1. Globalization and Trade
Trade Theories — Quiz
Test your understanding of trade theories with 5 practice questions.
Practice Questions
Question 1
Which trade theory suggests that trade can occur even if one country has an absolute advantage in all goods, as long as there are differences in relative production costs?
Question 2
According to the Heckscher-Ohlin theory, what is the expected trade pattern between a capital-abundant country and a labor-abundant country?
Question 3
New Trade Theory explains intra-industry trade primarily through which of the following concepts?
Question 4
If Country A can produce 10 units of cars or 20 units of textiles with one unit of labor, and Country B can produce 8 units of cars or 16 units of textiles with one unit of labor, what is Country B's opportunity cost of producing 1 unit of cars?
Question 5
Which of the following is a central argument of Mercantilism?