Quiz Related To International Trade

The correct answer is "the home economy is isolated from foreign trade or investment." This means that in a closed economy, there are no imports or exports, and there is no foreign investment in the domestic economy. The economy operates independently without any involvement or interaction with the global market.

Competitiveness refers to the ability of a firm to design, produce, and market goods and services that are better and/or cheaper than those of other firms. This means that the firm is able to offer products or services that are of higher quality, more innovative, or more cost-effective compared to its competitors. By being competitive, a firm can gain a larger market share, attract more customers, and achieve higher profitability. It involves continuously improving and adapting to market demands, staying ahead of competitors, and maintaining a strong position in the industry.

When a country moves to free international trade, it opens up its domestic market to foreign competition. This increased competition can lead to the breakup of a monopoly in the home market, as other firms from around the world enter the market. As a result, the home market transitions from being dominated by a single firm to being shared by a few large firms, creating an oligopoly in the world market.

The correct answer suggests that politicians may not prioritize maximizing consumer welfare when considering arguments for free trade. This could be due to various reasons such as political agendas, pressure from special interest groups, or a focus on other policy goals. Politicians may prioritize other factors such as protecting domestic industries or ensuring employment opportunities, which may lead them to disregard the arguments for free trade.

International trade is logically associated with the assumption that resources are less mobile internationally than domestically. This means that factors of production such as labor, capital, and technology are not as easily moved across borders as goods and services. This assumption is based on the fact that there are often barriers to the movement of resources, such as immigration restrictions, differences in legal systems, and cultural barriers. As a result, countries engage in trade to access resources that are not readily available domestically, leading to specialization and increased efficiency in production.