Question 1

Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico.These two curves indicate that

Accepted Answer

A) The United States should specialize in the production of both goods because it has an absolute advantage in the production of both. 
B) The United States should specialize in the production of machinery. 
C) Mexico should specialize in the production of tomatoes. 
D) Mexico should specialize in the production of machinery. 
A) The United States should specialize in the production of both goods because it has an absolute advantage in the production of both. 
B) The United States should specialize in the production of machinery. 
C) Mexico should specialize in the production of tomatoes. 
D) Mexico should specialize in the production of machinery.

Question 2

Comparative advantage refers to the ability to produce output with fewer resources than any other country.

Accepted Answer

A) True 
 B)False

Question 3

When a country has a lower opportunity cost in producing a good than any other country,

Accepted Answer

A) It necessarily has an absolute advantage in producing the good. 
B) It has favorable terms of trade in producing the good. 
C) Consumption possibilities will increase with specialization and trade. 
D) Production possibilities are no longer limited. 
A) It necessarily has an absolute advantage in producing the good. 
B) It has favorable terms of trade in producing the good. 
C) Consumption possibilities will increase with specialization and trade. 
D) Production possibilities are no longer limited.

Question 4

If U.S.quotas on imported sugar were eliminated,

Accepted Answer

A) The supply of sugar in the United States would shift to the left and prices would rise. 
B) The demand for sugar in the United States would shift to the left and prices would fall. 
C) The supply of sugar in the United States would shift to the right and sugar prices would fall. 
D) The world price of sugar would rise. 
A) The supply of sugar in the United States would shift to the left and prices would rise. 
B) The demand for sugar in the United States would shift to the left and prices would fall. 
C) The supply of sugar in the United States would shift to the right and sugar prices would fall. 
D) The world price of sugar would rise.

Question 5

Producers of paper products are most likely to be in favor of

Accepted Answer

A) Free trade in the paper product market and the lumber market. 
B) Protectionism in the paper product market and the lumber market. 
C) Free trade in the paper product market but protectionism in the lumber market. 
D) Protectionism in the paper product market but free trade in the lumber market. 
A) Free trade in the paper product market and the lumber market. 
B) Protectionism in the paper product market and the lumber market. 
C) Free trade in the paper product market but protectionism in the lumber market. 
D) Protectionism in the paper product market but free trade in the lumber market.

Question 6

A trade deficit means that exports exceed imports over some relevant time period.

Accepted Answer

A) True 
 B)False

Question 7

If the United States raises tariffs on foreign goods,it may achieve

Accepted Answer

A) Higher U.S.exports. 
B) Higher efficiency in domestic production. 
C) Greater profitability of import-competing firms. 
D) Higher production possibilities. 
A) Higher U.S.exports. 
B) Higher efficiency in domestic production. 
C) Greater profitability of import-competing firms. 
D) Higher production possibilities.

Question 8

Goods and services sold to foreign buyers are

Accepted Answer

A) Exports. 
B) Imports. 
C) The terms of trade. 
D) A trade embargo. 
A) Exports. 
B) Imports. 
C) The terms of trade. 
D) A trade embargo.

Question 9

If a country engages in trade with other countries,it is known as

Accepted Answer

A) An open economy. 
B) A democracy. 
C) A closed economy. 
D) A market economy. 
A) An open economy. 
B) A democracy. 
C) A closed economy. 
D) A market economy.

Question 10

Trade restrictions

Accepted Answer

A) Reduce the gains from trade for the country as a whole. 
B) Increase the gains from trade for poor countries. 
C) Reduce the number of hours employees must work. 
D) Increase the standard of living for the country as a whole. 
A) Reduce the gains from trade for the country as a whole. 
B) Increase the gains from trade for poor countries. 
C) Reduce the number of hours employees must work. 
D) Increase the standard of living for the country as a whole.

Question 11

Assume South Korea and Vietnam have the same amount of resources.In a given time period,South Korea can produce 100,000 jackets or 1,000,000 shirts.Vietnam can produce 200,000 jackets or 2,000,000 shirts.This means that

Accepted Answer

A) Vietnam has an absolute advantage in both jackets and shirts. 
B) Vietnam has a comparative advantage in shirts. 
C) South Korea has an absolute advantage in jackets. 
D) South Korea has a comparative advantage in jackets. 
A) Vietnam has an absolute advantage in both jackets and shirts. 
B) Vietnam has a comparative advantage in shirts. 
C) South Korea has an absolute advantage in jackets. 
D) South Korea has a comparative advantage in jackets.

Question 12

Suppose China can produce either 300 telephones or 200 DVD players,and Japan can produce either 200 telephones or 100 DVD players.Implicitly,Japan has

Accepted Answer

A) Both an absolute and a comparative advantage in telephones. 
B) An absolute but not necessarily a comparative advantage in telephones. 
C) A comparative but not necessarily an absolute advantage in telephones. 
D) Neither a comparative nor an absolute advantage in telephones. 
A) Both an absolute and a comparative advantage in telephones. 
B) An absolute but not necessarily a comparative advantage in telephones. 
C) A comparative but not necessarily an absolute advantage in telephones. 
D) Neither a comparative nor an absolute advantage in telephones.

Question 13

Discuss the differences between a tariff and a quota.Explain why quotas are considered to be a greater threat to competition than tariffs.

Accepted Answer

A tariff is a tax on imported goods (and

Question 14

World output of goods and services increases with specialization because

Accepted Answer

A) The world's resources are being used more efficiently. 
B) Each country's production possibilities curve shifts rightward. 
C) Each country's workers are willing to work harder than they did before specialization. 
D) The world's workers are more educated than before specialization. 
A) The world's resources are being used more efficiently. 
B) Each country's production possibilities curve shifts rightward. 
C) Each country's workers are willing to work harder than they did before specialization. 
D) The world's workers are more educated than before specialization.

Question 15

What is the "beggar-thy-neighbor" policy,and why is it a problem for the country that caused it?

Accepted Answer

The 'beggar-thy-neighbor' phenomenon is

Question 16

Based on the comparative cost ratios implied in Figure 35.2,it is clear that

Accepted Answer

A) The United States has a comparative advantage in baseballs and Mexico has a comparative advantage in golf shoes. 
B) Mexico should import all of its golf shoes from the United States. 
C) The United States should import all of its baseballs from Mexico. 
D) The United States should specialize in producing golf shoes,and Mexico should specialize in producing baseballs. 
A) The United States has a comparative advantage in baseballs and Mexico has a comparative advantage in golf shoes. 
B) Mexico should import all of its golf shoes from the United States. 
C) The United States should import all of its baseballs from Mexico. 
D) The United States should specialize in producing golf shoes,and Mexico should specialize in producing baseballs.

Question 17

Free trade benefits the nation as a whole but may hurt specific industries and workers.

Accepted Answer

A) True 
 B)False

Question 18

Refer to Figure 35.5.S1 represents the U.S.domestic supply of a good and S2 represents supply in the United States under conditions of free trade.If the United States imposes a tariff on this good,what will happen to the quantity imported?

Accepted Answer

A) Imports will increase because producers will pass the cost of the tariff on to consumers. 
B) Imports will decline as price increases and domestic production decreases. 
C) Imports will decline as price increases and domestic production increases. 
D) Imports will increase as price increases and domestic production increases. 
A) Imports will increase because producers will pass the cost of the tariff on to consumers. 
B) Imports will decline as price increases and domestic production decreases. 
C) Imports will decline as price increases and domestic production increases. 
D) Imports will increase as price increases and domestic production increases.

Question 19

Without trade,a country's consumption possibilities are

Accepted Answer

A) Limited to its domestic production possibilities. 
B) More than its terms of trade. 
C) Less than its trade balance. 
D) Greater than with trade. 
A) Limited to its domestic production possibilities. 
B) More than its terms of trade. 
C) Less than its trade balance. 
D) Greater than with trade.

Question 20

With regard to international trade,

Accepted Answer

A) The production possibilities exceed the consumption possibilities. 
B) Rich countries benefit at the expense of poor countries. 
C) The market mechanism determines the terms of trade. 
D) Some countries do not have a comparative advantage in producing anything. 
A) The production possibilities exceed the consumption possibilities. 
B) Rich countries benefit at the expense of poor countries. 
C) The market mechanism determines the terms of trade. 
D) Some countries do not have a comparative advantage in producing anything.

Exam 35: International Trade

Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico.These two curves indicate that

Comparative advantage refers to the ability to produce output with fewer resources than any other country.

When a country has a lower opportunity cost in producing a good than any other country,

If U.S.quotas on imported sugar were eliminated,

Producers of paper products are most likely to be in favor of

A trade deficit means that exports exceed imports over some relevant time period.

If the United States raises tariffs on foreign goods,it may achieve

Goods and services sold to foreign buyers are

If a country engages in trade with other countries,it is known as

Trade restrictions

Assume South Korea and Vietnam have the same amount of resources.In a given time period,South Korea can produce 100,000 jackets or 1,000,000 shirts.Vietnam can produce 200,000 jackets or 2,000,000 shirts.This means that

Suppose China can produce either 300 telephones or 200 DVD players,and Japan can produce either 200 telephones or 100 DVD players.Implicitly,Japan has

Discuss the differences between a tariff and a quota.Explain why quotas are considered to be a greater threat to competition than tariffs.

World output of goods and services increases with specialization because

What is the "beggar-thy-neighbor" policy,and why is it a problem for the country that caused it?

Based on the comparative cost ratios implied in Figure 35.2,it is clear that

Free trade benefits the nation as a whole but may hurt specific industries and workers.

Refer to Figure 35.5.S1 represents the U.S.domestic supply of a good and S2 represents supply in the United States under conditions of free trade.If the United States imposes a tariff on this good,what will happen to the quantity imported?

Without trade,a country's consumption possibilities are

With regard to international trade,

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Finance

Global Poverty

Filters

Refer to Figure 35.5.S₁ represents the U.S.domestic supply of a good and S₂ represents supply in the United States under conditions of free trade.If the United States imposes a tariff on this good,what will happen to the quantity imported?