1. International product price differences arise due to difference in
(A) supply conditions
(B) demand conditions
(C) demand and supply conditions
(D) all of the above
2. Principle of comparative cost is based on
(A) The differences in production costs of similar commodities in different countries,
(B) These differences are due to differences in geographical division of labor and
(c) Differences in climate, Natural resources, geographical situation & efficiency of labor
(D) All the above reasons are correct.
3. Which of these statements is correct?
(A) If the marginal opportunity costs in production are constant, the PPC will concave to the origin
(B) If the marginal opportunity costs in production are constant, the PPC will be I shaped
(c) If the marginal opportunity costs in production are increasing, the PPC will be positively‘ sloped
(D) If the marginal opportunity Costs in production are decreasing, the PPC will be convex to the origin
4. The factor price ratio in country A is 2 while it is 0.6 in the case of country B. (labour is measured along horizontal axis while capital is measured along vertical axis).
(A) country B is labour abundant
(B) country A is capital abundant
(c) country B is capital abundant
(D) country A is labour abundant
5. Between two countries capital intensive product is that one in which with same amount of capital we combine
(A) Cheap labour
(B) More labour
(C) Less labour
(D) No labour
6. As per Ricardian model of international trade developing countries produce primary products and developed countries produce non - primary products because of
(A) absolute disadvantage to developed countries.
(B) absolute cost disadvantage to developing countries
(C) absolute cost advantage to developing countries
(D) least comparative disadvantage to developing countries
7. Given Absolute cost differences, which of the following country has advantage in the production of X & Y commodities Country Commodity-X Commodity-Y
A 10 5
B 5 10
(A) 10x A / 5x B > 5yA / 10yB
(B) Country A has Absolute advantage in the production of X and Country B has Absolute advantage in the production of Y
(C) Both A & B are correct
(D) None of the Above
8. Which of these statements is correct?
(A) If the offer of country A in term is of its exportable to country B increases, the ToT will move in favour of country B, keeping other thing constant.
(B) If the offer of country A in terms of its exportables to country B increases, the terms of trade will move in favour of country A, keeping other things constant.
(C) If the offer of country A in terms of its exportables to country B decreases, the terms of trade will move in favour of country B, keeping other things constant.
(D) If the offer of country A in terms of its exportables to country B remains the same, terms of trade will move in favour of country B, keeping other things constant.
9. Paul krugnan developed the new theory of international trade using theoretical development from
(A) Market structure
(B) Micro-economics
(C) Both micro-economics & market structure
(D) None of the above
10. According to the factor proportions model, countries have comparative advantage in the good that ____
(A) Employs a relatively small amount of the factor that they have relatively more of than other countries.
(B) Employs a relatively large amount of their scarce factor.
(C) Uses intensively their scarce factor.
(D) None of the ab
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