Question 1

When can a country gain a price advantage on imports by imposing a tariff?

Accepted Answer

A)  when it is the largest country with absolute advantage in all goods 
B)  when it has a comparative advantage in the production of all goods 
C)  when it can do so without other countries retaliating with tariffs 
D)  when trade agreements prohibit quotas but permit tariffs 
A)  when it is the largest country with absolute advantage in all goods 
B)  when it has a comparative advantage in the production of all goods 
C)  when it can do so without other countries retaliating with tariffs 
D)  when trade agreements prohibit quotas but permit tariffs

Question 2

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

Accepted Answer

A)  effectively,ineffectively 
B)  haphazardly,carefully 
C)  equally,capriciously 
D)  unfairly,fairly 
E)  unequally,unequally 
A)  effectively,ineffectively 
B)  haphazardly,carefully 
C)  equally,capriciously 
D)  unfairly,fairly 
E)  unequally,unequally

Question 3

Figure 22-10  
-Figure 22-10 shows the effect on the market for disk drives of a(n)

Accepted Answer

A)  quota. 
B)  tariff. 
C)  export subsidy. 
D)  import subsidy. 
E)  export tax. 
A)  quota. 
B)  tariff. 
C)  export subsidy. 
D)  import subsidy. 
E)  export tax.

Question 4

A country has an absolute advantage over another in the production of widgets if it can produce

Accepted Answer

A)  widgets using smaller quantities of resources than can the other country. 
B)  more widgets than can the other country. 
C)  widgets more efficiently than can the other country. 
D)  widgets at a lower opportunity cost than can the other country. 
A)  widgets using smaller quantities of resources than can the other country. 
B)  more widgets than can the other country. 
C)  widgets more efficiently than can the other country. 
D)  widgets at a lower opportunity cost than can the other country.

Question 5

Which of the following observations is true of the principle of comparative advantage?

Accepted Answer

A)  It arises from the absolute cost advantage. 
B)  It helps determine most efficient patterns of production. 
C)  It was advanced by Adam Smith. 
D)  It means producing a good using smaller quantities of resources than others. 
A)  It arises from the absolute cost advantage. 
B)  It helps determine most efficient patterns of production. 
C)  It was advanced by Adam Smith. 
D)  It means producing a good using smaller quantities of resources than others.

Question 6

The infant industry argument is valid when

Accepted Answer

A)  a new industry is suffering financial losses. 
B)  a new industry is less efficient than foreign competitors. 
C)  the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected. 
D)  the industry is not likely to be profitable in the future. 
A)  a new industry is suffering financial losses. 
B)  a new industry is less efficient than foreign competitors. 
C)  the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected. 
D)  the industry is not likely to be profitable in the future.

Question 7

The logic of why international trade increases well-being is

Accepted Answer

A)  a major revision of the logic of why trade within a country increases well-being. 
B)  completely different from the logic of why trade within a country increases well-being. 
C)  a narrow,special case of the logic of why trade within a country increases well-being. 
D)  no different from the logic of why trade within a country increases well-being. 
A)  a major revision of the logic of why trade within a country increases well-being. 
B)  completely different from the logic of why trade within a country increases well-being. 
C)  a narrow,special case of the logic of why trade within a country increases well-being. 
D)  no different from the logic of why trade within a country increases well-being.

Question 8

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Accepted Answer

A) True 
 B)False

Question 9

Using graphs to illustrate the concepts,absolute advantage

Accepted Answer

A)  is shown with differences in slope of a production possibilities curve; comparative advantage is shown with a lower curve. 
B)  requires a very steep curve; comparative advantage requires a curve with a shallow slope. 
C)  on one good requires that the slope of the production possibilities curve be steeper for that good. 
D)  is shown with a higher production possibilities curve; comparative advantage is shown with differences in slope of the curves. 
A)  is shown with differences in slope of a production possibilities curve; comparative advantage is shown with a lower curve. 
B)  requires a very steep curve; comparative advantage requires a curve with a shallow slope. 
C)  on one good requires that the slope of the production possibilities curve be steeper for that good. 
D)  is shown with a higher production possibilities curve; comparative advantage is shown with differences in slope of the curves.

Question 10

Figure 22-9  
-In Figure 22-9,Pestoland at price OA

Accepted Answer

A)  is importing MN pasta from Pastaland. 
B)  is exporting MN pasta to Pastaland. 
C)  is exporting XY pasta to Pastaland. 
D)  is exporting OZ pasta to Pastaland. 
A)  is importing MN pasta from Pastaland. 
B)  is exporting MN pasta to Pastaland. 
C)  is exporting XY pasta to Pastaland. 
D)  is exporting OZ pasta to Pastaland.

Question 11

The economic effects of a quota are identical to those of a tariff.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following positions would a mercantilist support?

Accepted Answer

A)  Trade in manufacturing goods is good for the US. 
B)  Imports to the U.S.from Japan are beneficial to the U.S. 
C)  Exports from Japan to the U.K.are beneficial to Japan. 
D)  Movement of labor from UK to US is beneficial to US. 
A)  Trade in manufacturing goods is good for the US. 
B)  Imports to the U.S.from Japan are beneficial to the U.S. 
C)  Exports from Japan to the U.K.are beneficial to Japan. 
D)  Movement of labor from UK to US is beneficial to US.

Question 13

Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor.Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor.Assume that this is typical of the labor force as a whole.Which location has the absolute advantage and which has the comparative advantage,in the production of each good? Can these locations reap gains from trade?

Accepted Answer

From the numbers given,Vermont has the a

Question 14

Which of the following is an extreme form of risk associated with investing in a foreign country?

Accepted Answer

A)  Credit risk 
B)  Labor unrest 
C)  Expropriation 
D)  Immigration rules 
A)  Credit risk 
B)  Labor unrest 
C)  Expropriation 
D)  Immigration rules

Question 15

Figure 22-5  
-From the graph in Figure 22-5 (curves show output per unit of labor input),one can infer that

Accepted Answer

A)  Japan has an absolute advantage in TVs and computers,but a comparative advantage only in TVs. 
B)  Japan has only a comparative advantage in TVs. 
C)  Japan has an absolute advantage in both TVs and computers,but a comparative advantage only in computers. 
D)  China has a comparative advantage in computers. 
A)  Japan has an absolute advantage in TVs and computers,but a comparative advantage only in TVs. 
B)  Japan has only a comparative advantage in TVs. 
C)  Japan has an absolute advantage in both TVs and computers,but a comparative advantage only in computers. 
D)  China has a comparative advantage in computers.

Question 16

If every country uses tariffs,everyone is likely to lose.

Accepted Answer

A) True 
 B)False

Question 17

If a country begins to import more of a commodity,one can normally expect the price of the commodity to

Accepted Answer

A)  remain unchanged in that nation. 
B)  rise and then fall below where it was originally. 
C)  rise in that nation. 
D)  drop in that nation. 
A)  remain unchanged in that nation. 
B)  rise and then fall below where it was originally. 
C)  rise in that nation. 
D)  drop in that nation.

Question 18

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

Accepted Answer

A) True 
 B)False

Question 19

Figure 22-8  
-The effect of opening trade between countries is

Accepted Answer

A)  living standards rise in the country with efficient,high-pay workers. 
B)  both countries can exploit comparative advantage and increase productivity. 
C)  total world production increases as both countries specialize in specific goods. 
D)  All of the above are correct. 
A)  living standards rise in the country with efficient,high-pay workers. 
B)  both countries can exploit comparative advantage and increase productivity. 
C)  total world production increases as both countries specialize in specific goods. 
D)  All of the above are correct.

Question 20

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Accepted Answer

A)  it has no validity on non-economic grounds. 
B)  it is unrelated to the United States' ability to wage war. 
C)  other nations will retaliate with tariffs against U.S.producers of war material. 
D)  industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf. 
A)  it has no validity on non-economic grounds. 
B)  it is unrelated to the United States' ability to wage war. 
C)  other nations will retaliate with tariffs against U.S.producers of war material. 
D)  industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf.

When can a country gain a price advantage on imports by imposing a tariff?

A tariff on imports affects foreign suppliers ; a quota affects foreign suppliers .

Figure 22-10 -Figure 22-10 shows the effect on the market for disk drives of a(n)

A country has an absolute advantage over another in the production of widgets if it can produce

Which of the following observations is true of the principle of comparative advantage?

The infant industry argument is valid when

The logic of why international trade increases well-being is

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Using graphs to illustrate the concepts,absolute advantage

Figure 22-9 -In Figure 22-9,Pestoland at price OA

The economic effects of a quota are identical to those of a tariff.

Which of the following positions would a mercantilist support?

Which of the following is an extreme form of risk associated with investing in a foreign country?

Figure 22-5 -From the graph in Figure 22-5 (curves show output per unit of labor input),one can infer that

If every country uses tariffs,everyone is likely to lose.

If a country begins to import more of a commodity,one can normally expect the price of the commodity to

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

Figure 22-8 -The effect of opening trade between countries is

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

Exam 18: International Trade and Comparative Advantage

When can a country gain a price advantage on imports by imposing a tariff?

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

Figure 22-10 -Figure 22-10 shows the effect on the market for disk drives of a(n)

A country has an absolute advantage over another in the production of widgets if it can produce

Which of the following observations is true of the principle of comparative advantage?

The infant industry argument is valid when

The logic of why international trade increases well-being is

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Using graphs to illustrate the concepts,absolute advantage

Figure 22-9 -In Figure 22-9,Pestoland at price OA

The economic effects of a quota are identical to those of a tariff.

Which of the following positions would a mercantilist support?

Which of the following is an extreme form of risk associated with investing in a foreign country?

Figure 22-5 -From the graph in Figure 22-5 (curves show output per unit of labor input),one can infer that

If every country uses tariffs,everyone is likely to lose.

If a country begins to import more of a commodity,one can normally expect the price of the commodity to

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

Figure 22-8 -The effect of opening trade between countries is

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters

A tariff on imports affects foreign suppliers ; a quota affects foreign suppliers .