ECN 306 Practice Exam with All Correct
and Actual Answers 2026/2027 Updated.
Adam Smith - Answer Who wrote "Weath of Nations"?
households - Answer Who does Adam Smith compare nations to in his book?
Labor Productivity - Answer The number of units of output that a worker can produce in one
labor hour
fewer, more - Answer Mercantilists push for ____ imports and ______ exports
Absolute advantage - Answer When labor productivity is higher than the rest of the world or
other country.
Opportunity Cost - Answer The ____________ of producing more of a product in a country is
the amount of production of the other product that is given up
Relative Price - Answer The ratio of one product price to another product price
Autarky - Answer No trade between countries.
Consumer Surplus - Answer Difference between willingness to pay and actual price.
Producer Surplus - Answer Difference between amount paid, and cost
Willingness to pay - Answer Max amount a buyer will pay for a good.
Producer Surplus - Answer The area above the supply curve & under the price
Total Surplus - Answer Consumer surplus + Producer surplus
Deadweight loss - Answer Loss of total surplus
Arbitrage - Answer Buying something in one market, and reselling the same thing in another
market to profit from a price difference.
, True - Answer With no trade, differences in the price of a product between national markets
creates an arbitrage opportunity that can lead to international trade.
True/False
International/world price - Answer If there are no transport costs or other frictions, free trade
results in the new countries having the same price. What is this price called?
Mercantilism - Answer Goal of nations is to accumulate wealth.
World Price - Answer Under the Heckscher-Ohlin model, a small country is considered to be
any country that doesn't effect _______.
Heckscher-Ohlin Theory of trade - Answer Predicts that a country exports the product that
uses its relatively abundant factor(s) intensively and imports the product (or products) that uses
its relatively scarce factor(s) intensively.
labor abundant - Answer According to the Heckscher_ohlin Theory:
A country is relatively_________ if it has a higher ratio of labor to other factors than does the
rest of the world.
Labor intensive - Answer According to the Heckscher_ohlin Theory:
A product is relatively _____________ if labor requirements are a greater share of its value than
they are of the value of other products.
budget constraints of domestic consumers - Answer Actual consumption points chosen by
consumers depend on:
- which products are available
- budget constraints of domestic consumers
- which products are available domestically and which must be imported
- the quality of products that are available
and Actual Answers 2026/2027 Updated.
Adam Smith - Answer Who wrote "Weath of Nations"?
households - Answer Who does Adam Smith compare nations to in his book?
Labor Productivity - Answer The number of units of output that a worker can produce in one
labor hour
fewer, more - Answer Mercantilists push for ____ imports and ______ exports
Absolute advantage - Answer When labor productivity is higher than the rest of the world or
other country.
Opportunity Cost - Answer The ____________ of producing more of a product in a country is
the amount of production of the other product that is given up
Relative Price - Answer The ratio of one product price to another product price
Autarky - Answer No trade between countries.
Consumer Surplus - Answer Difference between willingness to pay and actual price.
Producer Surplus - Answer Difference between amount paid, and cost
Willingness to pay - Answer Max amount a buyer will pay for a good.
Producer Surplus - Answer The area above the supply curve & under the price
Total Surplus - Answer Consumer surplus + Producer surplus
Deadweight loss - Answer Loss of total surplus
Arbitrage - Answer Buying something in one market, and reselling the same thing in another
market to profit from a price difference.
, True - Answer With no trade, differences in the price of a product between national markets
creates an arbitrage opportunity that can lead to international trade.
True/False
International/world price - Answer If there are no transport costs or other frictions, free trade
results in the new countries having the same price. What is this price called?
Mercantilism - Answer Goal of nations is to accumulate wealth.
World Price - Answer Under the Heckscher-Ohlin model, a small country is considered to be
any country that doesn't effect _______.
Heckscher-Ohlin Theory of trade - Answer Predicts that a country exports the product that
uses its relatively abundant factor(s) intensively and imports the product (or products) that uses
its relatively scarce factor(s) intensively.
labor abundant - Answer According to the Heckscher_ohlin Theory:
A country is relatively_________ if it has a higher ratio of labor to other factors than does the
rest of the world.
Labor intensive - Answer According to the Heckscher_ohlin Theory:
A product is relatively _____________ if labor requirements are a greater share of its value than
they are of the value of other products.
budget constraints of domestic consumers - Answer Actual consumption points chosen by
consumers depend on:
- which products are available
- budget constraints of domestic consumers
- which products are available domestically and which must be imported
- the quality of products that are available
