Question 1

Alexander Hamilton used the infant-industry argument to support trade restrictions.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 34-12
  
-Refer to Exhibit 34-12.PW is the price that exists in a free world market.If the U.S.imposes a quota to reduce imports to Q4 - Q3,price will rise to

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
E)  There is not enough information to answer the question. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P4. 
E)  There is not enough information to answer the question.

Question 3

Countries that engage in specialization and trade can consume at a level beyond their production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 4

The situation where a country can produce a good at a lower opportunity cost than another country is called a(n)__________ advantage.

Accepted Answer

A)  permanent 
B)  transitory 
C)  absolute 
D)  comparative 
E)  natural 
A)  permanent 
B)  transitory 
C)  absolute 
D)  comparative 
E)  natural

Question 5

If a U.S.company operates within a competitive environment and chooses to offshore part of its production process,the resulting change in the firm's costs should shift the ______________ curve for its product ___________________,thus _____________ the price of the product being produced.

Accepted Answer

A)  supply; leftward; lowering 
B)  supply; rightward; raising 
C)  demand rightward; raising 
D)  supply; rightward; lowering 
A)  supply; leftward; lowering 
B)  supply; rightward; raising 
C)  demand rightward; raising 
D)  supply; rightward; lowering

Question 6

A tariff is imposed on strawberries. The tariff will ___________ the price of strawberries in the domestic market,_____________ the quantity of strawberries imported in the domestic market,and ____________ consumers' surplus.

Accepted Answer

A)  raise; lower; lower 
B)  lower; raise; lower 
C)  raise; lower; raise 
D)  lower; lower; raise 
A)  raise; lower; lower 
B)  lower; raise; lower 
C)  raise; lower; raise 
D)  lower; lower; raise

Question 7

Describe who benefits and who loses from tariffs and from quotas. What is the major difference between the effects of a quota and the effects of a tariff?

Accepted Answer

Tariffs and quotas both result in a decr

Question 8

Exhibit 34-9
  
-Refer to Exhibit 34-9.In the no specialization-no trade case,suppose country X produces and consumes 100 units of good A and 20 units of good B.Country Y produces and consumes 20 units of good A and 60 units of good B.If the two countries specialize and trade,and the actual amounts traded are 125 units of good A for 25 units of good B,how many more units of good B will country X consume by specializing and trading?

Accepted Answer

A)  75 
B)  25 
C)  5 
D)  105 
E)  50 
A)  75 
B)  25 
C)  5 
D)  105 
E)  50

Question 9

Exhibit 34-2
  
-Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is PW.At this price,what quantity of this good do U.S.consumers buy from U.S.producers and what quantity do they import from foreign producers?

Accepted Answer

A)  Q1 from U.S. producers and (Q3 - Q1) from foreign producers 
B)  Q2 from U.S. producers and (Q3 - Q1) from foreign producers 
C)  (Q3 - Q1) from U.S. producers and Q1 from foreign producers 
D)  Q3 from U.S. producers and nothing from foreign producers 
A)  Q1 from U.S. producers and (Q3 - Q1) from foreign producers 
B)  Q2 from U.S. producers and (Q3 - Q1) from foreign producers 
C)  (Q3 - Q1) from U.S. producers and Q1 from foreign producers 
D)  Q3 from U.S. producers and nothing from foreign producers

Question 10

Exhibit 34-1
  
-Refer to Exhibit 34-1.The opportunity cost of one unit of Y in Country B is

Accepted Answer

A)  0.5 units of X. 
B)  1 unit of X. 
C)  2 units of X. 
D)  20 units of X. 
A)  0.5 units of X. 
B)  1 unit of X. 
C)  2 units of X. 
D)  20 units of X.

Question 11

A tariff is a tax on

Accepted Answer

A)  savings. 
B)  capital goods. 
C)  imports. 
D)  land. 
A)  savings. 
B)  capital goods. 
C)  imports. 
D)  land.

Question 12

Dumping refers to a country

Accepted Answer

A)  imposing a retaliatory tariff against the subsidized products of a foreign country. 
B)  selling a good abroad at a price that is below its cost and lower than the price charged in the domestic market. 
C)  selling a good abroad at a price that is above its cost and higher than the price charged in the domestic market. 
D)  a and c 
E)  all of the above 
A)  imposing a retaliatory tariff against the subsidized products of a foreign country. 
B)  selling a good abroad at a price that is below its cost and lower than the price charged in the domestic market. 
C)  selling a good abroad at a price that is above its cost and higher than the price charged in the domestic market. 
D)  a and c 
E)  all of the above

Question 13

A French firm sells its good at a lower price in England than in France.It follows that the French firm is necessarily

Accepted Answer

A)  dumping. 
B)  saving domestic jobs. 
C)  being subsidized by the French government. 
D)  part of an infant industry. 
E)  none of the above 
A)  dumping. 
B)  saving domestic jobs. 
C)  being subsidized by the French government. 
D)  part of an infant industry. 
E)  none of the above

Question 14

Exhibit 34-12
  
-Refer to Exhibit 34-12.PW is the price that exists in a free world market.A quota is imposed and imports are Q4 - Q3.Consumers' surplus falls by the area __________ and importers gain revenues equal to the area __________.

Accepted Answer

A)  AEP3; GCE 
B)  GHC; GCE 
C)  ABP4; KGHJ 
D)  ACP2; GFEH 
E)  none of the above 
A)  AEP3; GCE 
B)  GHC; GCE 
C)  ABP4; KGHJ 
D)  ACP2; GFEH 
E)  none of the above

Question 15

Exhibit 34-1
  
-Refer to Exhibit 34-1.The Country B is the lower opportunity cost producer of

Accepted Answer

A)  good Y. 
B)  both goods. 
C)  neither good. 
D)  good X. 
A)  good Y. 
B)  both goods. 
C)  neither good. 
D)  good X.

Question 16

The national defense argument for trade restriction holds that

Accepted Answer

A)  the president should have the authority to erect trade barriers in case of war or national emergency. 
B)  free trade is a danger to the national defense because open borders increase the likelihood that spies will get into the country. 
C)  a country should produce those goods necessary for national defense purposes even if it doesn't have a comparative advantage in them. 
D)  if your enemy erects trade restrictions, so should you. 
A)  the president should have the authority to erect trade barriers in case of war or national emergency. 
B)  free trade is a danger to the national defense because open borders increase the likelihood that spies will get into the country. 
C)  a country should produce those goods necessary for national defense purposes even if it doesn't have a comparative advantage in them. 
D)  if your enemy erects trade restrictions, so should you.

Question 17

Exhibit 34-10
  
-Refer to Exhibit 34-10. Danielle's opportunity cost of cleaning the house is

Accepted Answer

A)  0.50 mowed lawns. 
B)  1.00 mowed lawns. 
C)  2.00 mowed lawns. 
D)  0.60 mowed lawns. 
A)  0.50 mowed lawns. 
B)  1.00 mowed lawns. 
C)  2.00 mowed lawns. 
D)  0.60 mowed lawns.

Question 18

Exhibit 34-3
  
-Refer to Exhibit 34-3.The world price is PW.If a tariff is imposed the price rises to PW + T.Because of the tariff,consumers' surplus is reduced by an amount equal to the area of

Accepted Answer

A)  1 + 2 + 3. 
B)  1 + 2. 
C)  1 + 2 + 3 + 4. 
D)  3 + 4. 
E)  2 + 3 + 4. 
A)  1 + 2 + 3. 
B)  1 + 2. 
C)  1 + 2 + 3 + 4. 
D)  3 + 4. 
E)  2 + 3 + 4.

Question 19

Smith argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Smith is

Accepted Answer

A)  advancing the foreign export subsidies argument for protectionism. 
B)  making the mistake of believing that high wages mean high costs. 
C)  advancing the antidumping argument for protectionism. 
D)  making the mistake of believing that productivity is higher in foreign countries than in the United States. 
E)  none of the above 
A)  advancing the foreign export subsidies argument for protectionism. 
B)  making the mistake of believing that high wages mean high costs. 
C)  advancing the antidumping argument for protectionism. 
D)  making the mistake of believing that productivity is higher in foreign countries than in the United States. 
E)  none of the above

Question 20

Exhibit 34-5
  
-Refer to Exhibit 34-5.The opportunity cost of one unit of good A is __________ for country 1 and __________ for country 2.

Accepted Answer

A)  20B; 15B 
B)  10B; 15B 
C)  2B; 1B 
D)  1/2B; 2B 
E)  1/10B; 1B 
A)  20B; 15B 
B)  10B; 15B 
C)  2B; 1B 
D)  1/2B; 2B 
E)  1/10B; 1B

Exam 34: International Trade

Alexander Hamilton used the infant-industry argument to support trade restrictions.

Exhibit 34-12 -Refer to Exhibit 34-12.PW is the price that exists in a free world market.If the U.S.imposes a quota to reduce imports to Q4 - Q3,price will rise to

Countries that engage in specialization and trade can consume at a level beyond their production possibilities frontier.

The situation where a country can produce a good at a lower opportunity cost than another country is called a(n)__________ advantage.

If a U.S.company operates within a competitive environment and chooses to offshore part of its production process,the resulting change in the firm's costs should shift the ______________ curve for its product ___________________,thus _____________ the price of the product being produced.

A tariff is imposed on strawberries. The tariff will ___________ the price of strawberries in the domestic market,_____________ the quantity of strawberries imported in the domestic market,and ____________ consumers' surplus.

Describe who benefits and who loses from tariffs and from quotas. What is the major difference between the effects of a quota and the effects of a tariff?

Exhibit 34-2 -Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is PW.At this price,what quantity of this good do U.S.consumers buy from U.S.producers and what quantity do they import from foreign producers?

Exhibit 34-1 -Refer to Exhibit 34-1.The opportunity cost of one unit of Y in Country B is

A tariff is a tax on

Dumping refers to a country

A French firm sells its good at a lower price in England than in France.It follows that the French firm is necessarily

Exhibit 34-12 -Refer to Exhibit 34-12.PW is the price that exists in a free world market.A quota is imposed and imports are Q4 - Q3.Consumers' surplus falls by the area __________ and importers gain revenues equal to the area __________.

Exhibit 34-1 -Refer to Exhibit 34-1.The Country B is the lower opportunity cost producer of

The national defense argument for trade restriction holds that

Exhibit 34-10 -Refer to Exhibit 34-10. Danielle's opportunity cost of cleaning the house is

Exhibit 34-3 -Refer to Exhibit 34-3.The world price is PW.If a tariff is imposed the price rises to PW + T.Because of the tariff,consumers' surplus is reduced by an amount equal to the area of

Smith argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Smith is

Exhibit 34-5 -Refer to Exhibit 34-5.The opportunity cost of one unit of good A is __________ for country 1 and __________ for country 2.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Exhibit 34-12 -Refer to Exhibit 34-12.P_W is the price that exists in a free world market.If the U.S.imposes a quota to reduce imports to Q₄ - Q₃,price will rise to

If a U.S.company operates within a competitive environment and chooses to offshore part of its production process,the resulting change in the firm's costs should shift the ____ curve for its product _,thus _____ the price of the product being produced.

A tariff is imposed on strawberries. The tariff will _____ the price of strawberries in the domestic market,_ the quantity of strawberries imported in the domestic market,and ______ consumers' surplus.

Exhibit 34-2 -Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is P_W.At this price,what quantity of this good do U.S.consumers buy from U.S.producers and what quantity do they import from foreign producers?

Exhibit 34-12 -Refer to Exhibit 34-12.P_W is the price that exists in a free world market.A quota is imposed and imports are Q₄ - Q₃.Consumers' surplus falls by the area and importers gain revenues equal to the area .

Exhibit 34-3 -Refer to Exhibit 34-3.The world price is P_W.If a tariff is imposed the price rises to P_W + T.Because of the tariff,consumers' surplus is reduced by an amount equal to the area of

Exhibit 34-5 -Refer to Exhibit 34-5.The opportunity cost of one unit of good A is for country 1 and for country 2.