Question 1

According to the theory of comparative advantage,

Accepted Answer

A) a country can gain from trade only if it can produce all goods at a lower cost than its trade partner. 
B) a country can gain from trade only if it can produce a good at a lower cost than another country. 
C) a country can gain from trade only if it can produce a good more efficiently than another country. 
D) any country can gain from trade. 
E) only high-income countries will gain from trade 
A) a country can gain from trade only if it can produce all goods at a lower cost than its trade partner. 
B) a country can gain from trade only if it can produce a good at a lower cost than another country. 
C) a country can gain from trade only if it can produce a good more efficiently than another country. 
D) any country can gain from trade. 
E) only high-income countries will gain from trade

Question 2

If a country unilaterally removes all trade restrictions,

Accepted Answer

A) individual gains will tend to be larger in magnitude than individual losses. 
B) it will gain because all other countries' markets will be more open. 
C) it can prevent large adjustment costs. 
D) individual gains will tend to be smaller in magnitude than individual losses. 
E) everybody in the country will be better off. 
A) individual gains will tend to be larger in magnitude than individual losses. 
B) it will gain because all other countries' markets will be more open. 
C) it can prevent large adjustment costs. 
D) individual gains will tend to be smaller in magnitude than individual losses. 
E) everybody in the country will be better off.

Question 3

Graphically illustrate how a tariff, quota, and VRA can all result in the same quantity of imports and the same equilibrium price.

Accepted Answer

According to the graph below, the free t

Question 4

The following relationship between price, average total cost, and the number of firms describes an industry in a single country.

Accepted Answer

The answer of The following relationship between price, average total...

Question 5

Exhibit 30-1  
-Refer to Exhibit 30-1. If the importing country imposes a tariff of $2 per unit, the new equilibrium price will be

Accepted Answer

A) $5. 
B) $4. 
C) $7. 
D) $6. 
E) $3. 
A) $5. 
B) $4. 
C) $7. 
D) $6. 
E) $3.

Question 6

Protectionist policies tend to

Accepted Answer

A) cause domestic industries to face more competition from foreign imports. 
B) expand international trade. 
C) raise domestic prices. 
D) protect foreign producers selling in domestic markets. 
E) increase the selection of goods available to domestic consumers. 
A) cause domestic industries to face more competition from foreign imports. 
B) expand international trade. 
C) raise domestic prices. 
D) protect foreign producers selling in domestic markets. 
E) increase the selection of goods available to domestic consumers.

Question 7

Explain the connection between opportunity costs of production and complete specialization in the production of a good.

Accepted Answer

If there are constant opportunity costs

Question 8

Creating regional trading areas is an increasingly popular approach to reducing trade barriers.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 30-2  
-Refer to the data in Exhibit 30-2. If the importing country sets a quota of 10 units, imports will be

Accepted Answer

A) the same as the free trade case. 
B) greater than the free trade case. 
C) higher than in the case of the tariff. 
D) lower than in the case of the tariff. 
E) the same as in the case of the tariff. 
A) the same as the free trade case. 
B) greater than the free trade case. 
C) higher than in the case of the tariff. 
D) lower than in the case of the tariff. 
E) the same as in the case of the tariff.

Question 10

If the world price of a good is lower than the no-trade equilibrium price for a particular country, the country will export the good.

Accepted Answer

A) True 
 B)False

Question 11

Workers in countries with higher productivity will be paid more than workers with lower productivity, even in countries that trade.

Accepted Answer

A) True 
 B)False

Question 12

Trade due to comparative advantage tends to be

Accepted Answer

A) intraindustry. 
B) more important than trade due to economies of scale. 
C) multinational. 
D) just like trade due to economies of scale. 
E) interindustry. 
A) intraindustry. 
B) more important than trade due to economies of scale. 
C) multinational. 
D) just like trade due to economies of scale. 
E) interindustry.

Question 13

Trade between countries in goods from different industries is called

Accepted Answer

A) free trade. 
B) intraindustry trade. 
C) interindustry trade. 
D) the gains from trade. 
E) competitive trade. 
A) free trade. 
B) intraindustry trade. 
C) interindustry trade. 
D) the gains from trade. 
E) competitive trade.

Question 14

International trade as a share of world GDP has doubled in the last 40 years.

Accepted Answer

A) True 
 B)False

Question 15

The tariff that was passed in 1828 that brought the average tariff level in the United States to over 60 percent came to be known as

Accepted Answer

A) the Smoot-Hawley tariff. 
B) the pre-Civil War tariff. 
C) the tariff of abominations. 
D) the mother of all tariffs. 
E) None of these 
A) the Smoot-Hawley tariff. 
B) the pre-Civil War tariff. 
C) the tariff of abominations. 
D) the mother of all tariffs. 
E) None of these

Question 16

Why has international trade grown more rapidly over the past 30 years?

Accepted Answer

In part, international trade has grown b

Question 17

Exhibit 29-2  
-Suppose the relative price of computers and rice in Japan is 2 computers per unit of rice. The relative price of computers and rice in Korea is 1/2 computer per unit of rice. If the two countries trade without government restrictions, transportation costs are negligible, and markets are competitive, then the likely terms of trade will fall in the range of

Accepted Answer

A) 3 computers per unit of rice. 
B) 5 computers per unit of rice. 
C) 1/4 computer per unit of rice. 
D) 1 computer per unit of rice. 
E) 2 computers per unit of rice 
A) 3 computers per unit of rice. 
B) 5 computers per unit of rice. 
C) 1/4 computer per unit of rice. 
D) 1 computer per unit of rice. 
E) 2 computers per unit of rice

Question 18

The principle of comparative advantage implies that trade

Accepted Answer

A) decreases the level of world employment. 
B) shifts production possibilities curves inward. 
C) increases the amount of world production. 
D) decreases the amount of world production. 
E) decreases the amount of world consumption. 
A) decreases the level of world employment. 
B) shifts production possibilities curves inward. 
C) increases the amount of world production. 
D) decreases the amount of world production. 
E) decreases the amount of world consumption.

Question 19

Which of the following statements about trade restrictions is true?

Accepted Answer

A) Trade restrictions are a benefit to consumers. 
B) All types of trade restrictions will increase government revenue. 
C) Foreign producers always benefit when trade restrictions are imposed. 
D) Domestic producers always lose revenue when trade restrictions are imposed. 
E) Domestic producers benefit at the expense of domestic consumers and foreign producers. 
A) Trade restrictions are a benefit to consumers. 
B) All types of trade restrictions will increase government revenue. 
C) Foreign producers always benefit when trade restrictions are imposed. 
D) Domestic producers always lose revenue when trade restrictions are imposed. 
E) Domestic producers benefit at the expense of domestic consumers and foreign producers.

Question 20

Explain the connection between opportunity costs of production and the shape of the production possibilities curve.

Accepted Answer

If there are constant opportunity costs

Exam 29: International Trade

According to the theory of comparative advantage,

If a country unilaterally removes all trade restrictions,

Graphically illustrate how a tariff, quota, and VRA can all result in the same quantity of imports and the same equilibrium price.

The following relationship between price, average total cost, and the number of firms describes an industry in a single country.

Exhibit 30-1 -Refer to Exhibit 30-1. If the importing country imposes a tariff of $2 per unit, the new equilibrium price will be

Protectionist policies tend to

Explain the connection between opportunity costs of production and complete specialization in the production of a good.

Creating regional trading areas is an increasingly popular approach to reducing trade barriers.

Exhibit 30-2 -Refer to the data in Exhibit 30-2. If the importing country sets a quota of 10 units, imports will be

If the world price of a good is lower than the no-trade equilibrium price for a particular country, the country will export the good.

Workers in countries with higher productivity will be paid more than workers with lower productivity, even in countries that trade.

Trade due to comparative advantage tends to be

Trade between countries in goods from different industries is called

International trade as a share of world GDP has doubled in the last 40 years.

The tariff that was passed in 1828 that brought the average tariff level in the United States to over 60 percent came to be known as

Why has international trade grown more rapidly over the past 30 years?

The principle of comparative advantage implies that trade

Which of the following statements about trade restrictions is true?

Explain the connection between opportunity costs of production and the shape of the production possibilities curve.

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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