Question 1

If a country has the comparative advantage in producing cloth,in the market for cloth the autarky price would be _____ the world price and the country would _____ cloth.

Accepted Answer

A) less than;export 
B) greater than;export 
C) less than;import 
D) the same as;export 
A) less than;export 
B) greater than;export 
C) less than;import 
D) the same as;export

Question 2

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.South Africa will _____ oranges,and the volume of trade will equal _____.

Accepted Answer

A) import;CT - QT 
B) export;CT - QT 
C) import;Q1 - QT 
D) export;CT - Q1 
A) import;CT - QT 
B) export;CT - QT 
C) import;Q1 - QT 
D) export;CT - Q1

Question 3

Import tariffs always benefit domestic producers more than they hurt domestic consumers.

Accepted Answer

A) True 
 B)False

Question 4

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.In autarky,the opportunity cost of 1 ton of beef in the Netherlands is:

Accepted Answer

A) 100 tons of beef. 
B) 1,000 boxes of tulips. 
C) 10 boxes of tulips. 
D) 0.1 box of tulips. 
A) 100 tons of beef. 
B) 1,000 boxes of tulips. 
C) 10 boxes of tulips. 
D) 0.1 box of tulips.

Question 5

Saudi Arabia has a tremendous comparative advantage in petroleum.Which factor is a source of this comparative advantage?

Accepted Answer

A) mild temperatures 
B) large reserves of crude oil 
C) no opportunity cost associated with oil production 
D) high tariffs on oil from other nations 
A) mild temperatures 
B) large reserves of crude oil 
C) no opportunity cost associated with oil production 
D) high tariffs on oil from other nations

Question 6

The Ricardian model of international trade assumes that countries have the usual bowed-out (concave to the origin)production possibility frontiers.

Accepted Answer

A) True 
 B)False

Question 7

In the importing country,the MOST likely effect of a tariff is to:

Accepted Answer

A) raise the price and decrease the quantity demanded. 
B) raise the price and increase the quantity demanded. 
C) raise the price without affecting the quantity demanded. 
D) decrease the quantity supplied. 
A) raise the price and decrease the quantity demanded. 
B) raise the price and increase the quantity demanded. 
C) raise the price without affecting the quantity demanded. 
D) decrease the quantity supplied.

Question 8

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 crude oil.

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 9

Mexico produces lettuce but can also import it.If Mexico imports some lettuce:

Accepted Answer

A) Mexico has a comparative advantage in lettuce production. 
B) the world price is lower than the domestic price. 
C) the price in Mexico will rise to equal the world price. 
D) the domestic quantity supplied will increase. 
A) Mexico has a comparative advantage in lettuce production. 
B) the world price is lower than the domestic price. 
C) the price in Mexico will rise to equal the world price. 
D) the domestic quantity supplied will increase.

Question 10

Workers in China earn low wages relative to world standards.A person who believes trade must be bad for workers in China because of this adheres to the:

Accepted Answer

A) sweatshop labor fallacy. 
B) Heckscher-Ohlin theory. 
C) pauper labor fallacy. 
D) theory of absolute advantage. 
A) sweatshop labor fallacy. 
B) Heckscher-Ohlin theory. 
C) pauper labor fallacy. 
D) theory of absolute advantage.

Question 11

If Indonesia has lower wage rates than India,trade between these two nations will make India worse off.

Accepted Answer

A) True 
 B)False

Question 12

(Figure: The Gains from International Trade)Use Figure: The Gains from International Trade.If each country specializes completely in the good for which it has a comparative advantage,each country must trade _____ computer(s)for _____ box of roses to consume at combination C '.

Accepted Answer

A) 1;0.5 
B) 2;1 
C) 0.5;1 
D) 1;1 
A) 1;0.5 
B) 2;1 
C) 0.5;1 
D) 1;1

Question 13

Use the following to answer question:  
-(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from PW to PT and the volume of imports falls to:

Accepted Answer

A) Q2 - Q1. 
B) C1 - C2. 
C) C1 - Q1. 
D) C2 - Q2. 
A) Q2 - Q1. 
B) C1 - C2. 
C) C1 - Q1. 
D) C2 - Q2.

Question 14

If a country imposes a tariff on imported shoes,we expect the domestic price of shoes to _____,domestic consumption to _____,and domestic production to _____.

Accepted Answer

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

Question 15

Advocates of trade barriers suggest that the barriers are needed for national security,job creation,and to:

Accepted Answer

A) protect producers who are just starting out so that they can become more established. 
B) eliminate the need for governments to become involved in the trade discussions. 
C) enhance the comparative advantage nature of trade. 
D) increase tariff revenue for government. 
A) protect producers who are just starting out so that they can become more established. 
B) eliminate the need for governments to become involved in the trade discussions. 
C) enhance the comparative advantage nature of trade. 
D) increase tariff revenue for government.

Question 16

Britain must give up the production of 75 hats to produce 25 additional sweaters.The opportunity cost of producing 3 hats is _____ sweater(s).

Accepted Answer

A) 1 
B) 3 
C) 22 
D) 28 
A) 1 
B) 3 
C) 22 
D) 28

Question 17

Production possibility frontiers:

Accepted Answer

A) illustrate the production choices available to an economy. 
B) assume full employment but not maximum efficiency. 
C) assume maximum efficiency but not full employment. 
D) are used to illustrate the law of decreasing opportunity costs. 
A) illustrate the production choices available to an economy. 
B) assume full employment but not maximum efficiency. 
C) assume maximum efficiency but not full employment. 
D) are used to illustrate the law of decreasing opportunity costs.

Question 18

Which argument is one that is common for trade protection?

Accepted Answer

A) national security 
B) increased efficiency 
C) increased profitability 
D) increased productivity 
A) national security 
B) increased efficiency 
C) increased profitability 
D) increased productivity

Question 19

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.Producer surplus without international trade would be area:

Accepted Answer

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

Question 20

Canada,Mexico,and the United States have:

Accepted Answer

A) joined together and are operating in what is called a closed-trade area with respect to the European Union. 
B) developed a currency similar to the euro. 
C) eliminated many trade barriers among themselves. 
D) reduced trade among themselves to protect jobs at home. 
A) joined together and are operating in what is called a closed-trade area with respect to the European Union. 
B) developed a currency similar to the euro. 
C) eliminated many trade barriers among themselves. 
D) reduced trade among themselves to protect jobs at home.

Exam 8: International Trade

If a country has the comparative advantage in producing cloth,in the market for cloth the autarky price would be _____ the world price and the country would _____ cloth.

Import tariffs always benefit domestic producers more than they hurt domestic consumers.

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.In autarky,the opportunity cost of 1 ton of beef in the Netherlands is:

Saudi Arabia has a tremendous comparative advantage in petroleum.Which factor is a source of this comparative advantage?

The Ricardian model of international trade assumes that countries have the usual bowed-out (concave to the origin)production possibility frontiers.

In the importing country,the MOST likely effect of a tariff is to:

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 crude oil.

Mexico produces lettuce but can also import it.If Mexico imports some lettuce:

Workers in China earn low wages relative to world standards.A person who believes trade must be bad for workers in China because of this adheres to the:

If Indonesia has lower wage rates than India,trade between these two nations will make India worse off.

(Figure: The Gains from International Trade)Use Figure: The Gains from International Trade.If each country specializes completely in the good for which it has a comparative advantage,each country must trade _____ computer(s)for _____ box of roses to consume at combination C '.

Use the following to answer question: -(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from PW to PT and the volume of imports falls to:

If a country imposes a tariff on imported shoes,we expect the domestic price of shoes to _____,domestic consumption to _____,and domestic production to _____.

Advocates of trade barriers suggest that the barriers are needed for national security,job creation,and to:

Britain must give up the production of 75 hats to produce 25 additional sweaters.The opportunity cost of producing 3 hats is _____ sweater(s).

Production possibility frontiers:

Which argument is one that is common for trade protection?

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.Producer surplus without international trade would be area:

Canada,Mexico,and the United States have:

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 country has the comparative advantage in producing cloth,in the market for cloth the autarky price would be _ the world price and the country would _ cloth.

(Figure: The Gains from International Trade)Use Figure: The Gains from International Trade.If each country specializes completely in the good for which it has a comparative advantage,each country must trade _ computer(s)for _ box of roses to consume at combination C '.

Use the following to answer question: -(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from P_W to P_T and the volume of imports falls to:

If a country imposes a tariff on imported shoes,we expect the domestic price of shoes to ___,domestic consumption to _,and domestic production to ___.

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.Producer surplus without international trade would be area: