Question 1

The average tariff on imports into the United States is less than 5 percent.

Accepted Answer

A) True 
 B)False

Question 2

In 2003, the WTO ruled that U.S. tariffs on ________ were unfair and allowed retaliatory tariffs on U.S. products.

Accepted Answer

A)  steel imported from the EU 
B)  beef imported from Argentina 
C)  automobiles imported from Japan 
D)  diamonds imported from South Africa 
A)  steel imported from the EU 
B)  beef imported from Argentina 
C)  automobiles imported from Japan 
D)  diamonds imported from South Africa

Question 3

Refer to the information provided in Table 20.2 below to answer the question(s) that follow.
Table 20.2 $$\begin{array} { c c c c } 
\hline & \text { China } &\quad\quad\quad\quad\quad\quad  { \text { Thailand } } \
\text { Tractors } & \text { Motorcycles } & \text { Tractors } & \text { Motorcycles } \
\hline 0 & 300 & 0 & 300 \
5 & 250 & 5 & 225 \
10 & 200 & 10 & 150 \
15 & 150 & 15 & 75 \
20 & 100 & 20 & 0 \
25 & 50 & - & - \
30 & 0 & - & - \
\hline
\end{array}$$
-Refer to Table 20.2. In China, the opportunity cost of

Accepted Answer

A)  a tractor is 1 motorcycle. 
B)  a motorcycle is 10 tractors. 
C)  a tractor is 10 motorcycles. 
D)  a motorcycle is 1/30 of a tractor. 
A)  a tractor is 1 motorcycle. 
B)  a motorcycle is 10 tractors. 
C)  a tractor is 10 motorcycles. 
D)  a motorcycle is 1/30 of a tractor.

Question 4

Related to the Economics in Practice on page 666: Trade ________ comparative advantage of countries and ________ the efficiency of firms.

Accepted Answer

A)  exploits; improves 
B)  exploits; reduces 
C)  inhibits; improves 
D)  inhibits; reduces 
A)  exploits; improves 
B)  exploits; reduces 
C)  inhibits; improves 
D)  inhibits; reduces

Question 5

Protection makes the people of a country better off.

Accepted Answer

A) True 
 B)False

Question 6

If Germany has exports of 90 billion euros and imports of 110 billion euros, then it is running a trade deficit.

Accepted Answer

A) True 
 B)False

Question 7

Trade allows the people of a country to consume outside their production possibility curve.

Accepted Answer

A) True 
 B)False

Question 8

A tariff is a tax on imports.

Accepted Answer

A) True 
 B)False

Question 9

Quotas generate tariff revenues for the government.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the information provided in Figure 20.2 below to answer the question(s) that follow.   Figure 20.2
-Refer to Figure 20.2. England has

Accepted Answer

A)  a comparative advantage in producing trucks. 
B)  an absolute advantage in producing cars. 
C)  a comparative advantage in producing cars. 
D)  no comparative advantage in producing either cars or trucks. 
A)  a comparative advantage in producing trucks. 
B)  an absolute advantage in producing cars. 
C)  a comparative advantage in producing cars. 
D)  no comparative advantage in producing either cars or trucks.

Question 11

When trade is free, patterns of trade and trade flows result from

Accepted Answer

A)  the collective decisions of a few importers and exporters, as well as the governments of the countries in which they reside. 
B)  the collective decisions of a few importers and exporters, as well as millions of private households and firms. 
C)  the independent decisions of thousands of importers and exporters, as well as millions of private households and firms. 
D)  the independent decisions of thousands of importers and exporters, as well as the governments of the countries in which they reside. 
A)  the collective decisions of a few importers and exporters, as well as the governments of the countries in which they reside. 
B)  the collective decisions of a few importers and exporters, as well as millions of private households and firms. 
C)  the independent decisions of thousands of importers and exporters, as well as millions of private households and firms. 
D)  the independent decisions of thousands of importers and exporters, as well as the governments of the countries in which they reside.

Question 12

For any pair of countries, there is only one single exchange rate that can lead automatically to both countries realizing the gains from specialization and comparative advantage.

Accepted Answer

A) True 
 B)False

Question 13

No U.S. trading partners engage in unfair trade practices.

Accepted Answer

A) True 
 B)False

Question 14

Refer to the information provided in Table 20.1 below to answer the question(s) that follow.
Table 20.1 $\quad $$\quad $$\quad $$\quad $$\quad $ $\text {Mexico}$$\quad $ $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$ \text {Guatemala}$
$\begin{array}{rrrr}
 \text {Oranges}& \text {Bananas}& \text {Oranges}& \text {Bananas}\ 
\text { bushel/acre}&\text {  bushel/acre }&\text { bushel/acre}&\text {  bushel/acre }\
\hline  200 & 0 & 50 & 0 \
160 & 40 & 40 & 20 \
120 & 80 & 30 & 40 \
80 & 120 & 20 & 60 \
40 & 160 & 10 & 80 \
0 & 200 & 0 & 100 \
\hline
\end{array}$

-Refer to Table 20.1. Guatemala should specialize in and export ________, and Mexico should specialize in and export ________.

Accepted Answer

A)  oranges; oranges 
B)  bananas; bananas 
C)  bananas; oranges 
D)  oranges; bananas 
A)  oranges; oranges 
B)  bananas; bananas 
C)  bananas; oranges 
D)  oranges; bananas

Question 15

Refer to the information provided in Figure 20.4 below to answer the question(s) that follow.   Figure 20.4
-Refer to Figure 20.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, domestic consumption of domestically produced wallets will be ________ wallets and domestic consumption of imported wallets will be ________ wallets.

Accepted Answer

A)  150; 100 
B)  150; 250 
C)  100; 250 
D)  200; 50 
A)  150; 100 
B)  150; 250 
C)  100; 250 
D)  200; 50

Question 16

Only those products in which a country has an absolute advantage will be competitive in world markets.

Accepted Answer

A) True 
 B)False

Question 17

Free trade allows the people of a country to produce outside their production possibility frontier.

Accepted Answer

A) True 
 B)False

Question 18

China has a comparative advantage in textiles and an absolute advantage in both textiles and radios. Japan has a comparative advantage in radios. According to this scenario

Accepted Answer

A)  Japan should import both radios and textiles. 
B)  China should export both radios and textiles. 
C)  China should export textiles and import radios. 
D)  Japan should export textiles and import radios. 
A)  Japan should import both radios and textiles. 
B)  China should export both radios and textiles. 
C)  China should export textiles and import radios. 
D)  Japan should export textiles and import radios.

Question 19

If the price of a truck in the United States is $25,000, and the exchange rate between the dollar and the euro falls from $1.50 to $1.30 per euro, then the price of the American truck in the EU will

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain the same. 
D)  be irrelevant, because the EU will impose restrictions on imports from the United States. 
A)  rise. 
B)  fall. 
C)  remain the same. 
D)  be irrelevant, because the EU will impose restrictions on imports from the United States.

Question 20

Dumping involves a country selling its exports

Accepted Answer

A)  at a price lower than its cost of production. 
B)  to nations without a comparative advantage in producing the products. 
C)  to nations that regularly impose tariffs. 
D)  to nations that have no need for the products. 
A)  at a price lower than its cost of production. 
B)  to nations without a comparative advantage in producing the products. 
C)  to nations that regularly impose tariffs. 
D)  to nations that have no need for the products.

The average tariff on imports into the United States is less than 5 percent.

In 2003, the WTO ruled that U.S. tariffs on ________ were unfair and allowed retaliatory tariffs on U.S. products.

Refer to the information provided in Table 20.2 below to answer the question(s) that follow. Table 20.2 China Thailand Tractors Motorcycles Tractors Motorcycles 0 300 0 300 5 250 5 225 10 200 10 150 15 150 15 75 20 100 20 0 25 50 - - 30 0 - - -Refer to Table 20.2. In China, the opportunity cost of

Related to the Economics in Practice on page 666: Trade comparative advantage of countries and the efficiency of firms.

Protection makes the people of a country better off.

If Germany has exports of 90 billion euros and imports of 110 billion euros, then it is running a trade deficit.

Trade allows the people of a country to consume outside their production possibility curve.

A tariff is a tax on imports.

Quotas generate tariff revenues for the government.

Refer to the information provided in Figure 20.2 below to answer the question(s) that follow. Figure 20.2 -Refer to Figure 20.2. England has

When trade is free, patterns of trade and trade flows result from

For any pair of countries, there is only one single exchange rate that can lead automatically to both countries realizing the gains from specialization and comparative advantage.

No U.S. trading partners engage in unfair trade practices.

Only those products in which a country has an absolute advantage will be competitive in world markets.

Free trade allows the people of a country to produce outside their production possibility frontier.

China has a comparative advantage in textiles and an absolute advantage in both textiles and radios. Japan has a comparative advantage in radios. According to this scenario

If the price of a truck in the United States is $25,000, and the exchange rate between the dollar and the euro falls from $1.50 to $1.30 per euro, then the price of the American truck in the EU will

Dumping involves a country selling its exports

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 20: International Trade, Comparative Advantage, and Protectionism

The average tariff on imports into the United States is less than 5 percent.

In 2003, the WTO ruled that U.S. tariffs on ________ were unfair and allowed retaliatory tariffs on U.S. products.

Refer to the information provided in Table 20.2 below to answer the question(s) that follow. Table 20.2 China Thailand Tractors Motorcycles Tractors Motorcycles 0 300 0 300 5 250 5 225 10 200 10 150 15 150 15 75 20 100 20 0 25 50 - - 30 0 - - -Refer to Table 20.2. In China, the opportunity cost of

Related to the Economics in Practice on page 666: Trade ________ comparative advantage of countries and ________ the efficiency of firms.

Protection makes the people of a country better off.

If Germany has exports of 90 billion euros and imports of 110 billion euros, then it is running a trade deficit.

Trade allows the people of a country to consume outside their production possibility curve.

A tariff is a tax on imports.

Quotas generate tariff revenues for the government.

Refer to the information provided in Figure 20.2 below to answer the question(s) that follow. Figure 20.2 -Refer to Figure 20.2. England has

When trade is free, patterns of trade and trade flows result from

For any pair of countries, there is only one single exchange rate that can lead automatically to both countries realizing the gains from specialization and comparative advantage.

No U.S. trading partners engage in unfair trade practices.

Only those products in which a country has an absolute advantage will be competitive in world markets.

Free trade allows the people of a country to produce outside their production possibility frontier.

China has a comparative advantage in textiles and an absolute advantage in both textiles and radios. Japan has a comparative advantage in radios. According to this scenario

If the price of a truck in the United States is $25,000, and the exchange rate between the dollar and the euro falls from $1.50 to $1.30 per euro, then the price of the American truck in the EU will

Dumping involves a country selling its exports

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Related to the Economics in Practice on page 666: Trade comparative advantage of countries and the efficiency of firms.