Question 1

A nation benefits from international trade if it

Accepted Answer

A)  exports more than it imports. 
B)  imports more than it exports. 
C)  imports goods for which it is a low opportunity cost producer. 
D)  exports goods for which it is a low opportunity cost producer. 
A)  exports more than it imports. 
B)  imports more than it exports. 
C)  imports goods for which it is a low opportunity cost producer. 
D)  exports goods for which it is a low opportunity cost producer.

Question 2

Measured as a share of the economy, the size of the trade sector (exports plus imports) of the United States has

Accepted Answer

A)  been increasing since 1980, but it declined during 1960-1980. 
B)  been relatively constant during the last four decades. 
C)  increased by about 10 percent during the last four decades. 
D)  approximately doubled since 1980 and tripled since 1960. 
A)  been increasing since 1980, but it declined during 1960-1980. 
B)  been relatively constant during the last four decades. 
C)  increased by about 10 percent during the last four decades. 
D)  approximately doubled since 1980 and tripled since 1960.

Question 3

Figure 17-12  
-If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area

Accepted Answer

A)  c + i + e + f 
B)  i + f 
C)  i 
D)  f 
E)  b + d 
A)  c + i + e + f 
B)  i + f 
C)  i 
D)  f 
E)  b + d

Question 4

Figure 17-9  
-Refer to Figure 17-9. Before the tariff is imposed, this country

Accepted Answer

A)  imports 200 carnations. 
B)  imports 400 carnations. 
C)  exports 200 carnations. 
D)  exports 400 carnations. 
A)  imports 200 carnations. 
B)  imports 400 carnations. 
C)  exports 200 carnations. 
D)  exports 400 carnations.

Question 5

Figure 17-8  
-Refer to Figure 17-8. With trade, this country

Accepted Answer

A)  exports 20 wagons. 
B)  exports 50 wagons. 
C)  imports 30 wagons. 
D)  imports 50 wagons. 
A)  exports 20 wagons. 
B)  exports 50 wagons. 
C)  imports 30 wagons. 
D)  imports 50 wagons.

Question 6

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will

Accepted Answer

A)  reduce the demand for U.S. export goods since foreigners will be less able to buy our goods if they cannot sell to us. 
B)  benefit producers in industries that export goods. 
C)  increase the nation's income since it protects domestic jobs. 
D)  enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage. 
A)  reduce the demand for U.S. export goods since foreigners will be less able to buy our goods if they cannot sell to us. 
B)  benefit producers in industries that export goods. 
C)  increase the nation's income since it protects domestic jobs. 
D)  enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage.

Question 7

Suppose the United States exports cars to France and imports cheese from Switzerland. This situation suggests that

Accepted Answer

A)  the United States has a comparative advantage relative to Switzerland in producing cheese, and France has a comparative advantage relative to the United States in producing cars. 
B)  the United States has a comparative advantage relative to France in producing cars, and Switzerland has a comparative advantage relative to the United States in producing cheese. 
C)  the United States has an absolute advantage relative to Switzerland in producing cheese, and France has an absolute advantage relative to the United States in producing cars. 
D)  the United States has an absolute advantage relative to France in producing cars, and Switzerland has an absolute advantage relative to the United States in producing cheese. 
A)  the United States has a comparative advantage relative to Switzerland in producing cheese, and France has a comparative advantage relative to the United States in producing cars. 
B)  the United States has a comparative advantage relative to France in producing cars, and Switzerland has a comparative advantage relative to the United States in producing cheese. 
C)  the United States has an absolute advantage relative to Switzerland in producing cheese, and France has an absolute advantage relative to the United States in producing cars. 
D)  the United States has an absolute advantage relative to France in producing cars, and Switzerland has an absolute advantage relative to the United States in producing cheese.

Question 8

When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had

Accepted Answer

A)  a comparative advantage in production of the product. 
B)  an absolute advantage in production of the product. 
C)  a higher opportunity cost of producing the product. 
D)  no incentive to import the product, regardless of the cost-price conditions for other products. 
A)  a comparative advantage in production of the product. 
B)  an absolute advantage in production of the product. 
C)  a higher opportunity cost of producing the product. 
D)  no incentive to import the product, regardless of the cost-price conditions for other products.

Question 9

Which of the following is true?

Accepted Answer

A)  Competition from abroad fails to provide domestic producers with a strong incentive to improve the quality of their products and keep their costs low. 
B)  When economies of scale are important in an industry, international trade benefits domestic consumers but harms domestic producers. 
C)  When economies of scale are important in an industry, international trade will be particularly important for domestic producers operating in small countries. 
D)  Economies of scale eliminate the potential gains from international trade. 
A)  Competition from abroad fails to provide domestic producers with a strong incentive to improve the quality of their products and keep their costs low. 
B)  When economies of scale are important in an industry, international trade benefits domestic consumers but harms domestic producers. 
C)  When economies of scale are important in an industry, international trade will be particularly important for domestic producers operating in small countries. 
D)  Economies of scale eliminate the potential gains from international trade.

Question 10

The following table indicates the production possibilities of cars and clothing per worker day in the United States and Japan.   Which of the following is true?

Accepted Answer

A)  No gains from trade are possible. 
B)  Joint output would be maximized if the United States specialized in producing cars and Japan in producing clothing. 
C)  Mutual gains from trade could be realized if the United States specialized in clothing production and Japan in car production. 
D)  The Japanese are the high-cost producers of both cars and clothing. 
A)  No gains from trade are possible. 
B)  Joint output would be maximized if the United States specialized in producing cars and Japan in producing clothing. 
C)  Mutual gains from trade could be realized if the United States specialized in clothing production and Japan in car production. 
D)  The Japanese are the high-cost producers of both cars and clothing.

Question 11

Figure 17-12  
-In Figure 17-12, with a tariff of $0.50 per unit and a world price of $1.00,

Accepted Answer

A)  25 units will be exported 
B)  25 units will be imported 
C)  50 units will be exported 
D)  50 units will be imported 
E)  10 units will be exported 
A)  25 units will be exported 
B)  25 units will be imported 
C)  50 units will be exported 
D)  50 units will be imported 
E)  10 units will be exported

Question 12

What is the law of comparative advantage, and why is it important in international trade?

Accepted Answer

The law of comparative advantage states

Question 13

Figure 17-6
The domestic country is China.  
-Refer to Figure 17-6. With trade, China will

Accepted Answer

A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners. 
A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners.

Question 14

The argument that import restrictions save jobs and promote prosperity fails to recognize that

Accepted Answer

A)  there are no secondary effects of import restrictions. 
B)  import restrictions will lower prices in the protected industries. 
C)  import restrictions cannot create jobs in any industries. 
D)  U.S. imports provide people in other countries with the purchasing power required for the purchase of U.S. exports. 
A)  there are no secondary effects of import restrictions. 
B)  import restrictions will lower prices in the protected industries. 
C)  import restrictions cannot create jobs in any industries. 
D)  U.S. imports provide people in other countries with the purchasing power required for the purchase of U.S. exports.

Question 15

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Accepted Answer

A)  The domestic price of automobiles would fall. 
B)  The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. 
C)  The number of unemployed workers in the domestic automobile industry would rise. 
D)  The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations. 
A)  The domestic price of automobiles would fall. 
B)  The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. 
C)  The number of unemployed workers in the domestic automobile industry would rise. 
D)  The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.

Question 16

Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would

Accepted Answer

A)  rise, but domestic output would fall. 
B)  decline, but domestic output would rise. 
C)  decline as would domestic output. 
D)  rise as would domestic output. 
A)  rise, but domestic output would fall. 
B)  decline, but domestic output would rise. 
C)  decline as would domestic output. 
D)  rise as would domestic output.

Question 17

Figure 17-7
The domestic country is Jamaica.  
-Refer to Figure 17-7. With trade, Jamaica

Accepted Answer

A)  imports 150 calculators. 
B)  imports 250 calculators. 
C)  exports 100 calculators. 
D)  exports 250 calculators. 
A)  imports 150 calculators. 
B)  imports 250 calculators. 
C)  exports 100 calculators. 
D)  exports 250 calculators.

Question 18

When both exports and imports are considered, the major advantage of international trade is that it allows us to

Accepted Answer

A)  seclude ourselves from foreign products. 
B)  consume a larger, more diverse quantity of goods and services at lower prices than would otherwise prevail. 
C)  benefit at the expense of less-developed nations 
D)  maintain jobs for workers who would otherwise have little to do. 
A)  seclude ourselves from foreign products. 
B)  consume a larger, more diverse quantity of goods and services at lower prices than would otherwise prevail. 
C)  benefit at the expense of less-developed nations 
D)  maintain jobs for workers who would otherwise have little to do.

Question 19

Figure 17-10  
-Refer to Figure 17-10. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Accepted Answer

A)  Q2 − Q1. 
B)  Q3 − Q2. 
C)  Q4 − Q3. 
D)  Q4 − Q3 + Q2 − Q1. 
A)  Q2 − Q1. 
B)  Q3 − Q2. 
C)  Q4 − Q3. 
D)  Q4 − Q3 + Q2 − Q1.

Question 20

Figure 17-8  
-Refer to Figure 17-8. With trade, the price of wagons in this country is

Accepted Answer

A)  $8, with 70 wagons being produced in this country, 20 of which are exported. 
B)  $8, with 90 wagons being produced in this country, 50 of which are exported. 
C)  $5, with 40 wagons being produced in this country and another 30 wagons being imported. 
D)  $5, with 40 wagons being produced in this country and another 50 wagons being imported. 
A)  $8, with 70 wagons being produced in this country, 20 of which are exported. 
B)  $8, with 90 wagons being produced in this country, 50 of which are exported. 
C)  $5, with 40 wagons being produced in this country and another 30 wagons being imported. 
D)  $5, with 40 wagons being produced in this country and another 50 wagons being imported.

A nation benefits from international trade if it

Measured as a share of the economy, the size of the trade sector (exports plus imports) of the United States has

Figure 17-12 -If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area

Figure 17-9 -Refer to Figure 17-9. Before the tariff is imposed, this country

Figure 17-8 -Refer to Figure 17-8. With trade, this country

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will

Suppose the United States exports cars to France and imports cheese from Switzerland. This situation suggests that

When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had

Which of the following is true?

The following table indicates the production possibilities of cars and clothing per worker day in the United States and Japan. Which of the following is true?

Figure 17-12 -In Figure 17-12, with a tariff of $0.50 per unit and a world price of $1.00,

What is the law of comparative advantage, and why is it important in international trade?

Figure 17-6 The domestic country is China. -Refer to Figure 17-6. With trade, China will

The argument that import restrictions save jobs and promote prosperity fails to recognize that

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would

Figure 17-7 The domestic country is Jamaica. -Refer to Figure 17-7. With trade, Jamaica

When both exports and imports are considered, the major advantage of international trade is that it allows us to

Figure 17-10 -Refer to Figure 17-10. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Figure 17-8 -Refer to Figure 17-8. With trade, the price of wagons in this country is

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters

Exam 16: Gaining From International Trade

A nation benefits from international trade if it

Measured as a share of the economy, the size of the trade sector (exports plus imports) of the United States has

Figure 17-12 -If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area

Figure 17-9 -Refer to Figure 17-9. Before the tariff is imposed, this country

Figure 17-8 -Refer to Figure 17-8. With trade, this country

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will

Suppose the United States exports cars to France and imports cheese from Switzerland. This situation suggests that

When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had

Which of the following is true?

The following table indicates the production possibilities of cars and clothing per worker day in the United States and Japan. Which of the following is true?

Figure 17-12 -In Figure 17-12, with a tariff of $0.50 per unit and a world price of $1.00,

What is the law of comparative advantage, and why is it important in international trade?

Figure 17-6 The domestic country is China. -Refer to Figure 17-6. With trade, China will

The argument that import restrictions save jobs and promote prosperity fails to recognize that

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would

Figure 17-7 The domestic country is Jamaica. -Refer to Figure 17-7. With trade, Jamaica

When both exports and imports are considered, the major advantage of international trade is that it allows us to

Figure 17-10 -Refer to Figure 17-10. A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Figure 17-8 -Refer to Figure 17-8. With trade, the price of wagons in this country is

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters