SFU BUSINESS CHAPTER 3 QUESTIONS WITH ACCURATE
ANSWERS
Absolute advantage correct answer the advantage that exists when a country
produces a specific product more efficiently than all other countries
Balance of payments correct answer the difference between money coming into a
country (from exports) and money leaving the country (for imports) plus money
flows from other factors such as tourism, foreign aid, military expenditures, and
foreign investment
Balance of trade correct answer the total value of a nation's exports compared to
its imports measured over a particular period
common market correct answer a regional group of countries that have a
common external tariff, no internal tariffs, and a coordination of laws to facilitate
exchange; also called trading bloc. An example is the European Union
Comparative advantage theory correct answer theory that states that a country
should sell to other countries those products that it produces most effectively and
efficiently, and buy from other countries those products that it cannot produce as
effectively or efficiently, suggested by David Ricardo
contract manufacturing correct answer a foreign company's production of
private-label goods to which a domestic company then attaches its brand name or
trademark; part of the broad category of outsourcing
countertrading correct answer a complex form of bartering in which several
countries may be involved, each trading goods for goods or services for services
ANSWERS
Absolute advantage correct answer the advantage that exists when a country
produces a specific product more efficiently than all other countries
Balance of payments correct answer the difference between money coming into a
country (from exports) and money leaving the country (for imports) plus money
flows from other factors such as tourism, foreign aid, military expenditures, and
foreign investment
Balance of trade correct answer the total value of a nation's exports compared to
its imports measured over a particular period
common market correct answer a regional group of countries that have a
common external tariff, no internal tariffs, and a coordination of laws to facilitate
exchange; also called trading bloc. An example is the European Union
Comparative advantage theory correct answer theory that states that a country
should sell to other countries those products that it produces most effectively and
efficiently, and buy from other countries those products that it cannot produce as
effectively or efficiently, suggested by David Ricardo
contract manufacturing correct answer a foreign company's production of
private-label goods to which a domestic company then attaches its brand name or
trademark; part of the broad category of outsourcing
countertrading correct answer a complex form of bartering in which several
countries may be involved, each trading goods for goods or services for services
