Q1 Home's import demand curve (MD) is the difference between the quantity that Home consumers demand (D) minus the quantity that Home supply (S), at each price. A. producers B. consumer C. labor Q2. Compared to free trade, the tariff the price in the importing country but by less than the tariff. This is because the tariff reduces the price in the exporting country. A. lower B. raises C. neutral Q3. The equilibrium world price is where Home import demand (MD curve) equals C supply. A. Home export B. domestic C. Foreign Q4. The classical theory of international trade is popularly known as the Theory of Comparative Costs or Advantage. It was formulated by David Ricardo in A. 1816 B. 1815 C. 1814 Q5. Ricardo wants to show that technological differences between countries can lead to trade. To accomplish this goal he needs to show the existence of trade among two countries that only in technology. A. same B. differ C. efficiently Q6. The demand curve shows the relative quantities bought by consumers at all possible values of the relative price. A. relative B. comparative C. imperative Q.7 Endogenous variables are those variables whose increases and decreases the theory is trying to A. explain B. ignore C. overlook Q8. A country as a whole is predicted to be better off with trade, so winners could in theory compensate the within each country. A. both B. winners C. losers Q9. When an economy produces the most value it can from its resources, the opportunity cost of producing a good equal the relative price of that good in A. growth B. economy C. markets Q10. increases the demand of goods produced by relatively abundant factors, indirectly increasing the demand of these factors, raising the prices of the relatively abundant factors. A. Trade B. export C. labor