Question 1

According to the infant industry argument,import protection is needed because:

Accepted Answer

A) foreign workers are often paid less than U.S.workers. 
B) it enables our protected industries to achieve technological efficiency and thus become competitive with mature foreign industries. 
C) the nation's security depends on a strong industrial base. 
D) it provides consumers with more and better goods in the long run. 
A) foreign workers are often paid less than U.S.workers. 
B) it enables our protected industries to achieve technological efficiency and thus become competitive with mature foreign industries. 
C) the nation's security depends on a strong industrial base. 
D) it provides consumers with more and better goods in the long run.

Question 2

Use the following to answer question:  
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada._____ has/have an absolute advantage in producing lumber.

Accepted Answer

A) Both the United States and Canada 
B) Neither the United States nor Canada 
C) The United States 
D) Canada 
A) Both the United States and Canada 
B) Neither the United States nor Canada 
C) The United States 
D) Canada

Question 3

Since the production of clothing is labor-intensive relative to the production of wheat and China is labor-abundant relative to most countries,we expect China to export clothing.

Accepted Answer

A) True 
 B)False

Question 4

China,which is labor-abundant,has a comparative advantage in clothing production,which is labor-intensive.Which model explains this pattern of comparative advantage?

Accepted Answer

A) the Ricardian model 
B) a model of increasing returns 
C) the Heckscher-Ohlin model 
D) a model of autarky 
A) the Ricardian model 
B) a model of increasing returns 
C) the Heckscher-Ohlin model 
D) a model of autarky

Question 5

In a single year,the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Belgium can raise 50 tons of beef or produce 750 boxes of tulips.From this information,we know that:

Accepted Answer

A) the Netherlands has a comparative advantage in raising beef. 
B) the Netherlands has a comparative advantage in raising tulips. 
C) Belgium has a comparative advantage in raising beef. 
D) Belgium has an absolute advantage in raising beef. 
A) the Netherlands has a comparative advantage in raising beef. 
B) the Netherlands has a comparative advantage in raising tulips. 
C) Belgium has a comparative advantage in raising beef. 
D) Belgium has an absolute advantage in raising beef.

Question 6

A country that is relatively labor-abundant and relatively land-scarce opens to international trade.As a result,it finds that wages _____ and rents _____.

Accepted Answer

A) increase;decrease 
B) decrease;decrease 
C) decrease;increase 
D) increase;increase 
A) increase;decrease 
B) decrease;decrease 
C) decrease;increase 
D) increase;increase

Question 7

In practice much trade protection reflects the political influence of import-competing producers.

Accepted Answer

A) True 
 B)False

Question 8

Use the following to answer question:  
-(Figure: The Market for Computers)Use Figure: The Market for Computers.Assume that PA is the autarky price and PW is the world price.Consumer surplus with international trade is area:

Accepted Answer

A) W + X + Y. 
B) W. 
C) Y. 
D) W + X. 
A) W + X + Y. 
B) W. 
C) Y. 
D) W + X.

Question 9

Use the following to answer question:  
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Jackson has an absolute advantage in producing:

Accepted Answer

A) wheat only. 
B) cattle only. 
C) both wheat and cattle. 
D) neither wheat nor cattle. 
A) wheat only. 
B) cattle only. 
C) both wheat and cattle. 
D) neither wheat nor cattle.

Question 10

The term autarky refers to a situation when a country:

Accepted Answer

A) trades goods and services based on the principle of comparative advantage. 
B) trades goods and services based on the principle of absolute advantage. 
C) trades goods and services based on the principle of Ricardian advantage. 
D) does not trade with other countries. 
A) trades goods and services based on the principle of comparative advantage. 
B) trades goods and services based on the principle of absolute advantage. 
C) trades goods and services based on the principle of Ricardian advantage. 
D) does not trade with other countries.

Question 11

A tariff or quota will _____ prices and _____ the consumption of the protected goods in the importing country.

Accepted Answer

A) raise;increase 
B) raise;decrease 
C) lower;increase 
D) lower;decrease 
A) raise;increase 
B) raise;decrease 
C) lower;increase 
D) lower;decrease

Question 12

Use the following to answer question:  
-(Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.The opportunity cost of _____ is _____ in the United States as/than in Mexico.

Accepted Answer

A) tractors;higher 
B) tractors;the same 
C) tractors;lower 
D) crude oil;lower 
A) tractors;higher 
B) tractors;the same 
C) tractors;lower 
D) crude oil;lower

Question 13

Use the following to answer question:  
-(Figure: The Markets for Melons in Russia)Use Figure: The Market for Melons in Russia.If Russia is trading based on comparative advantage and the world price is D,then Russia has _____ in the production of melons.

Accepted Answer

A) a comparative advantage 
B) a comparative disadvantage 
C) an absolute advantage 
D) neither an absolute nor a comparative advantage 
A) a comparative advantage 
B) a comparative disadvantage 
C) an absolute advantage 
D) neither an absolute nor a comparative advantage

Question 14

In 2002,the steel industry argued that higher tariffs on steel were necessary to help fight the war on terrorism.This is an example of the _____ argument.

Accepted Answer

A) infant industry 
B) national security 
C) job creation 
D) predatory pricing 
A) infant industry 
B) national security 
C) job creation 
D) predatory pricing

Question 15

Use the following to answer question:  
-(Figure: The Market for Calculators)Use Figure: The Market for Calculators.Assume that S and D represent the domestic demand and supply of calculators.The world price,PW,equals $100.The government imposes a quota restricting imports to 25 calculators.If import licenses are granted to foreigners,the net loss due to the import quota is equal to area:

Accepted Answer

A) K + L. 
B) G + J. 
C) G + H + I + J. 
D) G + H + I + J + K + L. 
A) K + L. 
B) G + J. 
C) G + H + I + J. 
D) G + H + I + J + K + L.

Question 16

The effect of international trade on U.S.factor markets is to:

Accepted Answer

A) increase the wage of highly educated workers. 
B) increase the wage of unskilled workers. 
C) decrease the wage of both highly educated workers and unskilled workers. 
D) increase the wage of both highly educated workers and unskilled workers. 
A) increase the wage of highly educated workers. 
B) increase the wage of unskilled workers. 
C) decrease the wage of both highly educated workers and unskilled workers. 
D) increase the wage of both highly educated workers and unskilled workers.

Question 17

In a single year,the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Belgium can raise 50 tons of beef or produce 750 boxes of tulips.Trade will take place between these two countries if 1 ton of beef costs _____ boxes of tulips.

Accepted Answer

A) 20 
B) 5 
C) 12 
D) 8 
A) 20 
B) 5 
C) 12 
D) 8

Question 18

Compared with autarky,international trade leads to _____ domestic production in exporting industries and _____ domestic production in import-competing industries.

Accepted Answer

A) higher;lower 
B) higher;higher 
C) lower;higher 
D) lower;lower 
A) higher;lower 
B) higher;higher 
C) lower;higher 
D) lower;lower

Question 19

Use the following to answer question:  
-(Figure: The Market for Laptops)Use Figure: The Market for Laptops.Assume that S and D are the domestic supply and demand curves and the world price is PW.Identify the area of deadweight loss when a tariff raises the domestic price from the world price to PT.

Accepted Answer

A) A + B 
B) C + D + E + F 
C) D + E + F 
D) D + F 
A) A + B 
B) C + D + E + F 
C) D + E + F 
D) D + F

Question 20

The absolute value of the slope of the production possibility frontier at any point:

Accepted Answer

A) gives the autarky price of the good on the vertical axis. 
B) is found by dividing the horizontal change by a vertical change. 
C) gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. 
D) gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis. 
A) gives the autarky price of the good on the vertical axis. 
B) is found by dividing the horizontal change by a vertical change. 
C) gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. 
D) gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis.

Exam 8: International Trade

According to the infant industry argument,import protection is needed because:

Use the following to answer question: -(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada._____ has/have an absolute advantage in producing lumber.

Since the production of clothing is labor-intensive relative to the production of wheat and China is labor-abundant relative to most countries,we expect China to export clothing.

China,which is labor-abundant,has a comparative advantage in clothing production,which is labor-intensive.Which model explains this pattern of comparative advantage?

In a single year,the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Belgium can raise 50 tons of beef or produce 750 boxes of tulips.From this information,we know that:

A country that is relatively labor-abundant and relatively land-scarce opens to international trade.As a result,it finds that wages _____ and rents _____.

In practice much trade protection reflects the political influence of import-competing producers.

Use the following to answer question: -(Figure: The Market for Computers)Use Figure: The Market for Computers.Assume that PA is the autarky price and PW is the world price.Consumer surplus with international trade is area:

Use the following to answer question: -(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Jackson has an absolute advantage in producing:

The term autarky refers to a situation when a country:

A tariff or quota will _____ prices and _____ the consumption of the protected goods in the importing country.

Use the following to answer question: -(Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.The opportunity cost of _____ is _____ in the United States as/than in Mexico.

Use the following to answer question: -(Figure: The Markets for Melons in Russia)Use Figure: The Market for Melons in Russia.If Russia is trading based on comparative advantage and the world price is D,then Russia has _____ in the production of melons.

In 2002,the steel industry argued that higher tariffs on steel were necessary to help fight the war on terrorism.This is an example of the _____ argument.

The effect of international trade on U.S.factor markets is to:

In a single year,the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Belgium can raise 50 tons of beef or produce 750 boxes of tulips.Trade will take place between these two countries if 1 ton of beef costs _____ boxes of tulips.

Compared with autarky,international trade leads to _____ domestic production in exporting industries and _____ domestic production in import-competing industries.

Use the following to answer question: -(Figure: The Market for Laptops)Use Figure: The Market for Laptops.Assume that S and D are the domestic supply and demand curves and the world price is PW.Identify the area of deadweight loss when a tariff raises the domestic price from the world price to PT.

The absolute value of the slope of the production possibility frontier at any point:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

A country that is relatively labor-abundant and relatively land-scarce opens to international trade.As a result,it finds that wages _ and rents _.

Use the following to answer question: -(Figure: The Market for Computers)Use Figure: The Market for Computers.Assume that P_A is the autarky price and P_W is the world price.Consumer surplus with international trade is area:

A tariff or quota will _ prices and _ the consumption of the protected goods in the importing country.

Use the following to answer question: -(Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.The opportunity cost of _ is _ in the United States as/than in Mexico.

Compared with autarky,international trade leads to _ domestic production in exporting industries and _ domestic production in import-competing industries.