IE Chap 2 (1)

Which of the following is NOT a reason why countries trade goods with each other?

• differences in technology used in different countries

• differences in countries' total amount of resources

• the proximity of countries to one another

• differences in countries' languages and cultures

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

• labor productivity.

• technology.

• population.

• government control.

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

• labor availability

• similar tastes and preferences

• proximity

• shared membership in a free trade area

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 Ricardian model

• offshoring

• technology

• proximity

A country's factors of production include:

• its labor.

• its capital.

• its natural resources.

• its labor, its capital, and its natural resources.

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

• labor

• capital

• natural resources

• government

When a firm in one nation purchases unfinished products internationally and adds further processing to sell in the domestic market, it is known as:

• barter.

• offshoring.

• factor movement.

• marketing arrangements.

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

• an absolute advantage.

• a technology advantage.

• a comparative advantage.

• a resource advantage.

The focus of the Ricardian model is on:

• how countries' resource bases explain international trade.

• how countries' different technologies explain international trade.

• how transportation costs explain international trade.

• how different languages and cultures explain international trade.

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

• absolute advantage in the production of the product.

• comparative advantage in the production of the product.

• higher opportunity cost of producing the product.

• lower opportunity cost of producing the product.