Unit 7; International Trade

Question 1

Absolute Advantage

Answer 1

The ability to produce a good or service more efficiently than competitors

Question 2

Comparative Advantage

Answer 2

The ability to produce a good or service at a lower cost than others

Question 3

Imports

Answer 3

A product or service that is bought from another country

Question 4

Exports

Answer 4

Goods or services that are produced in one country and sold to another

Question 5

Trade Surplus

Answer 5

A greater value of exports than imports

Question 6

Trade Deficit

Answer 6

A greater value of imports than exports

Question 7

Free Trade

Answer 7

A policy that allows the unrestricted exchange of goods and services between countries

Question 8

Tariff

Answer 8

A tax to be paid on a particular class of imports or exports

Question 9

Quotas

Answer 9

A fixed share of something that a person or group is entitled to receive or is bound to contribute

Question 10

Embargo

Answer 10

An official ban on trade activity with a particular country

Question 11

Flexible Exchange Rate

Answer 11

A monetary system where the exchange rate of a currency us determined by supply and demand in the market

Question 12

At a local bakery, Beatriz is able to make 200 chocolate chip cookies and decorate 15 cakes per hour, while a fellow co-worker Eric is only able to bake 120 chocolate chip cookies and 15 cakes per hour. Who has the absolute advantage?

Answer 12

Beatriz has the absolute advantage

Question 13

At a local bakery, Beatriz is able to make 200 chocolate chip cookies and decorate 15 cakes per hour, while a fellow co-worker Eric is only able to bake 120 chocolate chip cookies and 15 cakes per hour. Who has the comparative advantage?

Answer 13

Eric has the comparative advantage.