IB Exam 2 Quiz Comprehensive
Questions and Solutions
Graded A+
T/F mercantilism propagated in the sixteenth and seventeenth centuries advocated that
countries should simultaneously encourage both imports and exports - Answer: False
T/F a country has an absolute advantage in the production of a product when it is more efficient
than any other country in producing it - Answer: true
T/F the Nobel Prize-winning economist Paul Samuelson argued that contrary to the standard
interpretation, in certain circumstances the theory of comparative advantage predicts that a
rich country might actually be worse off by switching to a free trade regime with a poor nation -
Answer: True
T/F porter's theory has been subjective to detailed empirical testing and it is proven that it
accurately predicts international trade patterns - Answer: False
T/F factor endowments are unit cost reduction associated with a large scale of output - Answer:
False
which of the following terms best represents a situation in which government does not attempt
to influence through quotas or duties what its citizens an buy from another country or what
they can produce and sell to another country - Answer: Free Trade
, Salcia is a country that depends heavily on domestic products. the Salcian government decides
on the products that can be imported and ensures that any product that can be produced at
home is not imported. a major part of Salcia's trade is concentrated on exporting agricultural
produce and textiles. which of the following influences Salcia's approach to international trade -
Answer: Mercantilism
India specializes in business process and outsourcing and does this more efficiently than any
other country buys agricultural commodities which than the US which of the following theories
of international trade supports India's decision to buy agricultural commodities from the US -
Answer: Ricardo's theory of comparative advantage
In Zombia it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton
of rice. In south Curmudgea it takes 40 resources to produce 1 ton of cocoa and 20 resources to
produce 1 ton of rice. Zombia has comparative advantage over south Cummedgea in - Answer:
Cocoa and rice
T/F Import tariffs protect domestic producers against foreign competitors - Answer: True
T/F bot importing quotas and voluntary exports restraints (VERs) benefit domestic producers by
limiting import competition - Answer: True
T/F since strong economic arguments support unrestricted free trade governments of
developed nations are setting an example by unilaterally lowering their trade barriers - Answer:
False
T/F a firm may set up production activities in a foreign country when trade barriers do not
currently exist to reduce the threat of trade barriers being imposed later - Answer: True
T/F Government intervention can be self-defeating because it tends to protect the inefficient
rather than help the firms become efficient global competitors - Answer: True
Questions and Solutions
Graded A+
T/F mercantilism propagated in the sixteenth and seventeenth centuries advocated that
countries should simultaneously encourage both imports and exports - Answer: False
T/F a country has an absolute advantage in the production of a product when it is more efficient
than any other country in producing it - Answer: true
T/F the Nobel Prize-winning economist Paul Samuelson argued that contrary to the standard
interpretation, in certain circumstances the theory of comparative advantage predicts that a
rich country might actually be worse off by switching to a free trade regime with a poor nation -
Answer: True
T/F porter's theory has been subjective to detailed empirical testing and it is proven that it
accurately predicts international trade patterns - Answer: False
T/F factor endowments are unit cost reduction associated with a large scale of output - Answer:
False
which of the following terms best represents a situation in which government does not attempt
to influence through quotas or duties what its citizens an buy from another country or what
they can produce and sell to another country - Answer: Free Trade
, Salcia is a country that depends heavily on domestic products. the Salcian government decides
on the products that can be imported and ensures that any product that can be produced at
home is not imported. a major part of Salcia's trade is concentrated on exporting agricultural
produce and textiles. which of the following influences Salcia's approach to international trade -
Answer: Mercantilism
India specializes in business process and outsourcing and does this more efficiently than any
other country buys agricultural commodities which than the US which of the following theories
of international trade supports India's decision to buy agricultural commodities from the US -
Answer: Ricardo's theory of comparative advantage
In Zombia it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton
of rice. In south Curmudgea it takes 40 resources to produce 1 ton of cocoa and 20 resources to
produce 1 ton of rice. Zombia has comparative advantage over south Cummedgea in - Answer:
Cocoa and rice
T/F Import tariffs protect domestic producers against foreign competitors - Answer: True
T/F bot importing quotas and voluntary exports restraints (VERs) benefit domestic producers by
limiting import competition - Answer: True
T/F since strong economic arguments support unrestricted free trade governments of
developed nations are setting an example by unilaterally lowering their trade barriers - Answer:
False
T/F a firm may set up production activities in a foreign country when trade barriers do not
currently exist to reduce the threat of trade barriers being imposed later - Answer: True
T/F Government intervention can be self-defeating because it tends to protect the inefficient
rather than help the firms become efficient global competitors - Answer: True
