AGB 302 Assessment Test Questions
with Complete Answers
free trade - Answer- a situation in which a government does not attempt to influence
through quotas or duties what its citizens can buy from another country or what they can
produce and sell to another country
comparative advantage - Answer- the intellectual basis of modern argument for
unrestricted free trade
David Ricardo - Answer- comparative advantage
Heckscher-Ohlin Theory - Answer- The theory that a country will export goods that
make intensive use of the factors of production in which it is well endowed. Thus, a
labor-rich country will export goods that make intensive use of labor.
New trade theory - Answer- countries specialize in the production and export of
particular products not because of underlying differences in factor endowments, but
because in certain industries the world market can support only a limited number of
firms
Paul Krugman - Answer- New trade theory
Micheal Porter - Answer- Theory of national competitive advantage
Mercantillism - Answer- a country should sell more goods to another country than it
buys
zero-sum game - Answer- a situation in which an economic gain by one country results
in an economic loss by another
absolute advantage - Answer- the ability to produce a good using fewer inputs than
another producer
production possibilities frontier - Answer- the line on a production possibilities graph that
shows the maximum possible output
comparative advantage - Answer- potential world production is greater with unrestricted
free trade than with restricted trade
Constant Returns to Specialization - Answer- The units of resources required to
produce a good are assumed to remain constant no matter where one is on a country's
production possibility frontier.
with Complete Answers
free trade - Answer- a situation in which a government does not attempt to influence
through quotas or duties what its citizens can buy from another country or what they can
produce and sell to another country
comparative advantage - Answer- the intellectual basis of modern argument for
unrestricted free trade
David Ricardo - Answer- comparative advantage
Heckscher-Ohlin Theory - Answer- The theory that a country will export goods that
make intensive use of the factors of production in which it is well endowed. Thus, a
labor-rich country will export goods that make intensive use of labor.
New trade theory - Answer- countries specialize in the production and export of
particular products not because of underlying differences in factor endowments, but
because in certain industries the world market can support only a limited number of
firms
Paul Krugman - Answer- New trade theory
Micheal Porter - Answer- Theory of national competitive advantage
Mercantillism - Answer- a country should sell more goods to another country than it
buys
zero-sum game - Answer- a situation in which an economic gain by one country results
in an economic loss by another
absolute advantage - Answer- the ability to produce a good using fewer inputs than
another producer
production possibilities frontier - Answer- the line on a production possibilities graph that
shows the maximum possible output
comparative advantage - Answer- potential world production is greater with unrestricted
free trade than with restricted trade
Constant Returns to Specialization - Answer- The units of resources required to
produce a good are assumed to remain constant no matter where one is on a country's
production possibility frontier.
