Question 1

Exhibit 19-4   In Exhibit 19-4, if the world price of tulips is $4 and there are no trade restrictions, The Netherlands will

Accepted Answer

A) produce 10, 000, consume 4, 000, and import 6, 000 tulips 
B) produce 10, 000, consume 4, 000, and export 6, 000 tulips 
C) produce 4, 000, consume 10, 000, and import 6, 000 tulips 
D) produce no tulips 
E) import all of the tulips that it consumes 
A) produce 10, 000, consume 4, 000, and import 6, 000 tulips 
B) produce 10, 000, consume 4, 000, and export 6, 000 tulips 
C) produce 4, 000, consume 10, 000, and import 6, 000 tulips 
D) produce no tulips 
E) import all of the tulips that it consumes

Question 2

Exhibit 19-2
   In Exhibit 19-2, the United States has a comparative advantage in the production of rice.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 19-6   In Exhibit 19-6, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will the United States import?

Accepted Answer

A) 4, 000 
B) 6, 000 
C) 8, 000 
D) 10, 000 
E) 12, 000 
A) 4, 000 
B) 6, 000 
C) 8, 000 
D) 10, 000 
E) 12, 000

Question 4

The basis for international trade is

Accepted Answer

A) established trade patterns 
B) the size of gold holdings of two countries 
C) shipping and transportation costs 
D) absolute advantage 
E) comparative advantage 
A) established trade patterns 
B) the size of gold holdings of two countries 
C) shipping and transportation costs 
D) absolute advantage 
E) comparative advantage

Question 5

If there are no trade restrictions, a country will import a particular good if

Accepted Answer

A) domestic quantity supplied equals domestic quantity demanded at the world price 
B) there is excess domestic quantity demanded at the world price 
C) world quantity supplied is less than world quantity demanded 
D) world quantity supplied is greater than world quantity demanded 
E) domestic quantity supplied is greater than domestic quantity demanded at the world price 
A) domestic quantity supplied equals domestic quantity demanded at the world price 
B) there is excess domestic quantity demanded at the world price 
C) world quantity supplied is less than world quantity demanded 
D) world quantity supplied is greater than world quantity demanded 
E) domestic quantity supplied is greater than domestic quantity demanded at the world price

Question 6

Which of the following is not an argument in favor of restricting trade?

Accepted Answer

A) to preserve national security 
B) to prevent dumping 
C) to increase consumer surplus 
D) to protect infant industries 
E) to protect declining industries 
A) to preserve national security 
B) to prevent dumping 
C) to increase consumer surplus 
D) to protect infant industries 
E) to protect declining industries

Question 7

An import quota is a

Accepted Answer

A) tax on imports 
B) legal limit on the amount of a specific good that can be imported into a particular country 
C) tax on import quantities above the legal limit 
D) way to increase tariff revenues 
E) legal incentive for members of GATT to increase their exports of a particular good 
A) tax on imports 
B) legal limit on the amount of a specific good that can be imported into a particular country 
C) tax on import quantities above the legal limit 
D) way to increase tariff revenues 
E) legal incentive for members of GATT to increase their exports of a particular good

Question 8

Most U.S.imports are

Accepted Answer

A) manufactured goods 
B) agricultural services 
C) petroleum and related products 
D) minerals such as bauxite and nickel 
E) military goods 
A) manufactured goods 
B) agricultural services 
C) petroleum and related products 
D) minerals such as bauxite and nickel 
E) military goods

Question 9

Exhibit 19-2
   In Exhibit 19-2, Costa Rica has a comparative advantage in the production of rice.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 19-3   In Exhibit 19-3, if the world price of corn is $6 and there are no trade restrictions, the United States will

Accepted Answer

A) produce 7, 000, consume 3, 000, and import 4, 000 bushels of corn 
B) have an excess demand for corn 
C) be a net importer of corn 
D) not produce any corn 
E) consume only a portion of what is produced 
A) produce 7, 000, consume 3, 000, and import 4, 000 bushels of corn 
B) have an excess demand for corn 
C) be a net importer of corn 
D) not produce any corn 
E) consume only a portion of what is produced

Question 11

The largest regional trading bloc is the

Accepted Answer

A) North American Free Trade Agreement 
B) European Community 
C) Latin American Free Trade Agreement 
D) Asian Free Trade Agreement 
E) East Asian Cooperation Council 
A) North American Free Trade Agreement 
B) European Community 
C) Latin American Free Trade Agreement 
D) Asian Free Trade Agreement 
E) East Asian Cooperation Council

Question 12

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 19-3   In Exhibit 19-3, if the world price of corn is $2 and there are no trade restrictions, the United States will

Accepted Answer

A) produce 3, 000, consume 7, 000, and export 2, 000 bushels of corn 
B) have an excess supply of corn 
C) be a net exporter of corn 
D) not produce any corn 
E) consume all of the corn that it produces 
A) produce 3, 000, consume 7, 000, and export 2, 000 bushels of corn 
B) have an excess supply of corn 
C) be a net exporter of corn 
D) not produce any corn 
E) consume all of the corn that it produces

Question 14

A major U.S.motive for negotiating a free-trade agreement with Mexico was to

Accepted Answer

A) increase immigration into the United States 
B) encourage Mexico's recent drive to achieve a more market-oriented economy 
C) keep Mexico from going Communist 
D) achieve, ultimately, political union with Mexico 
E) help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries 
A) increase immigration into the United States 
B) encourage Mexico's recent drive to achieve a more market-oriented economy 
C) keep Mexico from going Communist 
D) achieve, ultimately, political union with Mexico 
E) help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries

Question 15

A nation's producers can compete effectively with imports from other nations if it has

Accepted Answer

A) high wages 
B) low wages 
C) low labor cost per unit of output 
D) less specialization 
E) low labor productivity 
A) high wages 
B) low wages 
C) low labor cost per unit of output 
D) less specialization 
E) low labor productivity

Question 16

Which of the following is not true of the terms of trade?

Accepted Answer

A) They are determined by supply and demand factors. 
B) They lie somewhere between the opportunity costs of the trading partners. 
C) GATT begins negotiations on the terms of trade. 
D) They depend on negotiations between trade partners. 
E) They often favor one partner more than the other. 
A) They are determined by supply and demand factors. 
B) They lie somewhere between the opportunity costs of the trading partners. 
C) GATT begins negotiations on the terms of trade. 
D) They depend on negotiations between trade partners. 
E) They often favor one partner more than the other.

Question 17

Exhibit 19-5   In Exhibit 19-5, with a tariff of $0.50 per unit and a world price of $1.00,

Accepted Answer

A) 25 units will be exported 
B) 25 units will be imported 
C) 50 units will be exported 
D) 50 units will be imported 
E) 10 units will be exported 
A) 25 units will be exported 
B) 25 units will be imported 
C) 50 units will be exported 
D) 50 units will be imported 
E) 10 units will be exported

Question 18

World output will be maximized if each country

Accepted Answer

A) attempts to be self-sufficient 
B) specializes in producing those goods in which it has a comparative advantage 
C) specializes in producing those goods in which it has an absolute advantage 
D) reduces its consumption possibilities 
E) specializes in producing those goods for which it has the lowest demand 
A) attempts to be self-sufficient 
B) specializes in producing those goods in which it has a comparative advantage 
C) specializes in producing those goods in which it has an absolute advantage 
D) reduces its consumption possibilities 
E) specializes in producing those goods for which it has the lowest demand

Question 19

The United States exports more raw materials than finished products.

Accepted Answer

A) True 
 B)False

Question 20

Differences in resource endowments are differences in

Accepted Answer

A) tariffs charged by each country 
B) consumption patterns across nations 
C) production patterns across nations 
D) the quantity, but not the quality, of resources available in different nations 
E) the quality and quantity of resources available in different nations 
A) tariffs charged by each country 
B) consumption patterns across nations 
C) production patterns across nations 
D) the quantity, but not the quality, of resources available in different nations 
E) the quality and quantity of resources available in different nations

Exam 19: International Trade

Exhibit 19-4 In Exhibit 19-4, if the world price of tulips is $4 and there are no trade restrictions, The Netherlands will

Exhibit 19-2 In Exhibit 19-2, the United States has a comparative advantage in the production of rice.

Exhibit 19-6 In Exhibit 19-6, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will the United States import?

The basis for international trade is

If there are no trade restrictions, a country will import a particular good if

Which of the following is not an argument in favor of restricting trade?

An import quota is a

Most U.S.imports are

Exhibit 19-2 In Exhibit 19-2, Costa Rica has a comparative advantage in the production of rice.

Exhibit 19-3 In Exhibit 19-3, if the world price of corn is $6 and there are no trade restrictions, the United States will

The largest regional trading bloc is the

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

Exhibit 19-3 In Exhibit 19-3, if the world price of corn is $2 and there are no trade restrictions, the United States will

A major U.S.motive for negotiating a free-trade agreement with Mexico was to

A nation's producers can compete effectively with imports from other nations if it has

Which of the following is not true of the terms of trade?

Exhibit 19-5 In Exhibit 19-5, with a tariff of $0.50 per unit and a world price of $1.00,

World output will be maximized if each country

The United States exports more raw materials than finished products.

Differences in resource endowments are differences in

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Finance

Economic Development

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