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6
Student: ___________________________________________________________________________
1.Free trade refers to a situation where a government does not attempt to influence through quotas or duties
what its citizens can buy from another country.
True False
2.The theories of Smith and Ricardo show that countries should not engage in international trade for
products that it is able to produce for itself.
True False
3.David Ricardo's theory of comparative advantage explains international trade in terms of international
differences in political environments.
True False
4.New trade theory stresses that in some cases countries specialize in the production and export of
particular products because the world market can support only a limited number of firms.
True False
5.Porter's theory of national competitive advantage recommends unrestricted free trade between countries.
True False
6.Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.
True False
7.Mercantilism supports the idea that countries should export more than what they import.
True False
8.Mercantilist doctrine advocates unrestricted free trade between countries.
True False
9.The principle of mercantilism views trade as a positive-sum game.
True False
10.A country has an absolute advantage in the production of a product when it is more efficient than any
other country in producing it.
True False
11.Adam smith argued that countries should specialize in the production of goods for which they have an
absolute advantage.
True False
12.According to Ricardo's theory of comparative advantage, countries should produce all the products for
which they have an absolute advantage.
True False
13.According to Ricardo's theory of comparative advantage, countries shall not produce a good even if they
have an absolute advantage in its production.
True False
14.The theory of comparative advantage suggests that trade is a positive-sum game in which all countries
that participate realize economic gains.
True False
15.Simple model of free trade assumed away transportation costs between countries.
True False