Overlapping Demands Model is usually referred as Linder Model.

THE RISE OF INTERNATIONAL TRADE THEORY AND MERCANTILISM

David Hume constructed what has become known as the specie-flow theory of the movement of money and goods between nations to assure equilibrium among international prices and the distribution of specie (or commodity) money among countries that are trading with each other. Hume explained that as net exports increased and more gold flowed into a country to pay for them, the prices of goods in that country would rise. Thus, an increased flow of gold into England would not necessarily increase England’s wealth substantially.

Product differentiation: Producing a commodity slightly different from the commodity produced by the competitor is called product differentiation. The correct answer is " D ".

The Factor Endowments and the HeckscherOhlin Theory, or simply the Heckscher Ohlin Theory, developed upon the weaknesses of the previous theories has some simplifying assumptions. Instead of examining them at the stage where the analysis stands, it’d be more effective to give them before starting to analyze the theory as a whole. The Heckscher-Ohlin Theory stands on twelve simplifying assumptions. The correct answer is " E ".

The discipline of international economics is composed of two main parts: International trade and international money. International trade refers to the real side of international economics while international money refers to the monetary side of international economics. The correct answer is "A".

One of the ranges of income elasticity of demand, inferior goods refers to the circumstance when the demand for a certain commodity decreases while the income increases. Potatoes and rice can be taken as examples for inferior goods. The correct answer is A.

Inferior goods: It refers to the circumstance when the demand for a certain commodity decreases while the income increases. Potatoes and rice can be taken as examples for inferior goods. Inferior goods are the commodities that low-income consumers demand.

Increasing returns to scale:

It refers to a condition of decreasing cost of a unit of commodity while its output rate increasing.

In economic theory, zerosum game represents the situation in which one part gains in the expense of the other part.

Revaluation: Raising the value of the national currency by the decision of the Central Bank is referred to revaluation.

Main Aims of Trade Restrictions are:

• Protect domestic producers
• Collect revenue to the Treasury
• Adjust balance of payment
• Implement infant-industry argument
• Serve for diplomatic relations

The international money part deals with the financial transactions like foreign exchange, foreign exchange markets, foreign exchange rate systems, payments among the nations, investment flows, and balance of payments.The correct answer is "C".

There is free trade between the trading countries: This assumption postulates that there are no obstacles on the free movement of commodities such as tariffs or non-tariff restrictions. Moreover, there are no transportation costs that can constitute a restriction on the free trade. The correct answer is " D ".

The fifth and the last stage is the product-decline stage, which refers to the time frame starting with Z. In the fifth stage, the production of the new product within the innovating country decreases rapidly since the imitating country undersells it in its domestic market. In other words, it becomes impossible for the innovating country to compete with the imitating country both in the domestic and international market.

In a perfectly competitive market or simply in perfect competition, there are many firms that are producing a homogeneous commodity. Thus, the commodit-ies within the market are identical in every respect. There are many consumers who are ready to buy the commodities that are produced identically. As there are no restrictions imposed, it’s easy for the new firms to enter into the market and for the existing firms to exit out from the market. The participants of the market, the firms and the consumers are well-informed about the prices and
the facts related with the market. The correct answer is " C ".

The first scientific study of international trade begins with Adam Smith’s famous book, The Wealth of Nations, published in 1776.

Defining the key terms and concepts has to start with the term volume of trade. Volume of trade gives the total amount of imports and exports. Doğru yanıt " A " dır.

Factor-Intensity Reversal explains the situation in which a commodity is the labor-intensive commodity in the labor-abundant country and the capital intensive commodity in the capitalabundant country.  The Factor-Intensity Reversal rests on the elasticity of substitution of factors of production. Elasticity of substitution of factors of production measures the ease with which one factor of production can be substituted for another within the production as the relative price of the factor declines. The correct answer is " A ". 

Economies of scale exist when the increase in the output is proportionally more than the increase in the input. Producing a commodity slightly different from the commodity produced by the competitor is called product differentiation. Constant returns to scale refers to the same amount of output increase with the increase within the factors of production. External economies of scale refers to a reduction in the average cost of a firm in conjunction with the increase within the size of the industry. Internal economies of scale refers to a reduction in the average cost of a firm that is peculiar to the increase within the scale of the firm itself.

Product Cycle Model divides the life cycle of a new product into five stages: new-product stage, product-growth stage, product-maturity stage, product-standardization stage and product-decline stage (II-IV-III-V-I). The correct answer is B.