General equilibrium of an economy is determined by the intersection of the production possibilities frontier, the autarky relative price line, and the indifferent curve.

Additive Manufacturing (AD): It refers to technologies that build 3D objects by adding layer-upon-layer materials of different kinds like plastics and metals.

International Factor Price Equalization Theorem deals with the international distribution of income. Stolper-Samuelson Theorem deals with the distribution of income effects of international trade within a trading country. Heckscher-Ohlin Theory states that comparative advantage of the trading countries is explained exclusively by differences in relative supply conditions. Classical Trade Theory which has been accepted as the primer of the international trade theory assumes that the country whose labor is more productive in producing the commodity that is subject to international trade has a comparative advantage in this commodity. Briefly, the basis of international trade solely depends on the differences of labor productivity.

General equilibrium of an economy is determined by the intersection of the production possibilities frontier, the autarky relative price line, and the indifferent curve. The correct answer is " A ".

The first economists who developed a more detailed analysis on the differences in productivity are Eli Heckscher and Bertil Ohlin. The correct answer is " C ".

Theory of Absolute Advantage

The theory was introduced in Adam Smith’s “Wealth of Nations”, published in 1776. By assuming that each country could produce some commodities using less labour than its trading partners, he showed that all parties could benefit from international trade. Trade improved the allocation of labour, ensuring that each good would be produced in the country where the good’s production required the least labour. Result would be a larger total quantity of goods produced in the world. Trade would be a positive-sum game. A country has an absolute advantage in the production of a good relative to another country if it can produce the good at a lower cost or with a higher productivity. If the input prices are the same in both countries, the country with an absolute advantage will have lower unit production cost for that good. A country should produce and export products in which it has an absolute advantage, and a country should import products in which it has a disadvantage.

Demand preferences are the same in both countries: Along with rapid globalization, demand preferences are more or less the same across countries. Thus, this assumption of the HeckscherOhlin Theory is probably the one that best fits today’s international trade environment.

Mercantilism can be said to be the first theory of international trade (Shenkar, Luo, Chi, 2004, p. 17). According to the mercantilist doctrine, countries should export more than they import. World wealth (gold or silver stock) is constant and cannot be increased. Therefore, there is always a contradiction among the foreign trade countries. Mercantilism is
an economic theory that holds that the prosperity of a nation is dependent upon its supply of capital, and that the global volume of international trade is “unchangeable”

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE

Positive economies of scale exist when the cost of producing a unit of commodity decreases as its output rate increases.

Ricardo based his explanation of the comparative advantage law on the labour value theory, which was later rejected. In the first part of the twentieth century, Gottfried Haberler came to save Ricardo, explaining the comparative advantage law in terms of opportunity cost theory, as reflected in the possibilities of production possibilities or in the transformation curves.

The production possibilities frontier of a labor-abundant country is skewed toward the axis that measures the labor-intensive commodity. The production possibilities frontier of a capital-abundant country is skewed toward the axis that measures the capital-intensive commodity.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE-Terms of trade

Another key term which is used within the scope of international trade is terms of trade. Terms of trade of a nation are found by the ratio of the price index of its exports to the price index of its imports. If this ratio is to be expressed in percentage, it is multiplied by hundred. These terms of trade can also refer to commodity terms of trade or net barter terms of trade.

Labor productivity: The quantity of a good that can be produced per unit of labor input. It is the reciprocal of the unit labour requirement.

An offer curve is a way to show a nation’s offer to export and import.

Labor productivity: The quantity of a good that can be produced per unit of labor input. It is the reciprocal of the unit labour requirement.

Decrease in the terms of trade refers to a deterioration in the terms of trade.

They are a type of intellectual property rights. Intellectual property is a general term referring to creations of the mind. Intellectual property rights designate creators with the right to protect themselves from the imitators for a limited period of time. Intellectual property rights have many types. For example; books, paintings and films are protected by copyrights while eligible inventions are protected by patents and brand names and product logos are registered as trademarks

External economies of scale exist when the cost per unit of production depends on the size of the industry. In other words, average cost of production decreases as the scale of the industry increases. It refers to a reduction in the average cost of a firm in conjunction with the increase within the size of the industry.

In 2017, the top trading countries in merchandise trade are China, the US, and Germany. In total exports, China is the leader but in total imports it is the US while the position of Germany is the same in both rankings, the third. The correct answer is "E".

The main reasons for intra-industry trade are: internal economies of scale, product differentiation, transportation costs, scope of commodity classification and differences (not similarities) in distribution of income. The correct answer is E.