Question 1

Mutually beneficial trade cannot occur if production frontiers are:

Accepted Answer

A) equal but tastes are not 
B) different but tastes are the same 
C) different and tastes are also different 
D) the same and tastes are also the same. 
A) equal but tastes are not 
B) different but tastes are the same 
C) different and tastes are also different 
D) the same and tastes are also the same. D

Question 2

The marginal rate of transformation (MRT)of X for Y refers to:

Accepted Answer

A) the amount of Y that a nation must give up to produce each additional unit of X 
B) the opportunity cost of X 
C) the absolute slope of the production frontier at the point of production 
D) all of the above 
A) the amount of Y that a nation must give up to produce each additional unit of X 
B) the opportunity cost of X 
C) the absolute slope of the production frontier at the point of production 
D) all of the above D

Question 3

Community indifference curves:

Accepted Answer

A) are negatively sloped 
B) are convex to the origin 
C) should not cross 
D) all of the above 
A) are negatively sloped 
B) are convex to the origin 
C) should not cross 
D) all of the above D

Question 4

If the internal Px/Py is lower in nation 1 than in nation 2 without trade:

Accepted Answer

A) nation 1 has a comparative advantage in commodity Y 
B) nation 2 has a comparative advantage in commodity X 
C) nation 2 has a comparative advantage in commodity Y 
D) none of the above 
A) nation 1 has a comparative advantage in commodity Y 
B) nation 2 has a comparative advantage in commodity X 
C) nation 2 has a comparative advantage in commodity Y 
D) none of the above

Question 5

Which of the following statements about community indifference curves is true?

Accepted Answer

A) They are entirely unrelated to individuals' community indifference curves 
B) they cross,they cannot be used in the analysis 
C) the problems arising from intersecting community indifference curves can be overcome by the application of the compensation principle 
D) all of the above. 
A) They are entirely unrelated to individuals' community indifference curves 
B) they cross,they cannot be used in the analysis 
C) the problems arising from intersecting community indifference curves can be overcome by the application of the compensation principle 
D) all of the above.

Question 6

The marginal rate of substitution (MRS)of X for Y in consumption refers to the:

Accepted Answer

A) amount of X that a nation must give up for one extra unit of Y and still remain on the same indifference curve 
B) amount of Y that a nation must give up for one extra unit of X and still remain on the same indifference curve 
C) amount of X that a nation must give up for one extra unit of Y to reach a higher indifference curve 
D) amount of Y that a nation must give up for one extra unit of X to reach a higher 
A) amount of X that a nation must give up for one extra unit of Y and still remain on the same indifference curve 
B) amount of Y that a nation must give up for one extra unit of X and still remain on the same indifference curve 
C) amount of X that a nation must give up for one extra unit of Y to reach a higher indifference curve 
D) amount of Y that a nation must give up for one extra unit of X to reach a higher

Question 7

With free trade under increasing costs:

Accepted Answer

A) neither nation will specialize completely in production 
B) at least one nation will consume above its production frontier 
C) a small nation will always gain from trade 
D) all of the above 
A) neither nation will specialize completely in production 
B) at least one nation will consume above its production frontier 
C) a small nation will always gain from trade 
D) all of the above

Question 8

The gains from exchange with respect to the gains from specialization are always:

Accepted Answer

A) greater 
B) smaller 
C) equal 
D) we cannot say without additional information 
A) greater 
B) smaller 
C) equal 
D) we cannot say without additional information

Question 9

A production frontier that is concave from the origin indicates that the nation incurs increasing opportunity costs in the production of:

Accepted Answer

A) commodity X only 
B) commodity Y only 
C) both commodities 
D) neither commodity 
A) commodity X only 
B) commodity Y only 
C) both commodities 
D) neither commodity

Question 10

Which of the following is not a reason for increasing opportunity costs:

Accepted Answer

A) technology differs among nations 
B) factors of production are not homogeneous 
C) factors of production are not used in the same fixed proportion in the production of all commodities 
D) for the nation to produce more of a commodity,it must use resources that are less and less suited in the production of the commodity 
A) technology differs among nations 
B) factors of production are not homogeneous 
C) factors of production are not used in the same fixed proportion in the production of all commodities 
D) for the nation to produce more of a commodity,it must use resources that are less and less suited in the production of the commodity

Question 11

If Px/Py exceeds the equilibrium relative Px/Py with trade

Accepted Answer

A) the nation exporting commodity X will want to export more of X than at equilibrium 
B) the nation importing commodity X will want to import less of X than at equilibrium 
C) Px/Py will fall toward the equilibrium Px/Py 
D) all of the above 
A) the nation exporting commodity X will want to export more of X than at equilibrium 
B) the nation importing commodity X will want to import less of X than at equilibrium 
C) Px/Py will fall toward the equilibrium Px/Py 
D) all of the above

Question 12

Which of the following statements is false?

Accepted Answer

A) The gains from trade can be broken down into the gains from exchange and the gains from specialization 
B) gains from exchange result even without specialization 
C) gains from specialization result even without exchange 
D) none of the above 
A) The gains from trade can be broken down into the gains from exchange and the gains from specialization 
B) gains from exchange result even without specialization 
C) gains from specialization result even without exchange 
D) none of the above

Question 13

Which of the following statements is true with respect to the MRS of X for Y?

Accepted Answer

A) It is given by the absolute slope of the indifference curve 
B) declines as the nation moves down an indifference curve 
C) rises as the nation moves up an indifference curve 
D) all of the above 
A) It is given by the absolute slope of the indifference curve 
B) declines as the nation moves down an indifference curve 
C) rises as the nation moves up an indifference curve 
D) all of the above

Question 14

Which of the following is not true for a nation that is in equilibrium in isolation?

Accepted Answer

A) It consumes inside its production frontier 
B) it reaches the highest indifference curve possible with its production frontier 
C) the indifference curve is tangent to the nation's production frontier 
D) MRT of X for Y equals MRS of X for Y,and they are equal to Px/Py 
A) It consumes inside its production frontier 
B) it reaches the highest indifference curve possible with its production frontier 
C) the indifference curve is tangent to the nation's production frontier 
D) MRT of X for Y equals MRS of X for Y,and they are equal to Px/Py

Question 15

Nation 1's share of the gains from trade will be greater:

Accepted Answer

A) the greater is nation 1's demand for nation 2's exports 
B) the closer Px/Py with trade settles to nation 2's pretrade Px/Py 
C) the weaker is nation 2's demand for nation 1's exports 
D) the closer Px/Py with trade settles to nation 1's pretrade Px/Py 
A) the greater is nation 1's demand for nation 2's exports 
B) the closer Px/Py with trade settles to nation 2's pretrade Px/Py 
C) the weaker is nation 2's demand for nation 1's exports 
D) the closer Px/Py with trade settles to nation 1's pretrade Px/Py

Mutually beneficial trade cannot occur if production frontiers are:

The marginal rate of transformation (MRT)of X for Y refers to:

Community indifference curves:

If the internal Px/Py is lower in nation 1 than in nation 2 without trade:

Which of the following statements about community indifference curves is true?

The marginal rate of substitution (MRS)of X for Y in consumption refers to the:

With free trade under increasing costs:

The gains from exchange with respect to the gains from specialization are always:

A production frontier that is concave from the origin indicates that the nation incurs increasing opportunity costs in the production of:

Which of the following is not a reason for increasing opportunity costs:

If Px/Py exceeds the equilibrium relative Px/Py with trade

Which of the following statements is false?

Which of the following statements is true with respect to the MRS of X for Y?

Which of the following is not true for a nation that is in equilibrium in isolation?

Nation 1's share of the gains from trade will be greater:

Introduction

The Law of Comparative Advantage

Demand and Supply, Offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, Imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, Present, and Future

Filters

Exam 3: The Standard Theory of International Trade

Mutually beneficial trade cannot occur if production frontiers are:

The marginal rate of transformation (MRT)of X for Y refers to:

Community indifference curves:

If the internal Px/Py is lower in nation 1 than in nation 2 without trade:

Which of the following statements about community indifference curves is true?

The marginal rate of substitution (MRS)of X for Y in consumption refers to the:

With free trade under increasing costs:

The gains from exchange with respect to the gains from specialization are always:

A production frontier that is concave from the origin indicates that the nation incurs increasing opportunity costs in the production of:

Which of the following is not a reason for increasing opportunity costs:

If Px/Py exceeds the equilibrium relative Px/Py with trade

Which of the following statements is false?

Which of the following statements is true with respect to the MRS of X for Y?

Which of the following is not true for a nation that is in equilibrium in isolation?

Nation 1's share of the gains from trade will be greater:

Introduction

The Law of Comparative Advantage

Demand and Supply, Offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, Imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, Present, and Future

Filters