Business Economics MCQs [set-6]

126. According to Classical economists, _ is the reason for a country to specialie in

the production of a commodity
A. Internalisation
B. Cost differences
C. International Division of labor
D. Special Commodities
Answer: C

127. International trade is the result of an advantage country possesses in

producing a particular commodity at a _
A. Lower Cost
o m
B. Equal cost
. c
C. Higher cost te
a
D. Constant Cost
Answer: A
q M
c
M
128. Absolute difference in Cost is explained by
A. David Ricardo
B. Adam Smith
C. J.S.Mill
D. Alfred Marshall
Answer: B

129. According to Adam Smith, international trade is advantageous for all

participating countries only if they enjoy _ difference in cost of production
A. Comparative
B. Equal
C. Absolute
D. Unequal
Answer: C
130. Who aid the following, " The esence of international trade is not the absolute
difference in cost but a comparative difference in cost."
A. Adam Smith
B. David Ricardo
C. J.S.Mill
D. Alfred Marshall
Answer: B

131. Ricardian theory has _ countries and commodities

A. 32
B. 23
C. 24
D. 22
Answer: D

132. Which of the following is NOT an assumption of Comparative Cost Advantage

Theory?
A. Perfect Competition
B. Increasing return to scale
C. Perfect Mobility of labor within countries
D. Homogenoeus labor
Answer: B

133. Comparative Advantage is expressed in _

A. Absolute Cost
B. Variable cost
C. Cost ratios
D. Marginal Cost
Answer: C

134. England 1 unit wine =1/2unit cloth, Portugal 1 unit wine = 1 unit cloth. This is
an example of
A. Comparative Cost
B. Absolute Cost
C. Relative Cost
D. Unequal Cost
Answer: A

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135. Comparative Advantage theory is based on _ value
A. Cost theory
B. Productivity theory
C. Quality theory
D. labor theory
Answer: D

136. No change in technology, no transport cost, constant returns to scale - these

assumptions make the Comparative Cost advantage theory __
A. Dynamic
B. Redundant
C. Static
D. Unacceptable
Answer: C

137. If a country enjoys an absolute advantage in the production of all commodities

then also trade is possible”. Who said this?
A. Adam Smith
B. David Ricardo
C. J.S.Mill
D. Alfred Marshall
Answer: B

138. According to H-O theory, International trade is, but a pecial case of _ _ trade.
A. Inter-state
B. Intra state
C. Intra-Country
D. Inter-regional
Answer: D

139. H-o Theory s based on value theory.

A. Partial
B. Semi-partial
C. General
D. Semi-General
Answer: C

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140. H-O Theory is a _ _ model
A. 1 X 1 X 1
B. 2 X 2 X 2
C. 3 X 3 X 3
D. 4 X 4 X 4
Answer: B

141. Commodity Y is Capital intensive if _ _

A. Ky / Ly = Kx / Lx
B. Ky / Ly < Kx /Lx
C. Ky /Ly > Kx / Lx
D. Ky > Kx
Answer: C

142. If,England 1 wine = 1/2 cloth and if Portugal 1 wine = 1 cloth, this I an
example of
A. Comparative advantage
B. Absolute Advantage
C. Similar Cost
D. Unequal Cost
Answer: A

143. If Commodity Y requres 2 units of capital and 2 units of labor and commodity
X requires 1 unit of capital and 4 units of labor then Y is
A. Labor intenive
B. Labor specific
C. Capital Intensive
D. Capital Specific
Answer: C

144. Factor intensity is measured in _ terms

A. Absolute Cost
B. Factor ratios
C. Relative Cost
D. Frequency of capital labor
Answer: B

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145. Total amount of labor in Nation 1 is greater than labor in nation 2 if
A. TK1 /TL1 > TK2 /TL2
B. TK1 / TL1 < TK2 /TL2
C. TK1 /TL1 = TK2/TL2
D. TL1 > TL2
Answer: A

146. Factor abundance can be explained using

A. Demand curve
B. Supply curve
C. Tangent
D. PPC
Answer: D

147. A nation is capital abundant if

A. PK1/PL1 < PK2/PL2
B. PK1/PL1 >PK2/PL2
C. PK1/PL1 = PK2/PL2
D. PK1 < PK2
Answer: B

148. Abundance of a factor makes it

A. Easy
B. More
C. Expensive
D. Cheap
Answer: D

149. r1 / w1 < r2 / w2 means

A. Nation 1 is capital abundant
B. Nation 1 is labor abundant
C. Nation 2 is capital abundant
D. Nation 2 has high wages
Answer: A

150. The rate at which goods are exchangeed between two countries is called
A. Import price
B. Export rate

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 C. Foreign exchange
D. Terms of trade
Answer: D

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