Question 1

Which of the following statements is false?

Accepted Answer

A)  Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B)  Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. 
C)  Most of the leading exporting countries are large, high-income countries. 
D)  Not all sectors of the U.S. economy are affected equally by international trade. 
A)  Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B)  Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. 
C)  Most of the leading exporting countries are large, high-income countries. 
D)  Not all sectors of the U.S. economy are affected equally by international trade.

Question 2

Which of the following statements is true?

Accepted Answer

A)  Japan is more dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of Belgium. 
C)  France is the leading exporting country, accounting for 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops. 
A)  Japan is more dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of Belgium. 
C)  France is the leading exporting country, accounting for 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops.

Question 3

All but one of the following statements is used to justify protectionism. Which statement is not used to justify protectionism?

Accepted Answer

A)  Free trade leads to higher prices for imported goods. 
B)  Free trade reduces employment by driving domestic firms out of business. 
C)  A country should not rely on other countries for goods that are critical to its national defense. 
D)  Trade restrictions are necessary to protect new firms until they can gain experience and become more productive. 
A)  Free trade leads to higher prices for imported goods. 
B)  Free trade reduces employment by driving domestic firms out of business. 
C)  A country should not rely on other countries for goods that are critical to its national defense. 
D)  Trade restrictions are necessary to protect new firms until they can gain experience and become more productive.

Question 4

Table 9-6
   Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Mateo has an absolute advantage in making saddles and Celeste has an absolute advantage in making spurs. 
B)  Mateo has an absolute advantage in making spurs and Celeste has an absolute advantage in making saddles. 
C)  Mateo has an absolute advantage in making spurs. 
D)  Celeste has an absolute advantage in making saddles. 
A)  Mateo has an absolute advantage in making saddles and Celeste has an absolute advantage in making spurs. 
B)  Mateo has an absolute advantage in making spurs and Celeste has an absolute advantage in making saddles. 
C)  Mateo has an absolute advantage in making spurs. 
D)  Celeste has an absolute advantage in making saddles.

Question 5

Explain whether it is possible for a country to have a comparative advantage in the production of a product without having an absolute advantage in the production of that product.

Accepted Answer

A country can have a comparative advanta

Question 6

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called?

Accepted Answer

A)  involuntary export restraints 
B)  voluntary export restraints 
C)  implicit quotas 
D)  sanctions 
A)  involuntary export restraints 
B)  voluntary export restraints 
C)  implicit quotas 
D)  sanctions

Question 7

Table 9-3
   Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Bryce has a greater opportunity cost than Tina for making candles. 
B)  Bryce's opportunity cost for making candles is less than Tina's. 
C)  Tina has a greater opportunity cost than Bryce for making candles. 
D)  Bryce's opportunity cost for making candles and making soap are both greater than Tina's. 
A)  Bryce has a greater opportunity cost than Tina for making candles. 
B)  Bryce's opportunity cost for making candles is less than Tina's. 
C)  Tina has a greater opportunity cost than Bryce for making candles. 
D)  Bryce's opportunity cost for making candles and making soap are both greater than Tina's.

Question 8

Twenty-eight countries in Europe have eliminated all tariffs with each other. This group of countries is known as the

Accepted Answer

A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association. 
A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association.

Question 9

Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. This statement describes the ________ argument for protectionism.

Accepted Answer

A)  diseconomies of scale 
B)  protecting national security 
C)  anti-dumping 
D)  infant industry 
A)  diseconomies of scale 
B)  protecting national security 
C)  anti-dumping 
D)  infant industry

Question 10

Figure 9-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3. What is the area of consumer surplus after the imposition of the quota?

Accepted Answer

A)  A + G + H 
B)  G + H + E + I+ J + M 
C)  G + H 
D)  A 
A)  A + G + H 
B)  G + H + E + I+ J + M 
C)  G + H 
D)  A

Question 11

Which of the following countries is not one of the top three exporting countries in the world?

Accepted Answer

A)  China 
B)  Germany 
C)  South Korea 
D)  the United States 
A)  China 
B)  Germany 
C)  South Korea 
D)  the United States

Question 12

Article Summary
In a September 2017 ruling, the U.S. International Trade Commission (ITC) found that imports of solar panels harmed U.S. manufacturers, opening the door for the Trump administration to impose tariffs on foreign solar panels and modules. The initial complaint to the ITC was filed in early 2017 by bankrupt solar panel manufacturer Suniva, who argued that a rapid increase in imports of inexpensive foreign product put U.S. manufacturers at risk. The decision was opposed by many in the solar panel industry, arguing that tariffs will hurt the industry as a whole.  While Suniva commissioned a report that showed devastating job losses without industry protection, an independent analysis by Bloomberg New Energy Finance found a ruling for Suniva would, at most, only create 6,400 jobs and "downstream job losses would almost certainly exceed any manufacturing gains."

-Refer to the Article Summary. All else equal, if the Trump administration declines to enact protectionist measures, such as a tariff, against foreign solar panels, the price of solar panels in the United States will be ________ than it would be with a tariff, and the quantity of solar panels demanded in the United States will be ________ than it would be with a tariff.

Accepted Answer

A)  higher; higher 
B)  lower; higher 
C)  higher; lower 
D)  lower; lower 
A)  higher; higher 
B)  lower; higher 
C)  higher; lower 
D)  lower; lower

Question 13

If a country has an absolute advantage in producing a product, it may not have a comparative advantage in producing that product.

Accepted Answer

A) True 
 B)False

Question 14

How have U.S. imports and exports, as a fraction of GDP, changed from 1970 to the present?

Accepted Answer

Since 1950, both exports and imports hav

Question 15

Whenever a buyer and a seller agree to trade,

Accepted Answer

A)  the agreement is made based on absolute advantage. 
B)  they must have identical opportunity costs in producing their respective products. 
C)  one party will always be worse off. 
D)  both must believe they will be made better off. 
A)  the agreement is made based on absolute advantage. 
B)  they must have identical opportunity costs in producing their respective products. 
C)  one party will always be worse off. 
D)  both must believe they will be made better off.

Question 16

Figure 9-2   Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2. Without the tariff in place, the United States consumes

Accepted Answer

A)  9 million pounds of rice. 
B)  15 million pounds of rice. 
C)  31 million pounds of rice. 
D)  42 million pounds of rice. 
A)  9 million pounds of rice. 
B)  15 million pounds of rice. 
C)  31 million pounds of rice. 
D)  42 million pounds of rice.

Question 17

Figure 9-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3. What is the area of domestic producer surplus without a quota?

Accepted Answer

A)  C 
B)  C + B 
C)  A + B + C 
D)  A + B + C + D 
A)  C 
B)  C + B 
C)  A + B + C 
D)  A + B + C + D

Question 18

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called comparative advantage.

Accepted Answer

A) True 
 B)False

Question 19

A tariff

Accepted Answer

A)  makes domestic consumers better off. 
B)  makes both domestic producers and consumers better off. 
C)  makes everyone worse off. 
D)  makes domestic producers better off. 
A)  makes domestic consumers better off. 
B)  makes both domestic producers and consumers better off. 
C)  makes everyone worse off. 
D)  makes domestic producers better off.

Question 20

Exports are domestically produced goods and services

Accepted Answer

A)  sold to other countries. 
B)  sold to the government. 
C)  sold at home. 
D)  which are used to produce other goods and services. 
A)  sold to other countries. 
B)  sold to the government. 
C)  sold at home. 
D)  which are used to produce other goods and services.

Exam 9: Comparative Advantage and the Gains From International Trade

Which of the following statements is false?

Which of the following statements is true?

All but one of the following statements is used to justify protectionism. Which statement is not used to justify protectionism?

Table 9-6 Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

Explain whether it is possible for a country to have a comparative advantage in the production of a product without having an absolute advantage in the production of that product.

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called?

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Twenty-eight countries in Europe have eliminated all tariffs with each other. This group of countries is known as the

Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. This statement describes the ________ argument for protectionism.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3. What is the area of consumer surplus after the imposition of the quota?

Which of the following countries is not one of the top three exporting countries in the world?

If a country has an absolute advantage in producing a product, it may not have a comparative advantage in producing that product.

How have U.S. imports and exports, as a fraction of GDP, changed from 1970 to the present?

Whenever a buyer and a seller agree to trade,

Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2. Without the tariff in place, the United States consumes

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3. What is the area of domestic producer surplus without a quota?

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called comparative advantage.

A tariff

Exports are domestically produced goods and services

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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