AGB 302 Questions with 100- Correct Answers.

AGB 302 Questions with 100% Correct
Answers



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