AGB 302 Ch 6 Exam Question with
Verified Solution
Free Trade - correct Answer-refers to a situation where a government does not attempt
to influence through quotas or duties what its citizens can buy from another country or
what they can produce and sell to another country
New Trade Theory - correct Answer-Paul Krugman; stresses that in some cases,
countries specialize in the production and export of particular products not because of
underlying differences in factor endowments but because in certain industries the world
market can support only a limited number of firms; at variance with the Heckscher-Ohlin
theory
Mercentilism - correct Answer-it was in a country's best interests to maintain a trade
surplus, to export more than it imported; advocate for government intervention in trade
to create surplus
Zero-Sum Game - correct Answer-one in which a gain by one country results in a loss
by another
Adam Smith - correct Answer-wrote the wealth of nations; he thinks that countries
should specialize in the production of goods for which
they have an absolute advantage and then trade these goods for those produced by
other countries
a straight line - correct Answer-The production possibility frontier will be ________ if
constant return to specialization is observed.
convex - correct Answer-The production possibility frontier will be ________ if
diminishing returns to specialization is observed.
production possibilities frontier - correct Answer-a graph that shows the combinations of
output that the economy can possibly produce given the available factors of production
and the available production technology
Ricardo's Theory - correct Answer-stresses that comparative advantage arises from
differences in productivity. Thus, whether Ghana is more efficient than South Korea in
the production of cocoa depends on how productively it uses its resources; Principles of
Political Economy
Verified Solution
Free Trade - correct Answer-refers to a situation where a government does not attempt
to influence through quotas or duties what its citizens can buy from another country or
what they can produce and sell to another country
New Trade Theory - correct Answer-Paul Krugman; stresses that in some cases,
countries specialize in the production and export of particular products not because of
underlying differences in factor endowments but because in certain industries the world
market can support only a limited number of firms; at variance with the Heckscher-Ohlin
theory
Mercentilism - correct Answer-it was in a country's best interests to maintain a trade
surplus, to export more than it imported; advocate for government intervention in trade
to create surplus
Zero-Sum Game - correct Answer-one in which a gain by one country results in a loss
by another
Adam Smith - correct Answer-wrote the wealth of nations; he thinks that countries
should specialize in the production of goods for which
they have an absolute advantage and then trade these goods for those produced by
other countries
a straight line - correct Answer-The production possibility frontier will be ________ if
constant return to specialization is observed.
convex - correct Answer-The production possibility frontier will be ________ if
diminishing returns to specialization is observed.
production possibilities frontier - correct Answer-a graph that shows the combinations of
output that the economy can possibly produce given the available factors of production
and the available production technology
Ricardo's Theory - correct Answer-stresses that comparative advantage arises from
differences in productivity. Thus, whether Ghana is more efficient than South Korea in
the production of cocoa depends on how productively it uses its resources; Principles of
Political Economy
