Question

Question 5

"Free Trade" (with no barriers) is considered to be better than "No Trade" if it guarantees a more efficient reallocation of available economic resources within each economy, and between all economies involved in this trade.

Question 5 options:

	True
	False

Question 6 (10 points)

Which of the following is an example of government intervention in the free trade, without a directly associated increase in government revenues?

Question 6 options:

	A tariff on an imported product.
	A tax on an exported product.
	A quota on an imported product.
	None of the above is a valid example.

Question 7

Between any two countries trading two products, where each country has a comparative advantage in producing one of these two products, we know that the regulated trade is always better than the free trade.

Question 7 options:

	True
	False

Question 8

In a world of only two countries producing only two products using the same amount of resources in each country; which of the following statements is/are expected to be true?

Question 8 options:

	If one country has a comparative advantage in producing one of the two products, then we know that the other country has a comparative advantage in producing the other product.
	It is possible that one of the two countries enjoy comparative advantages in producing both products.
	All of the above statements are true.
	None of the above statements is true.

Answer 1

5. True

Explanation: Efficient allocation of resources is the main objective in economics. Free trade is more beneficial only when it ensures a more efficient allocation of resources.

6. A quota on an imported product.

Explanation: A quota puts a quantitative limit on the amount of imported goods.