Week 1 Assignment
• Read chapters 1-2 of the text book
• Read the power points posted (chapter 1-2)
Try to answer the study questions in page 26. Answers of these problems will be provided next week; however, you should try your best to answer these problems before check the answers.
Try to answer the following multiple choice questions. Answers of these problems will be provided next week; however, you should try your best to answer these problems before check the answers.
1. A primary reason why nations conduct international trade is because:
Resources are not equally distributed among all trading nations
2. International trade in goods and services is sometimes used as a substitute for all of the following except:
d. Domestic production of different ...view middle of the document...
1.Mercantilism: Regulation to ensure a positive trade balance.Critics: possible only for short term; assumes static world economy. Absolute advantage (Adam Smith) Countries benefit from exporting what they make cheaper than anyone else But: nations without absolute advantage do not gain from trade. Comparative advantage (David Ricardo) Nations can gain from specialization, even if they lack an absolute advantage
2: Absolute advantage: Countries benefit from exporting what they make cheaper than anyone else But: nations without absolute advantage do not gain from trade
4: supply conditions can determine the comparative advantage and the mode of specification.
5: The production gains from specialization will be different.
6: when changing comparative advantage.
7: It will have a effect on the comparative advantage.
9: the measure of welfare separately on producers and consumers.
10: A country spends the money on B country that gains from C country, while B country spends the money on C country that gains from A country.
11: the improvement of working efficiency because of the specialization.
1. The trading principle formulated by Adam Smith maintained that:
d. Absolute cost differences determine the immediate basis for trade
2. A nation that gains from trade will find its consumption point being located:
c. Outside its production possibilities curve
3. Concerning international trade restrictions, which of the following is false? Trade restrictions:
c. Cause nations to produce inside their production possibilities curves
4. If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production:
a. Trade would depend on differences in demand conditions
5. When a nation achieves autarky equilibrium:
d. Production equals consumption