SS484 International Economics Block I
Question and answers verified to pass
2026/2027
___ is defined as the increase in the economic well-being of producers who sell a product at a market
price higher than the lowest price that they would have been willing to accept. - correct answer
✔Producer Surplus
What is a weakness in the one dollar one vote metric? - correct answer ✔The metric measures the
impact of a change in trade on the basis of effect on aggregate well-being and does not consider how
that well-being is distributed among various economic groups.
One way to measure responsiveness of quantity demanded to change in the price of an item is by
observing the - correct answer ✔slope of the demand curve.
A profitable competitive firm will supply units up to the point at which - correct answer ✔the price it
receives for a product just about equals the extra cost incurred in producing another unit.
What is the effect if a country that has been producing and consuming a product domestically but that
has not been importing that product then beings to import that product? - correct answer ✔The price
of the product will decrease and the demand for that product will increase.
If country A produces a product that is consumed domestically and that is also exported to another
country, free trade will result in the price of that product being the same in both the exporting and the
importing countries. This price is called what? - correct answer ✔The international price.
___ is buying something in one market and selling it at a profit in another market because of a price
difference in these markets. - correct answer ✔Arbitrage
,A change in the price of an item causeswhat? - correct answer ✔Movement along the demand curve
for the item.
Consumer surplus is used to measure what? - correct answer ✔The impact on consumers of changes
in the market price of a product.
There is a strong presumption that consumer demand curves do what? - correct answer ✔Slope
downward
____ means that the labor productivity for a particular product in a particular country is higher than the
rest of the world's labor productivity of that product. - correct answer ✔Absolute advantage
____ says that a country will export goods it can produce at a relatively low opportunity cost and import
goods it would produce at a relatively high opportunity cot. - correct answer ✔Ricardo's principle of
comparative advantage
___ is defined as the number of unites of outputs that a worker can produce in an hour. - correct
answer ✔Labor productivity
Complete specialization by countries is not common. For instance, the United States
A) specializes in the production of a few categories of goods.
B) produces some amount of most products that are consumed domestically and that it also imports.
C) imports essentially the same value of goods as it exports.
D) imports significantly more than it exports. - correct answer ✔B) produces some amount of most
products that are consumed domestically and that it also imports.
Adam Smith said that trade freely transacted between countries
A) only benefits a country if that country has a comparative advantage in a specific product.
B) is dangerous since there are no controls on what is exported and what is imported.
, C) only benefits a country if that country has an absolute advantage in all products.
D) generally leads to gains for all countries, so international trade is a positive-sum activity. - correct
answer ✔D) generally leads to gains for all countries, so international trade is a positive-sum activity.
The theory of comparative advantage as an explanation of international trade is based on the concept of
what? - correct answer ✔Opportunity cost
______ illustrates all combinations of amounts of different products an economy can produce with full
employment of its resources and maximum feasible productivity of those resources. - correct answer
✔A production possibility curve
Adam Smith maintained that national well-being depends on the ability to consume, so
A) a country should produce all that its citizens can consume and export everything that its citizens
cannot consume.
B) government should closely monitor imports and exports in order to maintain a proper balance
C) government should encourage domestic production so domestic consumption can increase without
increasing imports.
D) imports are valuable because national consumption can increase. - correct answer ✔D) imports are
valuable because national consumption can increase.
The amount of one product produced in a country that must be given up to produce another in that
country is the what? - correct answer ✔Opportunity cost
Both Smith and Ricardo believed that, in a competitive market, product prices reflect
A) the combined costs of many different inputs used in producing the products.
B) the cost of labor necessary to produce the products.
C) the policies of government toward trade.
D) the effects of trade rather than the costs of inputs. - correct answer ✔B) the cost of labor necessary
to produce the products.
Question and answers verified to pass
2026/2027
___ is defined as the increase in the economic well-being of producers who sell a product at a market
price higher than the lowest price that they would have been willing to accept. - correct answer
✔Producer Surplus
What is a weakness in the one dollar one vote metric? - correct answer ✔The metric measures the
impact of a change in trade on the basis of effect on aggregate well-being and does not consider how
that well-being is distributed among various economic groups.
One way to measure responsiveness of quantity demanded to change in the price of an item is by
observing the - correct answer ✔slope of the demand curve.
A profitable competitive firm will supply units up to the point at which - correct answer ✔the price it
receives for a product just about equals the extra cost incurred in producing another unit.
What is the effect if a country that has been producing and consuming a product domestically but that
has not been importing that product then beings to import that product? - correct answer ✔The price
of the product will decrease and the demand for that product will increase.
If country A produces a product that is consumed domestically and that is also exported to another
country, free trade will result in the price of that product being the same in both the exporting and the
importing countries. This price is called what? - correct answer ✔The international price.
___ is buying something in one market and selling it at a profit in another market because of a price
difference in these markets. - correct answer ✔Arbitrage
,A change in the price of an item causeswhat? - correct answer ✔Movement along the demand curve
for the item.
Consumer surplus is used to measure what? - correct answer ✔The impact on consumers of changes
in the market price of a product.
There is a strong presumption that consumer demand curves do what? - correct answer ✔Slope
downward
____ means that the labor productivity for a particular product in a particular country is higher than the
rest of the world's labor productivity of that product. - correct answer ✔Absolute advantage
____ says that a country will export goods it can produce at a relatively low opportunity cost and import
goods it would produce at a relatively high opportunity cot. - correct answer ✔Ricardo's principle of
comparative advantage
___ is defined as the number of unites of outputs that a worker can produce in an hour. - correct
answer ✔Labor productivity
Complete specialization by countries is not common. For instance, the United States
A) specializes in the production of a few categories of goods.
B) produces some amount of most products that are consumed domestically and that it also imports.
C) imports essentially the same value of goods as it exports.
D) imports significantly more than it exports. - correct answer ✔B) produces some amount of most
products that are consumed domestically and that it also imports.
Adam Smith said that trade freely transacted between countries
A) only benefits a country if that country has a comparative advantage in a specific product.
B) is dangerous since there are no controls on what is exported and what is imported.
, C) only benefits a country if that country has an absolute advantage in all products.
D) generally leads to gains for all countries, so international trade is a positive-sum activity. - correct
answer ✔D) generally leads to gains for all countries, so international trade is a positive-sum activity.
The theory of comparative advantage as an explanation of international trade is based on the concept of
what? - correct answer ✔Opportunity cost
______ illustrates all combinations of amounts of different products an economy can produce with full
employment of its resources and maximum feasible productivity of those resources. - correct answer
✔A production possibility curve
Adam Smith maintained that national well-being depends on the ability to consume, so
A) a country should produce all that its citizens can consume and export everything that its citizens
cannot consume.
B) government should closely monitor imports and exports in order to maintain a proper balance
C) government should encourage domestic production so domestic consumption can increase without
increasing imports.
D) imports are valuable because national consumption can increase. - correct answer ✔D) imports are
valuable because national consumption can increase.
The amount of one product produced in a country that must be given up to produce another in that
country is the what? - correct answer ✔Opportunity cost
Both Smith and Ricardo believed that, in a competitive market, product prices reflect
A) the combined costs of many different inputs used in producing the products.
B) the cost of labor necessary to produce the products.
C) the policies of government toward trade.
D) the effects of trade rather than the costs of inputs. - correct answer ✔B) the cost of labor necessary
to produce the products.
