Question 1

If production is subject to economies of scale,

Accepted Answer

A) countries can gain from trade if each nation specializes 
B) one country will develop an absolute advantage in the production of all goods 
C) higher output levels result in higher average production costs 
D) one country will develop a comparative advantage in the production of all goods 
E) countries cannot gain from trade 
A) countries can gain from trade if each nation specializes 
B) one country will develop an absolute advantage in the production of all goods 
C) higher output levels result in higher average production costs 
D) one country will develop a comparative advantage in the production of all goods 
E) countries cannot gain from trade

Question 2

A tax on imports equal to a percentage of the cost of those imports is known as

Accepted Answer

A) a specific tariff 
B) an ad valorem tariff 
C) a tax on luxury goods only 
D) an effective quota 
E) an ad valorem quota 
A) a specific tariff 
B) an ad valorem tariff 
C) a tax on luxury goods only 
D) an effective quota 
E) an ad valorem quota

Question 3

Exhibit 19-8   If the country in Exhibit 19-8 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted,

Accepted Answer

A) imports will not change 
B) imports will increase from 25 to 50 units per month 
C) domestic production will increase from 100 to 175 units per month 
D) domestic production will increase from 100 to 125 units per month 
E) domestic production will increase from 100 to 150 units per month 
A) imports will not change 
B) imports will increase from 25 to 50 units per month 
C) domestic production will increase from 100 to 175 units per month 
D) domestic production will increase from 100 to 125 units per month 
E) domestic production will increase from 100 to 150 units per month

Question 4

Exhibit 19-4   In Exhibit 19-4, if the world price of tulips is $1 and there are no trade restrictions, The Netherlands will

Accepted Answer

A) produce 7, 000, consume 10, 000, and export 3, 000 tulips 
B) produce 10, 000 and consume 10, 000 tulips 
C) produce no tulips 
D) import all of the tulips that it consumes 
E) consume all of the tulips that it produces 
A) produce 7, 000, consume 10, 000, and export 3, 000 tulips 
B) produce 10, 000 and consume 10, 000 tulips 
C) produce no tulips 
D) import all of the tulips that it consumes 
E) consume all of the tulips that it produces

Question 5

A nation's consumption possibilities frontier is

Accepted Answer

A) always the same as its production possibilities frontier 
B) never the same as its production possibilities frontier 
C) the same as its production possibilities frontier only if there is advantageous trade 
D) the same as its production possibilities frontier only if there is no international trade 
E) usually lower than its production possibilities frontier 
A) always the same as its production possibilities frontier 
B) never the same as its production possibilities frontier 
C) the same as its production possibilities frontier only if there is advantageous trade 
D) the same as its production possibilities frontier only if there is no international trade 
E) usually lower than its production possibilities frontier

Question 6

Under a tariff, the domestic government gains revenue, but under an import quota it does not, unless it sells the quota rights.

Accepted Answer

A) True 
 B)False

Question 7

Which country is the United States' largest trading partner?

Accepted Answer

A) Canada 
B) Japan 
C) Great Britain 
D) Mexico 
E) South Korea 
A) Canada 
B) Japan 
C) Great Britain 
D) Mexico 
E) South Korea

Question 8

Which of the following is not a problem with trade restrictions?

Accepted Answer

A) the high cost of rent-seeking activities such as lobbying 
B) the high cost of enforcement 
C) the unintended effects on related industries 
D) the inability to save U.S.jobs in the short run in industries that compete with imports 
E) the possibility of retaliation 
A) the high cost of rent-seeking activities such as lobbying 
B) the high cost of enforcement 
C) the unintended effects on related industries 
D) the inability to save U.S.jobs in the short run in industries that compete with imports 
E) the possibility of retaliation

Question 9

A country will import a good only if

Accepted Answer

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

Question 10

Tina Makumbi imports sesame oil from Ethiopia and sells to a market that has a downward sloping demand curve.The demand curve indicates that some consumers are willing to pay $1.50 or more per pound for the first few pounds, but every consumer gets to buy at the market clearing price of $0.50 per pound.The difference between the most that consumers would pay and the actual amount they do pay is called

Accepted Answer

A) exporter surplus 
B) trade balance 
C) producer surplus 
D) consumer equilibrium 
E) consumer surplus 
A) exporter surplus 
B) trade balance 
C) producer surplus 
D) consumer equilibrium 
E) consumer surplus

Question 11

Low wages may be traceable to all of the following except one.Which is the exception?

Accepted Answer

A) low productivity 
B) too much saving 
C) unstable business climate 
D) poor education and training 
E) lack of adequate physical capital supplied to labor 
A) low productivity 
B) too much saving 
C) unstable business climate 
D) poor education and training 
E) lack of adequate physical capital supplied to labor

Question 12

Which of the following factors is the most significant in determining the pattern of international trade?

Accepted Answer

A) absolute advantage 
B) diplomatic expertise 
C) comparative advantage 
D) overpowering military strength 
E) a country's size relative to another country's 
A) absolute advantage 
B) diplomatic expertise 
C) comparative advantage 
D) overpowering military strength 
E) a country's size relative to another country's

Question 13

International trade between countries typically produces a winner and a loser.Generally, it is the economically more advanced country that gains at the expense of the less developed nation.

Accepted Answer

A) True 
 B)False

Question 14

An import quota is a

Accepted Answer

A) legal limit on the quantity of a good that can be imported per year 
B) legal requirement that a specified percentage of a final good's value must be produced domestically 
C) legal requirement that exports to a certain country must exceed a specified value before that country's product may be imported 
D) percentage tax on an imported product 
E) lump-sum tax on an imported product 
A) legal limit on the quantity of a good that can be imported per year 
B) legal requirement that a specified percentage of a final good's value must be produced domestically 
C) legal requirement that exports to a certain country must exceed a specified value before that country's product may be imported 
D) percentage tax on an imported product 
E) lump-sum tax on an imported product

Question 15

Exhibit 19-1   Exhibit 19-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts.What is the opportunity cost of a coconut in Lambda?

Accepted Answer

A) 1/2 fish 
B) 1 fish 
C) 2 fish 
D) 21/2 fish 
E) cannot tell from the information provided 
A) 1/2 fish 
B) 1 fish 
C) 2 fish 
D) 21/2 fish 
E) cannot tell from the information provided

Question 16

Which of the following is not a type of trade restriction?

Accepted Answer

A) low-interest loans to foreign buyers 
B) export subsidies for domestic firms 
C) domestic content requirements 
D) restrictive health and safety standards 
E) economies of scale 
A) low-interest loans to foreign buyers 
B) export subsidies for domestic firms 
C) domestic content requirements 
D) restrictive health and safety standards 
E) economies of scale

Question 17

Revenue from a(n)__________ goes to the U.S.government while revenue from a(n)__________ goes to whomever secures the right to sell foreign goods in the U.S.market.

Accepted Answer

A) export subsidy, quota 
B) tariff, quota 
C) domestic content requirement, low-interest loan 
D) tariff, export subsidy 
E) quota, tariff 
A) export subsidy, quota 
B) tariff, quota 
C) domestic content requirement, low-interest loan 
D) tariff, export subsidy 
E) quota, tariff

Question 18

The General Agreement on Tariffs and Trade (GATT)was established in

Accepted Answer

A) 1870 to protect U.S.industries and decrease world trade 
B) 1921 to manage legal and accounting requirements for U.S.tariffs and quotas 
C) 1947 to reduce trade restrictions among 23 countries 
D) 1973 to increase trade restrictions, after OPEC significantly raised oil prices 
E) 1990 to create a common market 
A) 1870 to protect U.S.industries and decrease world trade 
B) 1921 to manage legal and accounting requirements for U.S.tariffs and quotas 
C) 1947 to reduce trade restrictions among 23 countries 
D) 1973 to increase trade restrictions, after OPEC significantly raised oil prices 
E) 1990 to create a common market

Question 19

Absolute advantage

Accepted Answer

A) is the same as comparative advantage 
B) implies autarky 
C) means that countries of the same size have the same opportunity cost of producing both goods 
D) means that a country can produce more of two goods than another country can 
E) means that a country can produce less of two goods than another country can 
A) is the same as comparative advantage 
B) implies autarky 
C) means that countries of the same size have the same opportunity cost of producing both goods 
D) means that a country can produce more of two goods than another country can 
E) means that a country can produce less of two goods than another country can

Question 20

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese.Germany can produce one watch for every 100 pounds of cheese it produces.Which of the following is true with regard to opportunity costs in the two countries?

Accepted Answer

A) The opportunity cost of producing watches is higher in Denmark. 
B) The opportunity cost of producing cheese is higher in Denmark. 
C) The opportunity cost of producing cheese is identical in both countries. 
D) It is impossible to compare opportunity costs because the two countries use different currencies. 
E) In both countries combined, the opportunity cost of one watch is 150 pounds of cheese. 
A) The opportunity cost of producing watches is higher in Denmark. 
B) The opportunity cost of producing cheese is higher in Denmark. 
C) The opportunity cost of producing cheese is identical in both countries. 
D) It is impossible to compare opportunity costs because the two countries use different currencies. 
E) In both countries combined, the opportunity cost of one watch is 150 pounds of cheese.

Exam 19: International Trade

If production is subject to economies of scale,

A tax on imports equal to a percentage of the cost of those imports is known as

Exhibit 19-8 If the country in Exhibit 19-8 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted,

Exhibit 19-4 In Exhibit 19-4, if the world price of tulips is $1 and there are no trade restrictions, The Netherlands will

A nation's consumption possibilities frontier is

Under a tariff, the domestic government gains revenue, but under an import quota it does not, unless it sells the quota rights.

Which country is the United States' largest trading partner?

Which of the following is not a problem with trade restrictions?

A country will import a good only if

Low wages may be traceable to all of the following except one.Which is the exception?

Which of the following factors is the most significant in determining the pattern of international trade?

International trade between countries typically produces a winner and a loser.Generally, it is the economically more advanced country that gains at the expense of the less developed nation.

An import quota is a

Exhibit 19-1 Exhibit 19-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts.What is the opportunity cost of a coconut in Lambda?

Which of the following is not a type of trade restriction?

Revenue from a(n)__________ goes to the U.S.government while revenue from a(n)__________ goes to whomever secures the right to sell foreign goods in the U.S.market.

The General Agreement on Tariffs and Trade (GATT)was established in

Absolute advantage

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese.Germany can produce one watch for every 100 pounds of cheese it produces.Which of the following is true with regard to opportunity costs in the two countries?

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

Filters

Revenue from a(n) goes to the U.S.government while revenue from a(n) goes to whomever secures the right to sell foreign goods in the U.S.market.