Question 1

Unless a country's absolute advantage is based on some limited natural resource, it seldom lasts.

Accepted Answer

Absolute advantage is based on a country's ability to produce a good or service more efficiently than another country. However, this advantage can be eroded over time due to changing market conditions, advancements in technology, and shifts in global trade patterns. Therefore, unless it is based on a limited natural resource, absolute advantage seldom lasts.

Question 2

Entrée Specialités, which produces food products and ships them to several independent buyers throughout Western Europe, is in the _____ business.
A) importing
B) comestibletrade
C) exporting
D) licensing

Accepted Answer

Entrée Specialités is shipping their food products to independent buyers in Western Europe, which means they are involved in exporting. Option A, importing, would only be applicable if they were buying goods from another country and bringing them into their own country. Option B, comestible trade, is not a commonly used term and does not accurately describe the type of business Entrée Specialités is in. Option D, licensing, would only be applicable if they were giving other companies the right to use their brand or products.

Question 3

Nations engage in trade primarily because no nation can produce all of the goods and services that it needs.

Accepted Answer

Nations specialize in producing certain goods and services that they have a comparative advantage in, and then trade with other nations to obtain goods and services that they cannot efficiently produce themselves. This allows for greater efficiency and a larger variety of goods and services for consumers.

Question 4

According to the principle of _____, a country that decides to specialize in the production of a particular product must sacrifice the production of another product.
A) comparative advantage
B) absolute advantage
C) crossproduction
D) opportunity cost

Accepted Answer

The principle described in the question is the concept of opportunity cost, which refers to the fact that producing more of one good or service means sacrificing the production of another good or service that could have been produced with those same resources. The concept of comparative advantage refers to the idea that countries should specialize in producing goods and services in which they have a lower opportunity cost relative to other countries, while absolute advantage refers to the ability of a country or individual to produce more of a particular good or service than others given the same amount of resources. Crossproduction is not a recognized economic principle.

Question 5

According to the concept of opportunity cost, a country that decides to specialize in the production of a particular product may sacrifice the production of another.

Accepted Answer

Opportunity cost is the cost of something in terms of an opportunity forgone to pursue an alternative course of action. Thus, if a country decides to specialize in the production of a particular product, it may have to sacrifice the production of another product, which represents the opportunity cost of its decision.

Question 6

If a country is the only source of a particular product or it can make more of a product using the same amount of or fewer resources than other countries we say that the country has an absolute advantage in economic terms.

Accepted Answer

This is the definition of absolute advantage in economics.

Question 7

The United States is currently experiencing an international trade _____.
A) balance
B) surplus
C) equilibrium
D) deficit

Accepted Answer

The word "deficit" indicates that the United States is importing more goods and services than it is exporting, leading to a negative balance of trade.

Question 8

The principle of _____ explains why France can produce white wine at a lower opportunity cost than the neighboring country of Germany.
A) comparative advantage
B) absolute advantage
C) capital ferment
D) opportunitycost replacement

Accepted Answer

The principle of comparative advantage explains why a country can produce a good or service at a lower opportunity cost than another country. In this case, France has a comparative advantage in producing white wine, meaning they can produce it at a lower opportunity cost (in terms of other goods they have to give up producing) compared to Germany.

Question 9

The largest factor in a country's balance of payments is its _____.
A) defense budget
B) welfare bill
C) importexport balance
D) creditcard debt

Accepted Answer

The balance of payments is a record of all transactions made between one particular country and all other countries during a certain time period. It includes both imports and exports of goods and services, as well as financial transactions between residents and non-residents. Therefore, the import-export balance is the largest factor in a country's balance of payments.

Question 10

Generally speaking, nations don't exploit production and trade advantages because they prefer to protect their international images.

Accepted Answer

Nations often actively seek to exploit production and trade advantages in order to boost their economies and gain a competitive edge in the international market. While they may be mindful of their international image, this is not typically their primary concern when making economic decisions.

Question 11

The largest factors in a country's balance of payments consist of revenues from tourism and welfare benefits paid to citizens and immigrants.

Accepted Answer

The largest factors in a country's balance of payments typically consist of exports and imports of goods and services, foreign investment, and remittances. While tourism and welfare benefits may have an impact on the balance of payments, they do not typically make up the largest portion.

Question 12

In economic terms, "balance of payments" refers to the difference between a country's total outflows and inflows of money over a period of time.

Accepted Answer

The statement is true.

Question 13

Basically, nations trade:
A) because most nations tend to have yearly surpluses of goods.
B) because no nation's economy can produce all of the goods and services that it needs.
C) in order to maintain peaceful relationships with neighboring countries.
D) in order to stockpile goods in case of national disaster or emergency.

Accepted Answer

No nation has the ability to produce all of the goods and services that it needs, thus nations trade to obtain goods and services that they cannot produce on their own. This is the basis for international trade.

Question 14

Japan's production and exporting expertise lies in the areas of electronics and automobiles.

Accepted Answer

Japan is well-known for its expertise in electronics and automobile production, which are major contributors to the country's economy and exports.

Question 15

The West European buyers who purchase and resell Entrée Specialités' food products in their home countries are in the _____ business.
A) importing
B) exporting
C) licensing
D) domesticinvestment

Accepted Answer

The buyers are purchasing from Entrée Specialités, which is based in the United States, and bringing the products into their own countries, making them importers.

Question 16

When nations continue to run large and ever-growing trade deficits over extended periods of time, creditor nations will eventually stop taking IOUs and trade will cease.

Accepted Answer

The answer of When nations continue to run large and...

Question 17

While importing is widely practiced throughout the world, exporting is not.

Accepted Answer

This statement is inaccurate. Exporting is a common practice and is essential for many countries' economies to thrive. In fact, many countries heavily rely on their exports for economic growth and development.

Question 18

By the year 2010, international trade in merchandise and services had topped _____.
A) $11 billion
B) $100 billion
C) $11 trillion
D) $18 trillion

Accepted Answer

The answer of By the year 2010, international trade in...

Question 19

U. S. exports are greater than U.S. imports.

Accepted Answer

According to the U.S. Trade in Goods and Services report, the U.S. has a trade deficit, meaning that imports exceed exports.

Question 20

The United States currently enjoys an international trade equilibrium.

Accepted Answer

The United States currently has a trade deficit, meaning that it imports more goods and services than it exports.

Quiz 3: Business in a Global Environment

Unless a country's absolute advantage is based on some limited natural resource, it seldom lasts.

Entrée Specialités, which produces food products and ships them to several independent buyers throughout Western Europe, is in the _____ business.

Nations engage in trade primarily because no nation can produce all of the goods and services that it needs.

According to the principle of _____, a country that decides to specialize in the production of a particular product must sacrifice the production of another product.

According to the concept of opportunity cost, a country that decides to specialize in the production of a particular product may sacrifice the production of another.

If a country is the only source of a particular product or it can make more of a product using the same amount of or fewer resources than other countries we say that the country has an absolute advantage in economic terms.

The United States is currently experiencing an international trade _____.

The principle of _____ explains why France can produce white wine at a lower opportunity cost than the neighboring country of Germany.

The largest factor in a country's balance of payments is its _____.