ECON 340 EXAM 1 QUESTIONS AND VERIFIED
ANSWERS
important part of International trade theory is that when countries exchange goods and
services... - Answers - is usually beneficial to both countries
International Trade Analysis - Answers - is transactions that involve the physical
movement of goods or a tangible commitment of resources
The following tends to promote the probability of trade volumes between two countries -
Answers - -Linguistic and/or cultural affinity
-mutual membership in preferential trade agreements
-sizes of economies
-historical ties
In claiming that "size matters," the gravity model asserts that there is a strong empirical
relationship between the size of a country's economy and - Answers - volume of its
imports and exports
Assume the U.S. currently grows 2.5 million tons of fresh winter fruit and that the
resources absorbed in the production of this fruit could have produced 200,000 laptop
computers. Therefore, the opportunity cost of those 2.5 million tons of fruit is - Answers
- 200,000 computers
Due to the difference in opportunity costs between the two regions, trade gives the
possibility of - Answers - a mutually beneficial rearrangement of world production
opportunity cost - Answers - the value of the next best alternative occurring as a result
of making a particular choice
Differing opportunity costs - Answers - the potential for gains from the rearrangement of
production among countries
A country has a comparative advantage in producing a good if - Answers - its
opportunity cost of producing that good is lower than elsewhere
not a misconception of Comparative Advantage and the nature of the gains from free
trade - Answers - trade based upon comparative advantage can be mutually beneficial
Unlike the simple Ricardian model, the specific factors model - Answers - allows for the
existence of factors of production besides labor
ANSWERS
important part of International trade theory is that when countries exchange goods and
services... - Answers - is usually beneficial to both countries
International Trade Analysis - Answers - is transactions that involve the physical
movement of goods or a tangible commitment of resources
The following tends to promote the probability of trade volumes between two countries -
Answers - -Linguistic and/or cultural affinity
-mutual membership in preferential trade agreements
-sizes of economies
-historical ties
In claiming that "size matters," the gravity model asserts that there is a strong empirical
relationship between the size of a country's economy and - Answers - volume of its
imports and exports
Assume the U.S. currently grows 2.5 million tons of fresh winter fruit and that the
resources absorbed in the production of this fruit could have produced 200,000 laptop
computers. Therefore, the opportunity cost of those 2.5 million tons of fruit is - Answers
- 200,000 computers
Due to the difference in opportunity costs between the two regions, trade gives the
possibility of - Answers - a mutually beneficial rearrangement of world production
opportunity cost - Answers - the value of the next best alternative occurring as a result
of making a particular choice
Differing opportunity costs - Answers - the potential for gains from the rearrangement of
production among countries
A country has a comparative advantage in producing a good if - Answers - its
opportunity cost of producing that good is lower than elsewhere
not a misconception of Comparative Advantage and the nature of the gains from free
trade - Answers - trade based upon comparative advantage can be mutually beneficial
Unlike the simple Ricardian model, the specific factors model - Answers - allows for the
existence of factors of production besides labor
