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Semester: 5
International trade (IT)
MCQs - 26 NOV 2021
INTERNAL MCQs
1. One of the following is the basis of the development of the H-O Theorem
A. Difference in Price between Nations
B. Difference in Incomes between Nations
C. Difference in Factor endowments between Nations
D. Difference in Tastes and Preferences between Nations
2. From the background of the New Trade Theory, if 'Amazon' has a great advantage over other competitors in the e-commerce business, it can be because of __________.
A. low quality and low cost of products
B. large sales and low cost of products
C. early move advantage
D. In-house products
3. The New Trade Theory basically explains _________ in international trade.
A. Perfect competition
B. Imperfect competition
A. Difference in Price between Nations
B. Difference in Incomes between Nations
C. Difference in Factor endowments between Nations
D. Difference in Tastes and Preferences between Nations
2. From the background of the New Trade Theory, if 'Amazon' has a great advantage over other competitors in the e-commerce business, it can be because of __________.
A. low quality and low cost of products
B. large sales and low cost of products
C. early move advantage
D. In-house products
3. The New Trade Theory basically explains _________ in international trade.
A. Perfect competition
B. Imperfect competition
C. Market competition
D. Market concept
4. According to the New Trade Theories, International trade is the result of:
A. Economies of scale and Trade barriers
B. Perfect competition with full employment
C. Only Increasing returns to scale
D. Economies of scale and Network effect
5. The Heckscher-Ohlin model rules out the classical theories of trade by assuming that _________ are different between countries.
A. Opportunity costs
B. Factor endowments
C. Factor intensities
D. Market concept
4. According to the New Trade Theories, International trade is the result of:
A. Economies of scale and Trade barriers
B. Perfect competition with full employment
C. Only Increasing returns to scale
D. Economies of scale and Network effect
5. The Heckscher-Ohlin model rules out the classical theories of trade by assuming that _________ are different between countries.
A. Opportunity costs
B. Factor endowments
C. Factor intensities
D. Technology
6. Identify which one is different from all other situations
A. Identical demand conditions but different supply conditions in Home and Foreign countries
B. Identical supply conditions but different demand conditions in Home and Foreign countries
C. Different demand and supply conditions in Home and Foreign countries
D. Identical demand and supply conditions in Home and Foreign countries
7. Due to improvement in technology, India is able to offer more quantity of several products to the USA in exchange for their products. If India's Offer curve is shown on the y-axis:
A. There will be Upward Shift in India's Offer Curve towards y-axis
6. Identify which one is different from all other situations
A. Identical demand conditions but different supply conditions in Home and Foreign countries
B. Identical supply conditions but different demand conditions in Home and Foreign countries
C. Different demand and supply conditions in Home and Foreign countries
D. Identical demand and supply conditions in Home and Foreign countries
7. Due to improvement in technology, India is able to offer more quantity of several products to the USA in exchange for their products. If India's Offer curve is shown on the y-axis:
A. There will be Upward Shift in India's Offer Curve towards y-axis
B. There is a Downward Shift in USA's Offer Curve towards x-axis
C. There is no change in the two Offer Curves
D. There will be a downward shift in India's Offer Curve towards x-axis
8. Choose the one of that is a cause of internal diseconomies of scale.
A. Technology transfer from the USA to India
B. Mismanagement in the Company due to large expansion in business
C. Labor strike across India
D. Transport disturbance due to Covid led Lockdown
9. Offer curve represents ________ demand.
A. Horizontal
B. Reciprocal
C. Vertical
D. Upward
10. When an Industrial area expands and better facilities such as Banks, roads and transport are made available at better prices, the Factories experience ________.
A. Economies of scale
B. Internal economies of scale
C. External economies of scale
D. Diseconomies of scale
11. The fundamental cause for International trade is:
A. Desire to consume new products
B. To earn more Foreign exchange
C. Price differentials in production
D. Better Standard of Living
12. The Offer curve of the nation shows what a Trading Nation:
A. Is expected to offer as per other Nation's request
B. Is willing to offer for a given exchange from the Partner country
C. May decide to offer after Bilateral talks
D. Offers only condition of exactly equal reciprocation from the partner country
13. In terms of the New Trade Theory, 'Google' can be seen as an example of reaping economies of scale due to its ________.
A. Multiple uses
B. Unique advantage
C. First mover's advantage
D. Global advantage
14. The domination of Chinese products in the global market due to its low price and large scale production is explained best in one of the following theories
A. The Comparative Cost Advantage theory
B. Opportunity Cost theory
C. Hecksher-Ohlin Theory
D. New Trade Theory
C. There is no change in the two Offer Curves
D. There will be a downward shift in India's Offer Curve towards x-axis
8. Choose the one of that is a cause of internal diseconomies of scale.
A. Technology transfer from the USA to India
B. Mismanagement in the Company due to large expansion in business
C. Labor strike across India
D. Transport disturbance due to Covid led Lockdown
9. Offer curve represents ________ demand.
A. Horizontal
B. Reciprocal
C. Vertical
D. Upward
10. When an Industrial area expands and better facilities such as Banks, roads and transport are made available at better prices, the Factories experience ________.
A. Economies of scale
B. Internal economies of scale
C. External economies of scale
D. Diseconomies of scale
11. The fundamental cause for International trade is:
A. Desire to consume new products
B. To earn more Foreign exchange
C. Price differentials in production
D. Better Standard of Living
12. The Offer curve of the nation shows what a Trading Nation:
A. Is expected to offer as per other Nation's request
B. Is willing to offer for a given exchange from the Partner country
C. May decide to offer after Bilateral talks
D. Offers only condition of exactly equal reciprocation from the partner country
13. In terms of the New Trade Theory, 'Google' can be seen as an example of reaping economies of scale due to its ________.
A. Multiple uses
B. Unique advantage
C. First mover's advantage
D. Global advantage
14. The domination of Chinese products in the global market due to its low price and large scale production is explained best in one of the following theories
A. The Comparative Cost Advantage theory
B. Opportunity Cost theory
C. Hecksher-Ohlin Theory
D. New Trade Theory
15. H-O model states that a country should specialize __________.
A. in Capital goods only
B. Production and consumption of any one commodity
A. in Capital goods only
B. Production and consumption of any one commodity
C. In Industrial production with the latest technology
D. in Production and Export of any one commodity
16. The Offer curve of a nation shows:
A. The supply of a Nation's imports
B. The demand for a Nation's exports
C. The trade partner's Demand for imports against its Supply of exports
D. The Nation's Demand for imports against its Supply of exports
17. The H-O theorem is not valid under the physical criteria of factor abundance if
A. The production and consumption bias of a country are in opposite direction
B. The production and consumption bias of a country are in the same direction
C. The country has exportable surplus of the good it specializes in
D. The country imports the commodity in which its trading partner specializes
18. One of the aspects that differentiates between Internal Trade and International Trade is :
A. GDP of a Country
B. Product Mobility
C. Domestic Demand
D. Trade Cycles
19. According to Absolute Advantage Theory, if India produces 110 units of Tea, consumes 50 units of Tea and trades with Malaysia to import Rubber. How much will Malaysia's exports be?
A. 110
B. 60
C. 50
D. 40
16. The Offer curve of a nation shows:
A. The supply of a Nation's imports
B. The demand for a Nation's exports
C. The trade partner's Demand for imports against its Supply of exports
D. The Nation's Demand for imports against its Supply of exports
17. The H-O theorem is not valid under the physical criteria of factor abundance if
A. The production and consumption bias of a country are in opposite direction
B. The production and consumption bias of a country are in the same direction
C. The country has exportable surplus of the good it specializes in
D. The country imports the commodity in which its trading partner specializes
18. One of the aspects that differentiates between Internal Trade and International Trade is :
A. GDP of a Country
B. Product Mobility
C. Domestic Demand
D. Trade Cycles
19. According to Absolute Advantage Theory, if India produces 110 units of Tea, consumes 50 units of Tea and trades with Malaysia to import Rubber. How much will Malaysia's exports be?
A. 110
B. 60
C. 50
D. 40
20. Haberler improved international trade theory by introducing
A. The analysis of factor intensity reversal
B. The concept of opportunity cost and the production possibility curve
C. The concept of Opportunity cost and factor endowment
A. The analysis of factor intensity reversal
B. The concept of opportunity cost and the production possibility curve
C. The concept of Opportunity cost and factor endowment
D. The concept of Offer curves and trade possibilities
21. The cost of producing one additional unit of a commodity is expressed in terms of the units of the other commodity that need to be foregone. This statement relates to __________
A. Offer Curve
B. Transformation Line
C. Terms of Trade Line
D. Opportunity Cost Curve
22. In Heckscher-Ohlin theory, which of these assumptions is incorrect
A. There are only two countries
B. There are only two commodities
C. Both countries are either Capital intensive or Labor intensive
D. There is perfect competition in commodity and as well as Factor markets
23. According to the Opportunity Cost Theory, equilibrium in International Trade takes place under the following conditions:
A. Tangency between Home Country's PPC and CIC
B. Tangency between Foreign Country's, PPC and CIC
C. Tangency between both countries, PPC alone
D. Tangency between both countries PPC and CIC
24. Match the following:
i. Absolute Cost Advantage A. David Ricardo
ii. Comparative Cost Advantage B. J. S. Mill
iii. Principle of Reciprocal Demand, C. Adam Smith
iv. Offer Curves D. Edgeworth Marshall
A. i - A, ii - B, iii - C, iv - D
B. i - C, ii - A, iii - B, iv - D
C. i - C, ii - A, iii - D, iv - B
D. ¡ - A, ii - C, iii - B, iv - D
25. _________is best explained through the New Trade Theory
A. IT Revolution and Start-ups
B. Globalization
C. Digital revolution
D. Global warming
26. Free trade is based on the principles of
A. Comparative scale
B. Comparative cost advantage
C. Economies of advantage
D. Globalization
27. Economies of scale are of two kind
A. Temporary and permanent
B. Internal and external
C. Managerial and industrial
D. Natural and artificial
28. One of these has practically no effect on Internal business
A. GST
B. Interest on Bank Loans
C. Purchasing power of public
D. Tariff
29. International Trade exists because __________ countries can produce some goods and services more efficiently than others, but no country can produce __________ the goods and services in the most efficient manner.
A. Some, some
B. Some, all
C. Most, most
D. Most, all
30. The fundamental cause for International trade is :
A. Desire to consume new products
B. To earn more Foreign exchange
C. Price differentials in production
D. Better Standard of Living
31. Haberler Improved International trade theory by introducing
A. The analysis of factor intensity reversal
B. The concept of opportunity cost and the production possibility curve
C. The concept of Opportunity cost and factor endowment
D. The concept of Offer curves and trade possibilities
32. At equilibrium, Heckscher-Ohlin Model hypothesizes __________.
A. Equal advantage to trading nations
B. Factors of price equalization
C. Equality of factors in use
D. Commodity price equalization
33. The cost of producing one additional unit of a commodity is expressed in terms of the units of the other commodity that need to be foregone. This statement relates to __________
A. Offer Curve
B. Transformation Line
C. Terms of Trade Line
D. Opportunity Cost Curve
34. Under H-O theorem, if the quantum of capital to labor expressed in ratio of country A is greater than that of country B, it implies that
A. A is a labor abundant country
B. B is a capital abundant country
C. A is a capital abundant country
D. B is a labor scarce country
35. The normal offer curve is:
A. Downward-sloping
B. Upward-sloping
C. Upward sloping and non-linear
D. Downward-sloping and linear
36. A "closed economy" is an economy in which
A. Only exports take place
B. The money supply is fully controlled
C. Neither exports nor imports take place
D. Deficit financing take place
37. Economies of scale are of two kind
A. Temporary and permanent
B. Internal and external
C. Managerial and industrial
D. Natural and artificial
38. In the determination of Terms of Trade and Gains from Trade, both Adam Smith and David Ricardo paid complete attention to __________
A. Supply conditions
B. Demand conditions
C. Equilibrium price
D. Trade Policies of Nations
39. In terms of the New Trade Theory, 'Google' can be seen as an example of reaping economies of scale due to its __________
A. Multiple uses
B. Unique advantage
C. First mover's advantage
D. Global advantage
40. During International Trade between India and Malaysia, if Malaysia has all the consumption gain and India has no gain at all, whether Trade will take place or not depends on __________.
A. Malaysia's willingness
B. Malaysia's political power
C. India's willingness
D. India's political power
41. Under the Heckscher - Ohlin Theory, in case Capital is represented on the Y axis and a Capital abundant country has Production and Consumption bias in opposite direction, the point of equilibrium in International trade will lie _________ of the equilibrium of the Country's CIC and PPC
A. To the Right
B. To the Left
C. Below the point
D. Above the point
42. Under Constant cost conditions when two countries have exactly opposing efficiency levels for two different products, specialization in the respective products of efficiency and later international trade between them will help both countries attain a welfare level __________ their PPC
A. Exactly at
B. Within
C. Beyond
40. During International Trade between India and Malaysia, if Malaysia has all the consumption gain and India has no gain at all, whether Trade will take place or not depends on __________.
A. Malaysia's willingness
B. Malaysia's political power
C. India's willingness
D. India's political power
41. Under the Heckscher - Ohlin Theory, in case Capital is represented on the Y axis and a Capital abundant country has Production and Consumption bias in opposite direction, the point of equilibrium in International trade will lie _________ of the equilibrium of the Country's CIC and PPC
A. To the Right
B. To the Left
C. Below the point
D. Above the point
42. Under Constant cost conditions when two countries have exactly opposing efficiency levels for two different products, specialization in the respective products of efficiency and later international trade between them will help both countries attain a welfare level __________ their PPC
A. Exactly at
B. Within
C. Beyond
D. Close to
43. The Principle of Reciprocal Demand is associated with __________.
A. Adam Smith, David Ricardo, J.S. Mill
B. Adam Smith, David Ricardo, Haberler
C. J.S. Mill, Edgeworth, Marshall
D. Heckscher, Ohlin, Paul Samuelson
44. Ricardo's Theory of comparative cost advantage is based on:
A. The labor theory of value
B. The opportunity cost theory
C. The law of diminishing returns
D. Law of reciprocal demand
45. The New Trade Theory explains __________ structure of International trade with economies of scale in production.
A. Multi-product market
B. Intranational market
C. Imperfect market
D. Supermarket
46. __________ is the oldest international trade theory.
A. country preference theory
B. theory of absolute cost advantage
C. product life cycle theory
D. mercantilism theory
47. If the domestic terms of trade between products X and Y is 2:1 for country A and 1:2 for country B, it implies that:
A. X is relatively cheaper in country A
B. Y is relatively cheaper in country A
C. X is relatively cheaper in country B
D. A Y is relatively costlier in country B
48. A Concave Opportunity cost represents __________ opportunity cost condition
A. Increasing
B. Diminishing
C. Constant
D. Unpredictable
49. International trade benefits a Nation individually and expands __________
A. Technology
B. Satisfaction levels
C. Global trade
D. Quality of products
50. If India's Offer Curve is shown along the y-axis and China's Offer Curve along the x-axis, Trade restriction by both countries will lead to
A. Both countries' offer curves shift towards X axis
B. Both countries' offer curves shift towards Y axis
C. Inward Shift of both Offer Curves
D. Outward Shift of both Offer Curves
51. In case the Offer curve of Country A represented on the x-axis is an upward sloping straight line the equilibrium point in trade will shift upward, each time the normal Offer curve of Country B represented on the Y-axis shifts to the _________ as we see it.
A. Right
B. Left
C. parallel
D. horizontally
52. Which of the examples given below fit into the concept of 'Networking effect' due to the way its growth has expanded
A. Automobile Industry
B. Telecom Sector
C. Banking Sector
D. Defense Sector
53. The Slope of the PPC measures the __________
A. Marginal Rate of Substitution between X and Y
B. Marginal Rate of Transformation between X and Y
C. Marginal Rate of Productivity of X and Y
D. Marginal Utility of X in terms of Y
54. Comparative advantage is determined by:
A. Differences in labor productivity between countries
B. Differences in size of labor size between countries
C. Product difference between countries
D. Preference difference between countries
48. A Concave Opportunity cost represents __________ opportunity cost condition
A. Increasing
B. Diminishing
C. Constant
D. Unpredictable
49. International trade benefits a Nation individually and expands __________
A. Technology
B. Satisfaction levels
C. Global trade
D. Quality of products
50. If India's Offer Curve is shown along the y-axis and China's Offer Curve along the x-axis, Trade restriction by both countries will lead to
A. Both countries' offer curves shift towards X axis
B. Both countries' offer curves shift towards Y axis
C. Inward Shift of both Offer Curves
D. Outward Shift of both Offer Curves
51. In case the Offer curve of Country A represented on the x-axis is an upward sloping straight line the equilibrium point in trade will shift upward, each time the normal Offer curve of Country B represented on the Y-axis shifts to the _________ as we see it.
A. Right
B. Left
C. parallel
D. horizontally
52. Which of the examples given below fit into the concept of 'Networking effect' due to the way its growth has expanded
A. Automobile Industry
B. Telecom Sector
C. Banking Sector
D. Defense Sector
53. The Slope of the PPC measures the __________
A. Marginal Rate of Substitution between X and Y
B. Marginal Rate of Transformation between X and Y
C. Marginal Rate of Productivity of X and Y
D. Marginal Utility of X in terms of Y
54. Comparative advantage is determined by:
A. Differences in labor productivity between countries
B. Differences in size of labor size between countries
C. Product difference between countries
D. Preference difference between countries
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