Fill in the blank: The theory of comparative advantage suggests that countries should specialize in producing goods for which they have a ___ advantage.

Comparative

True or False: Mercantilism promotes the idea that a country should import more than it exports to achieve economic prosperity.

False. Mercantilism advocates for exporting more than importing to maintain a favorable balance of trade.

What role does foreign trade play in ensuring efficient resource deployment?

Foreign trade enhances resource efficiency.

• Utilizes global resources effectively.

• Boosts productivity and innovation.

• Reduces domestic monopolistic risks.

Fill in the blank: Economies of scale refer to the cost advantages that arise when firms increase their ___ of production.

Scale

What is the significance of network effects in international trade?

Network effects enhance the utility of goods and services as more people use them, increasing their value and encouraging wider adoption.

C) Increased innovation

Explain how international trade contributes to human resource development.

International trade boosts human resources.

• Shares skills and knowledge.

• Enhances workforce capabilities.

• Fosters innovation and growth.

True or False: The new trade theory invalidates the traditional trade theories by suggesting that trade does not benefit all parties involved.

False. The new trade theory reinforces the benefits of trade while highlighting the importance of competition and economies of scale.

What impact does international trade have on global value chains for emerging economies?

International trade improves competitiveness.

• Enhances product quality standards.

• Boosts global market access.

• Facilitates economic growth opportunities.