Quiz Related To International Trade

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  • 1/5 Questions

    A closed economy is one in which

    • The home economy is isolated from foreign trade or investment
    • Domestic firms invest in foreign countries
    • Imports exactly equal exports
    • All of the above
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About This Quiz

Explore the dynamics of international trade through this quiz, focusing on assumptions, political influences, competitiveness, and trade effects. Understand market structures and the concept of closed economies. Essential for learners interested in global business strategies and economic policies.

Quiz Related To International Trade - Quiz

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  • 2. 

    ____________ is the ability of a firm to design, produce, and market goods and services that are better and/or cheaper than those of other firms

    • Competitiveness

    • Protectionism

    • Comparative advantage

    • Interventionism

    Correct Answer
    A. Competitiveness
    Explanation
    Competitiveness refers to the ability of a firm to design, produce, and market goods and services that are better and/or cheaper than those of other firms. This means that the firm is able to offer products or services that are of higher quality, more innovative, or more cost-effective compared to its competitors. By being competitive, a firm can gain a larger market share, attract more customers, and achieve higher profitability. It involves continuously improving and adapting to market demands, staying ahead of competitors, and maintaining a strong position in the industry.

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  • 3. 

    One likely effect of moving to free international trade is that

    • A monopoly in the home market becomes an oligopoly in the world market

    • An oligopoly in the home market becomes a monopoly in the world market

    • A purely competitive firm becomes an oligopolist

    • A purely competitive firm becomes a monopolist

    Correct Answer
    A. A monopoly in the home market becomes an oligopoly in the world market
    Explanation
    When a country moves to free international trade, it opens up its domestic market to foreign competition. This increased competition can lead to the breakup of a monopoly in the home market, as other firms from around the world enter the market. As a result, the home market transitions from being dominated by a single firm to being shared by a few large firms, creating an oligopoly in the world market.

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  • 4. 

    Arguments for free trade are sometimes disregarded by the political process because

    • Maximizing consumer welfare may not be a chief priority for politicians

    • Economists tend to favor highly protected domestic markets.

    • The gains of trade are of paramount concern to typical consumers

    • Economists have a universally accepted decisive power over the political decision mechanism

    Correct Answer
    A. Maximizing consumer welfare may not be a chief priority for politicians
    Explanation
    The correct answer suggests that politicians may not prioritize maximizing consumer welfare when considering arguments for free trade. This could be due to various reasons such as political agendas, pressure from special interest groups, or a focus on other policy goals. Politicians may prioritize other factors such as protecting domestic industries or ensuring employment opportunities, which may lead them to disregard the arguments for free trade.

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  • 5. 

    International trade is logically associated with which assumption?

    • Resources are less mobile internationally than domestically

    • Resources are more mobile internationally than are goods

    • Imports should exceed exports

    • Exports should exceed imports

    • None of the above

    Correct Answer
    A. Resources are less mobile internationally than domestically
    Explanation
    International trade is logically associated with the assumption that resources are less mobile internationally than domestically. This means that factors of production such as labor, capital, and technology are not as easily moved across borders as goods and services. This assumption is based on the fact that there are often barriers to the movement of resources, such as immigration restrictions, differences in legal systems, and cultural barriers. As a result, countries engage in trade to access resources that are not readily available domestically, leading to specialization and increased efficiency in production.

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  • Current Version
  • Aug 05, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Nov 30, 2013
    Quiz Created by
    Penisencarton
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