The Reasons for International Trade Quiz by Shubhrata Shrestha | Jun 2, 2025 | 0 comments The Reasons for International Trade Quiz 1. Which of the following best defines comparative advantage? A) Producing a good using fewer resources B) Producing a good at lower opportunity cost C) Producing more of all goods D) Producing at full employment None 2. A country benefits from international trade when: A) It imports more than it exports B) It only exports finished goods C) It specialises according to comparative advantage D) It has trade restrictions in place None 3. The terms of trade improve when: A) Export prices fall relative to import prices B) Import prices rise more than export prices C) Export prices rise faster than import prices D) Import volumes increase significantly None 4. A limitation of the comparative advantage theory is: A) It assumes multiple currencies B) It assumes perfect competition C) It includes taxes and quotas D) It assumes no transport costs None 5. What does the trading possibility curve (TPC) show? A) The national budget limit B) The maximum imports a country can handle C) The combinations a country can consume through trade beyond its PPF D) The limit of technology a country can use None 6. Which of these is NOT a benefit of free trade? A) Higher consumer choice B) Lower prices C) More trade barriers D) Efficient resource allocation None 7. The Marshall-Lerner condition is met when: A) Exports are elastic but imports are not B) Export and import elasticities are less than one C) The sum of export and import price elasticities is greater than one D) Exports exceed imports in volume None 8. Which factor would worsen a country’s terms of trade? A) A rise in global demand for its exports B) A decrease in its export prices relative to import prices C) Currency appreciation D) Reduction in import tariffs globally None 9. The Prebisch-Singer hypothesis suggests: A) Developed countries face worsening TOT B) Primary goods increase in price over time C) Exporters of primary goods face deteriorating TOT D) Services trade is unsustainable long-term None 10. Specialisation in international trade: A) Makes countries self-sufficient B) Eliminates opportunity cost C) Increases overall world output D) Causes trade deficits always None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
