Topic 4.1: Benefits of International Trade Questions

Which of the following best defines absolute advantage?

Which of the following is a benefit of free trade?

The trading possibility curve (TPC) lies outside the PPC because:

According to the theory of comparative advantage, a country should specialise in producing the good for which it has:

Which of the following best defines absolute advantage?

According to the theory of comparative advantage, a country should specialise in producing the good for which it has:

Which of the following is a benefit of free trade?

Which of the following would cause a deterioration in a country's terms of trade?

An improvement in a country's terms of trade means that:

Country A can produce 100 tonnes of wheat OR 50 tonnes of cloth. Country B can produce 60 tonnes of wheat OR 40 tonnes of cloth.\n(a) Calculate the opportunity cost of 1 tonne of wheat in each country.\n(b) Which country has comparative advantage in wheat? In cloth?\n(c) State a possible range for the terms of trade for wheat.

The terms of trade are calculated as:

Which of the following would cause a deterioration in a country's terms of trade?

Country A can produce 120 tonnes of rice or 60 tonnes of tea. Country B can produce 80 tonnes of rice or 20 tonnes of tea. Which statement is correct?

Define the terms "absolute advantage" and "comparative advantage".

Define the terms "absolute advantage" and "comparative advantage".

The terms of trade are calculated as:

Which of the following is an assumption of the theory of comparative advantage?

Which of the following is an assumption of the theory of comparative advantage?

Country A can produce 120 tonnes of rice or 60 tonnes of tea. Country B can produce 80 tonnes of rice or 20 tonnes of tea. Which statement is correct?

An improvement in a country's terms of trade means that: