ECN 306 International Economics Exam 1 Study Guide 2026 | Trade, Policy &
Practice Questions
By 2006, the cost of production of natural gas in Canada was _____________
because_________________________. - correct answer ✔✔increasing; the lowest cost sources
were being depleted.
What is the primary factor that affects both international trade flows of goods and services and
international financial flows? - correct answer ✔✔Exchange rates
Adverse environmental effects of trade decisions are called: - correct answer ✔✔Negative
externalities
When considering factor mobility, how can land be mobile? - correct answer ✔✔Land can be
put to different productive uses.
With respect to financial capital, "home bias" means a preference to invest in: - correct answer
✔✔one's own country.
______________________ is defined as the increase in the economic well-being of producers
who sell a product at a market price higher than the lowest price that they would have been
willing to accept. - correct answer ✔✔Producer surplus
______________________ is buying something in one market and selling it at a profit in
another market because of a price difference in those markets. - correct answer ✔✔Arbitrage
The net gain to consumers from buying any product is the: - correct answer ✔✔difference
between what consumers are willing to pay for a product and the price they must pay to
purchase the product.
, A change in the price of an item causes: - correct answer ✔✔movement along the demand
curve for the item.
The primary factors that determine how much of a product a firm is willing to supply are: -
correct answer ✔✔the price the firm receives from the sale of the product and the cost to the
firm of producing and selling the product.
Consumer surplus is used to measure: - correct answer ✔✔the impact on consumers of changes
in the market price of a product.
A change in the price of an item causes: - correct answer ✔✔movement along the demand
curve for the item.
Price elasticity of demand measures: - correct answer ✔✔the percentage change in quantity
demanded resulting from a 1 percent change in the price of an item.
The additional cost of producing one additional unit of product is called the: - correct answer
✔✔marginal cost.
The primary factors that determine how much of a product a firm is willing to supply are: -
correct answer ✔✔the price the firm receives from the sale of the product and the cost to the
firm of producing and selling the product.
International trade is a positive-sum activity. This means that: - correct answer ✔✔most
countries gain from international trade, so the whole world has a net gain from international
trade.
Profiting by buying a product at a specified price in one market and then selling that product in
a different market for a higher price is: - correct answer ✔✔arbitrage.
Practice Questions
By 2006, the cost of production of natural gas in Canada was _____________
because_________________________. - correct answer ✔✔increasing; the lowest cost sources
were being depleted.
What is the primary factor that affects both international trade flows of goods and services and
international financial flows? - correct answer ✔✔Exchange rates
Adverse environmental effects of trade decisions are called: - correct answer ✔✔Negative
externalities
When considering factor mobility, how can land be mobile? - correct answer ✔✔Land can be
put to different productive uses.
With respect to financial capital, "home bias" means a preference to invest in: - correct answer
✔✔one's own country.
______________________ is defined as the increase in the economic well-being of producers
who sell a product at a market price higher than the lowest price that they would have been
willing to accept. - correct answer ✔✔Producer surplus
______________________ is buying something in one market and selling it at a profit in
another market because of a price difference in those markets. - correct answer ✔✔Arbitrage
The net gain to consumers from buying any product is the: - correct answer ✔✔difference
between what consumers are willing to pay for a product and the price they must pay to
purchase the product.
, A change in the price of an item causes: - correct answer ✔✔movement along the demand
curve for the item.
The primary factors that determine how much of a product a firm is willing to supply are: -
correct answer ✔✔the price the firm receives from the sale of the product and the cost to the
firm of producing and selling the product.
Consumer surplus is used to measure: - correct answer ✔✔the impact on consumers of changes
in the market price of a product.
A change in the price of an item causes: - correct answer ✔✔movement along the demand
curve for the item.
Price elasticity of demand measures: - correct answer ✔✔the percentage change in quantity
demanded resulting from a 1 percent change in the price of an item.
The additional cost of producing one additional unit of product is called the: - correct answer
✔✔marginal cost.
The primary factors that determine how much of a product a firm is willing to supply are: -
correct answer ✔✔the price the firm receives from the sale of the product and the cost to the
firm of producing and selling the product.
International trade is a positive-sum activity. This means that: - correct answer ✔✔most
countries gain from international trade, so the whole world has a net gain from international
trade.
Profiting by buying a product at a specified price in one market and then selling that product in
a different market for a higher price is: - correct answer ✔✔arbitrage.
