Consider the Sources of the Gains from International Trade

question 79

Multiple Choice

Consider the sources of the gains from international trade.Economies of scale and product differentiation can provide an explanation for

• A)countries remaining at their autarkic positions.
• B)countries trading in completely different products.
• C)the imposition of trade barriers.
• D)intra-industry trade.
• E)absolute advantage.

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Definitions:

Security's Beta

A measure of an investment's volatility compared to the market as a whole, indicating its risk in relation to the market.

Risk Premium

The extra return expected from an investment for taking on additional risk.

Security Market Line

A graphical representation of the expected return of an asset compared to its risk, as measured by beta.

Systematic Risk

The risk inherent to the entire market or an entire market segment, which cannot be eliminated through diversification.