Test Bank for International Economics 4th Edition by Feenstra
1. Which of the following is NOT a reason why countries trade goods with one another?
A) differences in technology used in different countries
B) differences in countries' total amount of resources
C) the proximity of countries to one another
D) differences in countries' languages and cultures
2. David Ricardo's model explains trade based on:
A) labor supply.
B) technology.
C) population.
D) government control.
3. Which of the following is the MOST likely explanation for a Detroit construction
company's imports of concrete blocks made in Windsor, Ontario?
A) the Ricardian model
B) offshoring
C) technology
D) proximity
4. What is the MOST likely reason why neighboring nations engage in trade?
A) labor availability
B) similar tastes and preferences
C) proximity
D) shared membership in a free-trade area
5. A country's factors of production includes:
A) its labor, capital, natural resources, and markets.
B) only its labor and capital.
C) only its capital and natural resources.
D) its labor, capital, and natural resources.
6. Which of the following is NOT considered to be a factor of production?
A) labor
B) capital
C) natural resources
D) government
Page 1
,
, 7. When a firm in one nation purchases unfinished products internationally and adds
further processing to sell in the domestic market, this is known as:
A) barter.
B) offshoring.
C) factor movement.
D) marketing arrangements.
8. In some cases, a country can export a good without having any advantage in the natural
resources needed to produce it. Which of the following is an example of this type of
export?
A) Austrian exports of snowboards
B) U. S. exports of ―icewine‖
C) Japanese exports of Toyotas
D) Canadian exports of lumber
9. In some cases, a country can export a good without having any advantage in the natural
resources needed to produce it. Which of the following is an example of this type of
export?
A) United Arab Emirates's exports of high-quality snowboards
B) U. S. exports of Caterpillar bulldozers
C) French exports of wine
D) Canadian exports of lumber
10. In trade, if a nation has the technology to produce a good with fewest resources (such as
Germany's production of snowboards), it is known as a(n):
A) absolute advantage.
B) technology advantage.
C) comparative advantage.
D) resource advantage.
11. The Ricardian model focuses on how:
A) countries' resource bases explain international trade.
B) countries' different technologies explain international trade.
C) transportation costs explain international trade.
D) different languages and cultures explain international trade.
Page 2
, 12. When a country requires fewer resources to produce a product than other countries, it is
said to have a(n):
A) absolute advantage in the production of the product.
B) comparative advantage in the production of the product.
C) higher opportunity cost of producing the product.
D) lower opportunity cost of producing the product.
13. When a country requires more resources to produce a product than other countries, it is
said to have a(n):
A) absolute disadvantage in the production of the product.
B) comparative disadvantage in the production of the product.
C) lower opportunity cost of producing the product.
D) higher opportunity cost of producing the product.
14. The primary explanation of trade among nations is Ricardo's theory of:
A) offshoring.
B) resource abundance.
C) absolute advantage.
D) comparative advantage.
15. The Ricardian model focuses on how differences in influence international
trade patterns.
A) demand
B) comparative costs
C) absolute costs
D) transportation costs
16. Ricardo's theory of trade discredited the school of economic thought that believed
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. This school of economic thought was
known as:
A) export preference.
B) mercantilism.
C) monetary economics.
D) price-specie-flow mechanism.
Page 3
1. Which of the following is NOT a reason why countries trade goods with one another?
A) differences in technology used in different countries
B) differences in countries' total amount of resources
C) the proximity of countries to one another
D) differences in countries' languages and cultures
2. David Ricardo's model explains trade based on:
A) labor supply.
B) technology.
C) population.
D) government control.
3. Which of the following is the MOST likely explanation for a Detroit construction
company's imports of concrete blocks made in Windsor, Ontario?
A) the Ricardian model
B) offshoring
C) technology
D) proximity
4. What is the MOST likely reason why neighboring nations engage in trade?
A) labor availability
B) similar tastes and preferences
C) proximity
D) shared membership in a free-trade area
5. A country's factors of production includes:
A) its labor, capital, natural resources, and markets.
B) only its labor and capital.
C) only its capital and natural resources.
D) its labor, capital, and natural resources.
6. Which of the following is NOT considered to be a factor of production?
A) labor
B) capital
C) natural resources
D) government
Page 1
,
, 7. When a firm in one nation purchases unfinished products internationally and adds
further processing to sell in the domestic market, this is known as:
A) barter.
B) offshoring.
C) factor movement.
D) marketing arrangements.
8. In some cases, a country can export a good without having any advantage in the natural
resources needed to produce it. Which of the following is an example of this type of
export?
A) Austrian exports of snowboards
B) U. S. exports of ―icewine‖
C) Japanese exports of Toyotas
D) Canadian exports of lumber
9. In some cases, a country can export a good without having any advantage in the natural
resources needed to produce it. Which of the following is an example of this type of
export?
A) United Arab Emirates's exports of high-quality snowboards
B) U. S. exports of Caterpillar bulldozers
C) French exports of wine
D) Canadian exports of lumber
10. In trade, if a nation has the technology to produce a good with fewest resources (such as
Germany's production of snowboards), it is known as a(n):
A) absolute advantage.
B) technology advantage.
C) comparative advantage.
D) resource advantage.
11. The Ricardian model focuses on how:
A) countries' resource bases explain international trade.
B) countries' different technologies explain international trade.
C) transportation costs explain international trade.
D) different languages and cultures explain international trade.
Page 2
, 12. When a country requires fewer resources to produce a product than other countries, it is
said to have a(n):
A) absolute advantage in the production of the product.
B) comparative advantage in the production of the product.
C) higher opportunity cost of producing the product.
D) lower opportunity cost of producing the product.
13. When a country requires more resources to produce a product than other countries, it is
said to have a(n):
A) absolute disadvantage in the production of the product.
B) comparative disadvantage in the production of the product.
C) lower opportunity cost of producing the product.
D) higher opportunity cost of producing the product.
14. The primary explanation of trade among nations is Ricardo's theory of:
A) offshoring.
B) resource abundance.
C) absolute advantage.
D) comparative advantage.
15. The Ricardian model focuses on how differences in influence international
trade patterns.
A) demand
B) comparative costs
C) absolute costs
D) transportation costs
16. Ricardo's theory of trade discredited the school of economic thought that believed
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. This school of economic thought was
known as:
A) export preference.
B) mercantilism.
C) monetary economics.
D) price-specie-flow mechanism.
Page 3
