Question 1

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _____ and domestic consumption will _____.

Accepted Answer

A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall 
A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall

Question 2

Use the following to answer question:  
-(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Accepted Answer

A) will import 150,000 Beats by Dre. 
B) will export 150,000 Beats by Dre. 
C) has a domestic supply equal to 250,000 Beats by Dre. 
D) has a domestic demand equal to 100,000 Beats by Dre. 
A) will import 150,000 Beats by Dre. 
B) will export 150,000 Beats by Dre. 
C) has a domestic supply equal to 250,000 Beats by Dre. 
D) has a domestic demand equal to 100,000 Beats by Dre.

Question 3

Assume that a tariff is imposed on Chinese imports into the United States.This tariff is likely to _____ U.S.producers and _____ Chinese producers.

Accepted Answer

A) penalize;penalize 
B) benefit;benefit 
C) benefit;penalize 
D) penalize;benefit 
A) penalize;penalize 
B) benefit;benefit 
C) benefit;penalize 
D) penalize;benefit

Question 4

Use the following to answer question:  
-(Figure: Comparative Advantage and the Production Possibility Frontier)Use Figure: Comparative Advantage and the Production Possibility Frontier._____ has an absolute advantage in the production of _____ and a comparative advantage in the production of _____.

Accepted Answer

A) The United States;computers;roses 
B) Colombia;computers;roses 
C) The United States;computers;computers 
D) Colombia;roses;computers 
A) The United States;computers;roses 
B) Colombia;computers;roses 
C) The United States;computers;computers 
D) Colombia;roses;computers

Question 5

Use the following to answer question:  
-(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P1.When the economy is opened to trade,the price falls to PW and producer surplus will _____ to area _____.

Accepted Answer

A) fall;N + Q 
B) fall;Q 
C) rise;M + N + O + P 
D) rise;M + N + O + P + Q 
A) fall;N + Q 
B) fall;Q 
C) rise;M + N + O + P 
D) rise;M + N + O + P + Q

Question 6

A direct restriction on the quantity of an import is called a(n):

Accepted Answer

A) import quota. 
B) tariff. 
C) import subsidy. 
D) import restriction. 
A) import quota. 
B) tariff. 
C) import subsidy. 
D) import restriction.

Question 7

Assume that the United States imposes an import quota on Italian shoes.Relative to the equilibrium world price that would exist in the absence of import quotas,the equilibrium price of shoes in the United States will most likely _____ and the equilibrium price of shoes in Italy will most likely _____.

Accepted Answer

A) increase;decrease 
B) decrease;remain the same 
C) decrease;increase 
D) increase;remain the same 
A) increase;decrease 
B) decrease;remain the same 
C) decrease;increase 
D) increase;remain the same

Question 8

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

Accepted Answer

A) A. 
B) A + B. 
C) A + B + D + E. 
D) A + B + D + E - C. 
A) A. 
B) A + B. 
C) A + B + D + E. 
D) A + B + D + E - C.

Question 9

Countries that trade based on the Heckscher-Ohlin model will find that:

Accepted Answer

A) their import goods tend to utilize their relatively scarce factors of production most intensively. 
B) the goods they export tend to use their relatively scarce factors of production most intensively. 
C) countries with a relative abundance of capital will export goods that use labor intensively. 
D) the concept of absolute advantage determines which goods they should export and import. 
A) their import goods tend to utilize their relatively scarce factors of production most intensively. 
B) the goods they export tend to use their relatively scarce factors of production most intensively. 
C) countries with a relative abundance of capital will export goods that use labor intensively. 
D) the concept of absolute advantage determines which goods they should export and import.

Question 10

When a market begins to engage in international trade:

Accepted Answer

A) producers in the exporting industry may be better off. 
B) consumers of the imported good may be worse off. 
C) consumers of the exported good may be better off. 
D) producers in the importing industry are better off. 
A) producers in the exporting industry may be better off. 
B) consumers of the imported good may be worse off. 
C) consumers of the exported good may be better off. 
D) producers in the importing industry are better off.

Question 11

Use the following to answer question:  
-(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.Both nations will gain from trade when 1 tire trades for _____ microchip(s).

Accepted Answer

A) 0.33 
B) 0.5 
C) 1.5 
D) 2 
A) 0.33 
B) 0.5 
C) 1.5 
D) 2

Question 12

When a business hires people in other countries to perform various tasks,_____ has occurred.

Accepted Answer

A) comparative advantage 
B) globalization 
C) offshore outsourcing 
D) pauper labor 
A) comparative advantage 
B) globalization 
C) offshore outsourcing 
D) pauper labor

Question 13

Use the following to answer question:  
-(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.The opportunity cost of producing 1 tire in Indonesia is _____ microchip(s),while the opportunity cost of producing 1 tire in Malaysia is _____ microchip(s).

Accepted Answer

A) 0.5;2 
B) 2;1 
C) 600;800 
D) 800;1,200 
A) 0.5;2 
B) 2;1 
C) 600;800 
D) 800;1,200

Question 14

If a country removes a tariff on imported shoes,we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____.

Accepted Answer

A) fall;fall 
B) fall;rise 
C) rise;fall 
D) rise;rise 
A) fall;fall 
B) fall;rise 
C) rise;fall 
D) rise;rise

Question 15

Use the following to answer question:  
-(Figure: Domestic Market for Digital Cameras)Use Figure: The Domestic Market for Digital Cameras.Assume that PA is the autarky price and PW is the world price.Total surplus after international trade _____ by the area _____.

Accepted Answer

A) rises;B + D + E 
B) falls;C 
C) rises;C 
D) rises;D + E 
A) rises;B + D + E 
B) falls;C 
C) rises;C 
D) rises;D + E

Question 16

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._____ has/have an absolute advantage in producing tractors.

Accepted Answer

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

Question 17

Restrictions on free international trade designed to insulate domestic industries from competitive market forces that originate beyond the borders of the country are _____ policies.

Accepted Answer

A) competitive 
B) protectionist 
C) free-trade 
D) antitrust 
A) competitive 
B) protectionist 
C) free-trade 
D) antitrust

Question 18

International trade based on comparative advantage allows a country to produce outside its production possibility frontier.

Accepted Answer

A) True 
 B)False

Question 19

Bangladesh exports shirts,the making of which is labor-intensive,to the United States.The likely source of Bangladesh's comparative advantage in shirts is:

Accepted Answer

A) a hotter climate,which makes it possible to produce shirts outdoors,eliminating the need for factory buildings and hence reducing costs. 
B) superior production technology. 
C) that,in comparison with the United States,Bangladesh is a labor-abundant country. 
D) the higher labor productivity in Bangladesh. 
A) a hotter climate,which makes it possible to produce shirts outdoors,eliminating the need for factory buildings and hence reducing costs. 
B) superior production technology. 
C) that,in comparison with the United States,Bangladesh is a labor-abundant country. 
D) the higher labor productivity in Bangladesh.

Question 20

In a single year,Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Venezuela can raise 50 tons of beef or produce 750 boxes of tulips.When the two countries begin trading beef for tulips,we expect the price of beef in Venezuela:

Accepted Answer

A) to fall. 
B) to rise. 
C) to remain at the autarky price. 
D) to be 15 boxes of tulips. 
A) to fall. 
B) to rise. 
C) to remain at the autarky price. 
D) to be 15 boxes of tulips.

Exam 8: International Trade

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _____ and domestic consumption will _____.

Use the following to answer question: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Assume that a tariff is imposed on Chinese imports into the United States.This tariff is likely to _____ U.S.producers and _____ Chinese producers.

Use the following to answer question: -(Figure: Comparative Advantage and the Production Possibility Frontier)Use Figure: Comparative Advantage and the Production Possibility Frontier._____ has an absolute advantage in the production of _____ and a comparative advantage in the production of _____.

Use the following to answer question: -(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P1.When the economy is opened to trade,the price falls to PW and producer surplus will _____ to area _____.

A direct restriction on the quantity of an import is called a(n):

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

Countries that trade based on the Heckscher-Ohlin model will find that:

When a market begins to engage in international trade:

Use the following to answer question: -(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.Both nations will gain from trade when 1 tire trades for _____ microchip(s).

When a business hires people in other countries to perform various tasks,_____ has occurred.

If a country removes a tariff on imported shoes,we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____.

Use the following to answer question: -(Figure: Domestic Market for Digital Cameras)Use Figure: The Domestic Market for Digital Cameras.Assume that PA is the autarky price and PW is the world price.Total surplus after international trade _____ by the area _____.

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._____ has/have an absolute advantage in producing tractors.

Restrictions on free international trade designed to insulate domestic industries from competitive market forces that originate beyond the borders of the country are _____ policies.

International trade based on comparative advantage allows a country to produce outside its production possibility frontier.

Bangladesh exports shirts,the making of which is labor-intensive,to the United States.The likely source of Bangladesh's comparative advantage in shirts is:

In a single year,Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season,Venezuela can raise 50 tons of beef or produce 750 boxes of tulips.When the two countries begin trading beef for tulips,we expect the price of beef in Venezuela:

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

If a nation imports a good when the economy is opened to trade,the domestic price of the good will _ and domestic consumption will _.

Use the following to answer question: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.If the world price equals $100 and there is free trade,this country:

Assume that a tariff is imposed on Chinese imports into the United States.This tariff is likely to _ U.S.producers and _ Chinese producers.

Use the following to answer question: -(Figure: Comparative Advantage and the Production Possibility Frontier)Use Figure: Comparative Advantage and the Production Possibility Frontier.___ has an absolute advantage in the production of _ and a comparative advantage in the production of ___.

Use the following to answer question: -(Figure: The Market for Oranges in South Africa)Use Figure: The Market for Oranges in South Africa.In autarky,the price of oranges in South Africa is P₁.When the economy is opened to trade,the price falls to P_W and producer surplus will _ to area _.

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

If a country removes a tariff on imported shoes,we expect the domestic price of shoes to _ and the quantity of shoes consumed in the domestic market to _.

Use the following to answer question: -(Figure: Domestic Market for Digital Cameras)Use Figure: The Domestic Market for Digital Cameras.Assume that P_A is the autarky price and P_W is the world price.Total surplus after international trade _ by the area _.