Note: The following statements are True or False. Please mark the correct answer as True or False.

1 The price of related goods and a change in the number of consumers can shift the demand for a product.

2 Absolute advantage refers to the ability to produce more or better goods and services than somebody else.

3 With the existing resources in these 2 countries, Wakanda can produce 42 TVs or 14 cars; and Gotham can produce 50 TVs or 25 cars. The opportunity cost of producing one car in Wakanda is 2 TVs whereas, the opportunity cost of producing one car in Gotham is 3 cars. Hence, Wakanda has a comparative advantage in producing cars over Gotham.

4 Comparative advantage indicates which nation is best at producing a given good, whereas absolute advantage is an indication of which nation stands to lose the least by choosing to produce one good versus another.

5 A fall in the prices of exported goods in international markets would increase the Terms of Trade, while a rise in the prices of imported goods would increase it.

6 Foreign Exchange Risks are a result of a country's policies that leads to international trade barriers because of protectionism and tariffs on imported goods.

7 With the existing resources in these 2 countries, Wakanda can produce 42 TVs or 14 cars; and Gotham can produce 50 TVs or 25 cars. The opportunity cost of producing one TV in Wakanda is 1/3 cars whereas, the opportunity cost of producing one TV in Gotham is 1/2 cars. Hence, Wakanda has a comparative advantage in producing TV over Gotham.

8 The gains from trade results from the ability of two countries to increase their consumption possibilities by specializing in the good in which they have comparative advantage and trading for a good in which they do not have a comparative advantage * True False

According to the international trade theory, even if a country has an absolute advantage over another, it can still benefit from specialization.

9 It is not possible for an individual or country to have a comparative advantage in all goods. There will be some other individual or country that can produce some things at lower opportunity costs.

10 The law of demand states that there's an inverse relationship between price and quantity supplied. This means when the price goes down, the quantity demanded decreases.

11 With the existing resources in these 2 countries, Wakanda can produce 42 TVs or 14 cars; and Gotham can produce 50 TVs or 25 cars. Hence, Gotham has an absolute advantage in producing cars whereas Wakanda has an absolute advantage in producing TVs. * True False

Opportunity cost is the opportunity you are giving up by making a choice. It compares choosing one option over another, and how much the producer benefits or loses by doing so.

12 What are the most important assumptions in International Economics is that efficiency should outweigh the effectiveness of a country. * True False If the price is elastic, an increase in the price would reduce the total revenue of a product. * True False

The law of diminishing return says that as you consume anything, like milk, the level of satisfaction you're going to get as you continue to consume the milk is going to decrease over time.

13 Economics is a social science concerned with the production, distribution, and consumption of goods and services.

14 Specialization occurs when an individual or a country allocates most or all of its resources towards the production of a particular good or service.

15 If the price elasticity of a product is 1.7, as the price of a product decreases by 1%, the quantity demand for that product will increase by more than 1%.

16 Comparative advantage refers to the uncontested superiority of a country to produce a particular good better. * True False

World Trade Organization (WTO) is an international forum that establishes the rules of international trade and allows members to deal with trade issues.

17 Production Possibility Frontier or PPF refers to the ability to produce goods and services at a lower opportunity cost

18 With the existing resources in these 2 countries, Wakanda can produce 42 TVs or 14 cars; and Gotham can produce 50 TVs or 25 cars. If Wakanda exchanges 4 TVs for 1 car with Gotham, Gotham will be benefitting from this trade as well.

19 An increase in the productive efficiency of a country determines its gains from trade as it lowers the cost of production and price of the goods. As a result, the country importing gains by importing cheap goods.

20 With the existing resources in these 2 countries, Wakanda can produce 42 TVs or 14 cars; and Gotham can produce 50 TVs or 25 cars. Wakanda should import cars from Gotham and export TVs to Gotham at the same time.

21 A trade surplus exists when a country imports more than it exports. A trade deficit is when a country exports more than it imports.

22 International trade is the exchange of goods and services between nations.

23 Key Drivers of International Trade include demography, geography, and topography of a county.

24 The concept of demand for a product is the same as the quantity demanded for a product. Similarly, the term supply means the same as the quantity supplied.

25 One of the main reasons for growing International Trade in Canada is the presence of its North-West water passage.