Answer

Proximity is the most likely reason neighboring nations engage in trade because it is simply easier and more cost-effective to transport goods across a short distance than over a long distance. Additionally, neighboring countries often share borders, which can make trade more efficient and facilitate the movement of goods between the two countries. While the other options (labor availability, similar tastes and preferences, and shared membership in a free-trade area) can also be factors in determining trade behavior between nations, they are not as universally applicable as proximity.

Question 7

According to the Ricardian principle of comparative advantage,
International trade increases a nation's total output because:

Accepted Answer

The Ricardian principle of comparative advantage states that a nation should specialize in producing and exporting goods that it can produce more efficiently than other countries, and import goods that it cannot produce as efficiently. Through this specialization, a nation's resources are used where they are most productive, leading to an increase in total output. Therefore, option A is the correct answer. Option B is incorrect as international trade does not necessarily lead to a decline in the output of a nation's trading partner. Option C is incorrect as producing beyond the production possibilities frontier is not possible due to resource constraints. Option D is also incorrect as the Ricardian principle does not necessarily lead to an increase in consumption, but rather an increase in total output.

Question 8

David Ricardo's model, which provided an explanation of why nations
Trade, was based on:

Accepted Answer

The answer of David Ricardo's model, which provided an explanation...

Question 9

Ricardo's theory of trade discredited the idea that inflows of gold or silver
As a result of exporting helped a nation, while outflows of gold or silver
As a result of importing hurt a nation; that was known as:

Accepted Answer

Ricardo's theory of trade challenged the mercantilist belief that a nation's wealth was measured by its stock of gold and silver, which was thought to be increased by exporting more than importing.

Question 10

The focus of the Ricardian model is on how:

Accepted Answer

The Ricardian model focuses on how countries' different technologies explain international trade. It does not account for transportation costs or cultural differences.

Question 11

When a country requires fewer resources to produce a product than
Other countries, it is said to have a(n):

Accepted Answer

When a country can produce a product with fewer resources, it has an absolute advantage in the production of that product.

Question 12

Ricardo's theory made a number of assumptions, including which of the
Following?

Accepted Answer

Ricardo's theory of comparative advantage assumes that there are no barriers to trade (free trade) and that nations have balanced trade with their partners.

Question 13

Ricardo's theory showed that if nations are allowed to trade freely, the
Result will be that:

Accepted Answer

Ricardo's theory of comparative advantage showed that if nations specialize in producing goods in which they have a lower opportunity cost and then trade with others, both parties will benefit from the exchange. This leads to increased efficiency, lower prices, and higher economic output for all trading nations. Therefore, all trading nations benefit by trade, making choice A the correct answer.

Question 14

David Ricardo believed that:

Accepted Answer

David Ricardo was a proponent of the theory of comparative advantage, which states that all nations can benefit from free international trade by specializing in producing what they are most efficient at producing and then trading with other countries for goods and services that they are less efficient at producing. This theory supports the idea of mutual gain from trade rather than a zero-sum game.

Question 15

The focus of the Ricardian model is on how differences in _________
Influence international trade patterns.

Accepted Answer

The Ricardian model focuses on comparative costs, which refer to the relative efficiency with which countries can produce goods. This concept is crucial in determining trade patterns, as countries tend to specialize in the production of goods in which they have a comparative advantage and then trade with other countries for goods in which they do not have a comparative advantage. Differences in absolute costs, transportation costs, and even demand can also impact trade patterns, but the Ricardian model specifically highlights comparative costs as the main driver of international trade.

Question 16

When a firm in one nation purchases unfinished products internationally
And adds further processing to sell in the domestic market, this is known
As:

Accepted Answer

This scenario describes offshoring, which is when a company purchases unfinished products or services from another country to complete the production process in their own domestic market.

Question 17

According to Ricardo:

Accepted Answer

Ricardo's theory of comparative advantage states that all countries can benefit from trade if they specialize in producing goods that they have a comparative advantage in, meaning they can produce at a lower opportunity cost than other countries. This allows for more efficient production and trade of goods, leading to economic gains for all countries involved.

Question 18

A country's factors of production include its:

Accepted Answer

A country's factors of production include its labor, capital, and natural resources. This means that for an economy to function, it requires the input of these three factors to produce goods and services.

Question 19

In trade, if-due to technology-a nation can produce a good (such as
Germany's production of snowboards) with fewest resources, it is known
As a(n):

Accepted Answer

Absolute advantage refers to the ability of a nation to produce a good using fewer resources than another nation.

Question 20

Which of the following is NOT a reason why countries trade goods with
One another?

Accepted Answer

Differences in language and culture may make it more difficult to trade, but it is not a reason why countries would choose to trade with one another. The other options all have an impact on trade, as differences in technology and resources can make it beneficial for countries to specialize in certain goods and trade with others, while proximity can impact transportation costs and ease of trade.

Quiz 2: Trade and Technology: the Ricardian Model

Which of the following is NOT considered to be a factor of production?

When a country requires more resources to produce a product than other Countries, it is said to have a(n) :

Mercantilists believed that:

Which of the following is the MOST likely explanation for a Detroit Construction company's imports of Canadian concrete blocks made in Windsor, Ontario?

The primary explanation of trade among nations is Ricardo's theory of:

What is the MOST likely reason neighboring nations engage in trade?

According to the Ricardian principle of comparative advantage, International trade increases a nation's total output because:

David Ricardo's model, which provided an explanation of why nations Trade, was based on:

Ricardo's theory of trade discredited the idea that inflows of gold or silver As a result of exporting helped a nation, while outflows of gold or silver As a result of importing hurt a nation; that was known as:

The focus of the Ricardian model is on how:

When a country requires fewer resources to produce a product than Other countries, it is said to have a(n) :

Ricardo's theory made a number of assumptions, including which of the Following?

Ricardo's theory showed that if nations are allowed to trade freely, the Result will be that:

David Ricardo believed that:

The focus of the Ricardian model is on how differences in _________ Influence international trade patterns.

When a firm in one nation purchases unfinished products internationally And adds further processing to sell in the domestic market, this is known As:

According to Ricardo:

A country's factors of production include its:

In trade, if-due to technology-a nation can produce a good (such as Germany's production of snowboards) with fewest resources, it is known As a(n) :

Which of the following is NOT a reason why countries trade goods with One another?