WGU C211 OA Global Economics for
Managers Exam Questions and Verified
Answers ()
Which of the following best defines absolute advantage?
A) The ability of a country to produce a good at a lower opportunity cost than
another country
B) The ability of a country to produce a good using fewer resources than another
country
C) The ability of a country to produce more goods than another country overall
D) The ability of a country to monopolize the global market for a specific good
Answer: B
A country has an absolute advantage in the production of both cars and wheat.
According to the principle of comparative advantage, what should this country
do?
A) Produce both goods and refuse to trade
B) Produce the good for which it has a comparative advantage and import the
other
C) Produce the good for which it has the greatest absolute advantage and import
the other
D) Split its resources evenly between the two goods
Answer: B
Country A can produce 10 cars or 5 tons of wheat. Country B can produce 6 cars
or 6 tons of wheat. What is the opportunity cost of producing 1 car in Country A?
,A) 0.5 tons of wheat
B) 2 tons of wheat
C) 1 ton of wheat
D) 0.2 tons of wheat
Answer: A
Using the same data (Country A: 10C or 5W; Country B: 6C or 6W), which country
has a comparative advantage in producing wheat?
A) Country A
B) Country B
C) Both have the same comparative advantage
D) Neither has a comparative advantage in wheat
Answer: B
Terms of trade between two countries must lie between what two values?
A) The absolute costs of production for each country
B) The opportunity costs of production for each country
C) The exchange rates of the two countries' currencies
D) The inflation rates of the two countries
Answer: B
Which theory states that countries will export goods that intensively use their
abundant factors of production and import goods that intensively use their scarce
factors?
A) Mercantilism
B) Product Life-Cycle Theory
C) Heckscher-Ohlin Theory
D) New Trade Theory
, Answer: C
What does the Leontief Paradox refer to?
A) The finding that the U.S. exported labor-intensive goods and imported capital-
intensive goods, contradicting the Heckscher-Ohlin model
B) The observation that countries with similar GDPs trade more with each other
than dissimilar countries
C) The idea that economies of scale prevent perfect competition in international
trade
D) The paradox that tariffs increase overall global welfare
Answer: A
According to Raymond Vernon's Product Life-Cycle Theory, where is a new
product most likely to be initially produced and sold?
A) In a developing country with low labor costs
B) In the advanced country where it was invented
C) Simultaneously in all global markets
D) In the country with the highest demand for imported goods
Answer: B
What is intra-industry trade?
A) Trade between industries in the same country
B) The exchange of similar products belonging to the same industry (e.g.,
exporting cars and importing cars)
C) Trade of raw materials for finished goods
D) Trade between subsidiaries of the same multinational corporation
Answer: B
New Trade Theory emphasizes which of the following as a reason for trade?
A) Differences in labor productivity
Managers Exam Questions and Verified
Answers ()
Which of the following best defines absolute advantage?
A) The ability of a country to produce a good at a lower opportunity cost than
another country
B) The ability of a country to produce a good using fewer resources than another
country
C) The ability of a country to produce more goods than another country overall
D) The ability of a country to monopolize the global market for a specific good
Answer: B
A country has an absolute advantage in the production of both cars and wheat.
According to the principle of comparative advantage, what should this country
do?
A) Produce both goods and refuse to trade
B) Produce the good for which it has a comparative advantage and import the
other
C) Produce the good for which it has the greatest absolute advantage and import
the other
D) Split its resources evenly between the two goods
Answer: B
Country A can produce 10 cars or 5 tons of wheat. Country B can produce 6 cars
or 6 tons of wheat. What is the opportunity cost of producing 1 car in Country A?
,A) 0.5 tons of wheat
B) 2 tons of wheat
C) 1 ton of wheat
D) 0.2 tons of wheat
Answer: A
Using the same data (Country A: 10C or 5W; Country B: 6C or 6W), which country
has a comparative advantage in producing wheat?
A) Country A
B) Country B
C) Both have the same comparative advantage
D) Neither has a comparative advantage in wheat
Answer: B
Terms of trade between two countries must lie between what two values?
A) The absolute costs of production for each country
B) The opportunity costs of production for each country
C) The exchange rates of the two countries' currencies
D) The inflation rates of the two countries
Answer: B
Which theory states that countries will export goods that intensively use their
abundant factors of production and import goods that intensively use their scarce
factors?
A) Mercantilism
B) Product Life-Cycle Theory
C) Heckscher-Ohlin Theory
D) New Trade Theory
, Answer: C
What does the Leontief Paradox refer to?
A) The finding that the U.S. exported labor-intensive goods and imported capital-
intensive goods, contradicting the Heckscher-Ohlin model
B) The observation that countries with similar GDPs trade more with each other
than dissimilar countries
C) The idea that economies of scale prevent perfect competition in international
trade
D) The paradox that tariffs increase overall global welfare
Answer: A
According to Raymond Vernon's Product Life-Cycle Theory, where is a new
product most likely to be initially produced and sold?
A) In a developing country with low labor costs
B) In the advanced country where it was invented
C) Simultaneously in all global markets
D) In the country with the highest demand for imported goods
Answer: B
What is intra-industry trade?
A) Trade between industries in the same country
B) The exchange of similar products belonging to the same industry (e.g.,
exporting cars and importing cars)
C) Trade of raw materials for finished goods
D) Trade between subsidiaries of the same multinational corporation
Answer: B
New Trade Theory emphasizes which of the following as a reason for trade?
A) Differences in labor productivity
