Identify the main flaw with mercantilism.
A)Stating that it is in a country’s best interests to maintain a trade surplus.
B)Advocating government intervention to achieve a surplus in the balance of trade.
C)Limiting imports by tariffs and quotas, while exports were subsidized.
D)Viewing trade as one in which a gain by one country results in a loss by another.
47. Country A can produce 10 tons of cotton and 25 tons of sugarcane. Country B can produce 8 tons of cotton and 26 tons of
sugarcane. Country C can produce 11 tons of cotton and 23 tons of sugarcane, while country D can produce 6 tons of cotton and 25
tons of sugarcane. All these countries use the same amount of resources. Which country is said to have an absolute advantage in the
production of both the products in this simple assumption?
A)Country C B)Country D C)Country A D)Country B
48. What are economies of scale?
A)The extent to which a country is endowed with resources.
B)The economic and strategic advantages that accrue to early entrants into an industry.
C)The extent to which a country has to import goods. D)The cost reductions associated with a large scale output.
49. According to Michael Porter, this is an example of a “basic” factor of production.
A)Demographics B)Skilled labor C)Research facilities D)Communication infrastructure
6. Identify the incorrect statement concerning globalization.
A) The solution to the problem of stagnant incomes among the unskilled can be resolved by increasing society’s investment in
B) Migration of unskilled jobs to low-wage countries is a temporary phenomenon representing a structural adjustment.
C) Real labor compensation has expanded robustly in most developed nations since the 1980s, including the United States.
D) It is skilled labor in developed nations that has seen its share of national income decline over the last two decades.
7. Critics of globalization argue that
A) the benefits of free trade and investment far outweigh the costs.
B) the gap between the rich and poor nations of the world has gotten wider.
C) economic power has shifted toward national governments.
D) free trade discourages firms in advanced nations to move manufacturing facilities abroad.
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