Question 1

The difference between production possibilities curves with and without trade represents the

Accepted Answer

A) country's absolute advantage. 
B) terms of trade. 
C) deadweight loss to a country. 
D) gains from trade. 
E) country's comparative advantage. 
A) country's absolute advantage. 
B) terms of trade. 
C) deadweight loss to a country. 
D) gains from trade. 
E) country's comparative advantage.

Question 2

Exhibit 30-1  
-According to the data in Exhibit 30-1, the equilibrium price for the good is

Accepted Answer

A)  12. 
B)  3. 
C)  10. 
D)  5. 
E)  4. 
A)  12. 
B)  3. 
C)  10. 
D)  5. 
E)  4.

Question 3

Trade will tend to increase wages in a labor-abundant country.

Accepted Answer

A) True 
 B)False

Question 4

As a market increases in size, average total cost declines at each firm if the number of firms does not change.

Accepted Answer

A) True 
 B)False

Question 5

A tariff imposed on a country as a penalty for dumping goods is called a(n)

Accepted Answer

A) antidumping duty. 
B) quota tariff. 
C) ad valorem tariff. 
D) revenue tariff. 
E) dumping duty. 
A) antidumping duty. 
B) quota tariff. 
C) ad valorem tariff. 
D) revenue tariff. 
E) dumping duty.

Question 6

Trade will tend to equalize the price of goods, but not the price of factors of production.

Accepted Answer

A) True 
 B)False

Question 7

American movies have become very popular in France.

Accepted Answer

The answer of American movies have become very popular in...

Question 8

The intersection of the export supply curve and import demand curve gives the amount

Accepted Answer

A) exported out of the country, but not the price. 
B) imported into the country and the price. 
C) exported out of the country and the price. 
D) imported into the country, but not the price. 
E) of foreign currency traded, but not the amount of goods and services exported and imported. 
A) exported out of the country, but not the price. 
B) imported into the country and the price. 
C) exported out of the country and the price. 
D) imported into the country, but not the price. 
E) of foreign currency traded, but not the amount of goods and services exported and imported.

Question 9

What is unilateral disarmament? Why is unilateral disarmament not a viable way to reduce trade barriers in developed countries?

Accepted Answer

Unilateral disarmament is when a country

Question 10

If the comparative advantage between Japan and Korea was due only to differences in relative capital and labor abundance, then trade would tend to

Accepted Answer

A) increase real wages in the higher-wage country and lower real wages in the lower-wage country. 
B) have no effect on the real wages in either country. 
C) increase real wages in the lower-wage country and lower real wages in the higher-wage country. 
D) decrease money wages in the lower-wage country and raise money wages in the higher-wage country. 
E) prevent wages from changing in either country. 
A) increase real wages in the higher-wage country and lower real wages in the lower-wage country. 
B) have no effect on the real wages in either country. 
C) increase real wages in the lower-wage country and lower real wages in the higher-wage country. 
D) decrease money wages in the lower-wage country and raise money wages in the higher-wage country. 
E) prevent wages from changing in either country.

Question 11

Suppose that each firm in an industry has total costs as shown in the following table.

Accepted Answer

The answer of Suppose that each firm in an industry...

Question 12

Changes in comparative advantage over time from investment in physical and human capital and in technology are called

Accepted Answer

A) static comparative advantage. 
B) innovative comparative advantage. 
C) resource-intensive comparative advantage. 
D) dynamic comparative advantage. 
E) differential comparative advantage. 
A) static comparative advantage. 
B) innovative comparative advantage. 
C) resource-intensive comparative advantage. 
D) dynamic comparative advantage. 
E) differential comparative advantage.

Question 13

The oldest and most common method for a government to restrict trade is the

Accepted Answer

A) voluntary export restraint. 
B) quota. 
C) voluntary restraint agreement. 
D) tariff. 
E) voluntary import expansion. 
A) voluntary export restraint. 
B) quota. 
C) voluntary restraint agreement. 
D) tariff. 
E) voluntary import expansion.

Question 14

Country A and country B both produce only two goods, cars and computers. If country A has a lower opportunity cost of producing cars, then

Accepted Answer

A) country B has an absolute advantage in computer production. 
B) country B has a comparative advantage in computer production. 
C) country A will have a comparative advantage in both goods if country A also has a lower opportunity cost of producing computers. 
D) country A has an absolute advantage in car production. 
E) country A can also have a lower opportunity cost of producing computers. 
A) country B has an absolute advantage in computer production. 
B) country B has a comparative advantage in computer production. 
C) country A will have a comparative advantage in both goods if country A also has a lower opportunity cost of producing computers. 
D) country A has an absolute advantage in car production. 
E) country A can also have a lower opportunity cost of producing computers.

Question 15

A danger with the infant industry argument is that

Accepted Answer

A) it will increase product variety too much. 
B) the protection may last long after it was initially justified. 
C) it will increase international trade around the world. 
D) a nation's security may be at stake. 
E) firms may engage in strategic behavior. 
A) it will increase product variety too much. 
B) the protection may last long after it was initially justified. 
C) it will increase international trade around the world. 
D) a nation's security may be at stake. 
E) firms may engage in strategic behavior.

Question 16

Exhibit 29-3  
-Referring to Exhibit 29-3, suppose the posttrade relative price between Japan and Korea is 1 computer per unit of rice. If Korea takes 10 workers out of rice production, puts the 10 workers in computer production, and sells the resulting computers to Japan in exchange for rice, Korea will

Accepted Answer

A) gain 20 units of rice. 
B) lose 20 units of rice. 
C) lose 30 units of rice. 
D) gain 10 units of rice. 
E) lose 40 units of rice. 
A) gain 20 units of rice. 
B) lose 20 units of rice. 
C) lose 30 units of rice. 
D) gain 10 units of rice. 
E) lose 40 units of rice.

Question 17

The Smoot-Hawley tariff demonstrated to the whole world how

Accepted Answer

A) harmful tariffs can be. 
B) beneficial protectionism can be. 
C) raising tariffs can stimulate the growth of world trade. 
D) lowering tariffs can be counterproductive. 
E) raising tariffs stimulated U.S.production. 
A) harmful tariffs can be. 
B) beneficial protectionism can be. 
C) raising tariffs can stimulate the growth of world trade. 
D) lowering tariffs can be counterproductive. 
E) raising tariffs stimulated U.S.production.

Question 18

U.S. tariffs, measured as a percentage of the import price,

Accepted Answer

A) were very low prior to the Great Depression. 
B) have remained constant since the Great Depression. 
C) have declined steadily since the Great Depression. 
D) were never used prior to the Great Depression. 
E) have only been used since the start of the twentieth century. 
A) were very low prior to the Great Depression. 
B) have remained constant since the Great Depression. 
C) have declined steadily since the Great Depression. 
D) were never used prior to the Great Depression. 
E) have only been used since the start of the twentieth century.

Question 19

There are winners and losers as a result of protectionist policies, but economic theory can show that the gains from the winners are larger than the losses of the losers.

Accepted Answer

A) True 
 B)False

Question 20

Why might it not be a good idea for the government to use trade policy to protect newly emerging industries?

Accepted Answer

There is no guarantee that trade policy

Exam 29: International Trade

The difference between production possibilities curves with and without trade represents the

Exhibit 30-1 -According to the data in Exhibit 30-1, the equilibrium price for the good is

Trade will tend to increase wages in a labor-abundant country.

As a market increases in size, average total cost declines at each firm if the number of firms does not change.

A tariff imposed on a country as a penalty for dumping goods is called a(n)

Trade will tend to equalize the price of goods, but not the price of factors of production.

American movies have become very popular in France.

The intersection of the export supply curve and import demand curve gives the amount

What is unilateral disarmament? Why is unilateral disarmament not a viable way to reduce trade barriers in developed countries?

If the comparative advantage between Japan and Korea was due only to differences in relative capital and labor abundance, then trade would tend to

Suppose that each firm in an industry has total costs as shown in the following table.

Changes in comparative advantage over time from investment in physical and human capital and in technology are called

The oldest and most common method for a government to restrict trade is the

Country A and country B both produce only two goods, cars and computers. If country A has a lower opportunity cost of producing cars, then

A danger with the infant industry argument is that

The Smoot-Hawley tariff demonstrated to the whole world how

U.S. tariffs, measured as a percentage of the import price,

There are winners and losers as a result of protectionist policies, but economic theory can show that the gains from the winners are larger than the losses of the losers.

Why might it not be a good idea for the government to use trade policy to protect newly emerging industries?

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Finance

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