MIB International Trade & Policy 1

Question 1

The World Trade Organization (WTO) principle of 'Most Favored Nation' (MFN) requires that:

Accepted Answer

Any trade advantage given to one country must be extended to all WTO members

Answer

The MFN principle requires WTO members to extend any favorable trade treatment they grant one country to all other WTO member nations equally.

Question 2

Which trade theory suggests that countries should export goods in which they have a lower opportunity cost of production?

Accepted Answer

Comparative advantage theory

Answer

Comparative advantage theory (Ricardo) states that countries benefit from specializing in and exporting goods they produce at a relatively lower opportunity cost, even if another country is absolutely more efficient.

Question 3

A tariff-rate quota (TRQ) in international trade policy means:

Accepted Answer

A lower tariff rate applies up to a set import quantity, higher rate beyond

Answer

A TRQ applies a lower (in-quota) tariff rate to imports up to a specified quantity and a higher (over-quota) tariff rate to any imports exceeding that quantity.

Question 4

The 'Heckscher-Ohlin (H-O) theorem' predicts that a country will export goods that:

Accepted Answer

Intensively use the country's relatively abundant factor of production

Answer

The H-O theorem states that countries export goods whose production intensively uses their most abundant factor (labor, capital, or land) and import goods that use their scarce factors.

Question 5

Which non-tariff barrier involves a government setting technical standards that foreign products must meet to enter the market?

Accepted Answer

Technical barriers to trade (TBT)

Answer

Technical barriers to trade include product standards, testing requirements, and certification procedures that imported goods must satisfy, sometimes serving as protectionist measures.

MIB - Master of International Business Practice Test

MIB - Master of International Business Practice Test

MIB International Trade & Policy 1