Question 1

Saudi Arabia has a tremendous comparative advantage in petroleum. Which factor is a source of this comparative advantage?

Accepted Answer

A)  mild temperatures 
B)  large reserves of crude oil 
C)  no opportunity cost associated with oil production 
D)  high tariffs on oil from other nations 
A)  mild temperatures 
B)  large reserves of crude oil 
C)  no opportunity cost associated with oil production 
D)  high tariffs on oil from other nations

Question 2

Canada, Mexico, and the United States have:

Accepted Answer

A)  joined together and are operating in what is called a closed-trade area with respect to the European Union. 
B)  developed a currency similar to the euro. 
C)  eliminated many trade barriers among themselves. 
D)  reduced trade among themselves to protect jobs at home. 
A)  joined together and are operating in what is called a closed-trade area with respect to the European Union. 
B)  developed a currency similar to the euro. 
C)  eliminated many trade barriers among themselves. 
D)  reduced trade among themselves to protect jobs at home.

Question 3

A tariff imposed on U.S. imports into Japan tends to _____ U.S. producers and _____ Japanese producers.

Accepted Answer

A)  penalize; benefit 
B)  benefit; penalize 
C)  penalize; penalize 
D)  benefit; benefit 
A)  penalize; benefit 
B)  benefit; penalize 
C)  penalize; penalize 
D)  benefit; benefit

Question 4

The MOST likely effects of tariffs and/or import quotas are to _____ prices and to _____ consumption of the protected goods in the importing country.

Accepted Answer

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

Question 5

Chile has a comparative advantage over the United States in copper. Which factor is a source of this comparative advantage?

Accepted Answer

A)  mild temperatures 
B)  large deposits of copper ore 
C)  no opportunity cost associated with copper production 
D)  high tariffs on copper from other nations 
A)  mild temperatures 
B)  large deposits of copper ore 
C)  no opportunity cost associated with copper production 
D)  high tariffs on copper from other nations

Question 6

France and the United Kingdom both produce wine and cloth with constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England MUST have a comparative advantage in cloth production.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer questions:  
-(Figure: The Market for Roses) Use Figure: The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus without international trade would be area:

Accepted Answer

A)  X + Y + Z. 
B)  W + X + Y. 
C)  X + Y. 
D)  Y. 
A)  X + Y + Z. 
B)  W + X + Y. 
C)  X + Y. 
D)  Y.

Question 8

If the executives of the U.S. silicon chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the _____ argument.

Accepted Answer

A)  environmental standards 
B)  infant industry 
C)  cheap foreign labor 
D)  national security 
A)  environmental standards 
B)  infant industry 
C)  cheap foreign labor 
D)  national security

Question 9

Use the following to answer questions:  
-(Figure: The Production Possibilities for Two Countries) Use Figure: The Production Possibilities for Two Countries. If Indonesia and Malaysia trade 1 microchip for 1 tire, the most that Indonesia can consume is _____ microchips and _____ tires, while the most that Malaysia can consume is _____ microchips and _____ tires.

Accepted Answer

A)  300; 600; 800; 200 
B)  200; 900; 600; 300 
C)  1,200; 400; 800; 200 
D)  600; 600; 1,000; 600 
A)  300; 600; 800; 200 
B)  200; 900; 600; 300 
C)  1,200; 400; 800; 200 
D)  600; 600; 1,000; 600

Question 10

Use the following to answer questions:  
-(Figure: A Tariff on Oranges in South Africa) Use Figure: A Tariff on Oranges in South Africa. When the government imposes a tariff on imported oranges, the price of oranges in South Africa rises from PW to PT and there's a net _____ to total surplus of _____.

Accepted Answer

A)  addition; I + J + K+ L 
B)  addition; I + J + K 
C)  reduction; I + K 
D)  reduction; I + J + K + L 
A)  addition; I + J + K+ L 
B)  addition; I + J + K 
C)  reduction; I + K 
D)  reduction; I + J + K + L

Question 11

Which argument is one that is common for trade protection?

Accepted Answer

A)  national security 
B)  increased efficiency 
C)  increased profitability 
D)  increased productivity 
A)  national security 
B)  increased efficiency 
C)  increased profitability 
D)  increased productivity

Question 12

The World Trade Organization:

Accepted Answer

A)  assists importers and exporters in conducting their trade. 
B)  works together with United Nations forces to enforce international decisions. 
C)  organizes the negotiations involved in trade agreements and resolves disputes among members. 
D)  promotes trade by organizing educational conferences. 
A)  assists importers and exporters in conducting their trade. 
B)  works together with United Nations forces to enforce international decisions. 
C)  organizes the negotiations involved in trade agreements and resolves disputes among members. 
D)  promotes trade by organizing educational conferences.

Question 13

If Japan levies tariffs on U.S. goods entering Japan, this will tend to:

Accepted Answer

A)  benefit both Japanese and U.S. producers. 
B)  damage U.S. producers and benefit Japanese producers. 
C)  benefit U.S. producers and damage Japanese producers. 
D)  damage both Japanese and U.S. producers. 
A)  benefit both Japanese and U.S. producers. 
B)  damage U.S. producers and benefit Japanese producers. 
C)  benefit U.S. producers and damage Japanese producers. 
D)  damage both Japanese and U.S. producers.

Question 14

A tariff imposed on Japanese imports into the United States tends to _____ U.S. producers and _____ Japanese producers.

Accepted Answer

A)  penalize; benefit. 
B)  benefit; penalize 
C)  penalize; penalize 
D)  benefit; benefit 
A)  penalize; benefit. 
B)  benefit; penalize 
C)  penalize; penalize 
D)  benefit; benefit

Question 15

Relative to the size of their economy, many other countries engage in more foreign trade than the United States.

Accepted Answer

A) True 
 B)False

Question 16

Use the following to answer questions:  
-(Figure: The Production Possibilities for Two Countries) Use Figure: The Production Possibilities for Two Countries. Malaysia has an absolute advantage in producing:

Accepted Answer

A)  microchips. 
B)  tires. 
C)  both microchips and tires. 
D)  neither microchips nor tires. 
A)  microchips. 
B)  tires. 
C)  both microchips and tires. 
D)  neither microchips nor tires.

Question 17

Honduras exports clothing to the United States, and the United States exports bulldozers to Honduras. Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that:

Accepted Answer

A)  Honduras has an advantage in the technology used in clothing production, while the United States has an advantage in the technology used in bulldozer production. 
B)  Honduras's climate is more conducive to producing clothing, while the United States' climate is more conducive to producing bulldozers. 
C)  Honduras has a relatively large endowment of factors of production for making clothing, while the United States has a relatively large endowment of factors of production for making bulldozers. 
D)  Honduras has a factor intensity in capital and the United States has a factor intensity in labor. 
A)  Honduras has an advantage in the technology used in clothing production, while the United States has an advantage in the technology used in bulldozer production. 
B)  Honduras's climate is more conducive to producing clothing, while the United States' climate is more conducive to producing bulldozers. 
C)  Honduras has a relatively large endowment of factors of production for making clothing, while the United States has a relatively large endowment of factors of production for making bulldozers. 
D)  Honduras has a factor intensity in capital and the United States has a factor intensity in labor.

Question 18

Use the following to answer questions:  
-(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre. If the world price equals $100 and there is free trade, producer surplus:

Accepted Answer

A)  gains $1.5 million. 
B)  gains $2 million. 
C)  gains $750,000. 
D)  falls. 
A)  gains $1.5 million. 
B)  gains $2 million. 
C)  gains $750,000. 
D)  falls.

Question 19

Use the following to answer questions:  
-(Table: Production Possibilities for the United States and Canada) Use Table: Production Possibilities for the United States and Canada. _____ has/have an absolute advantage in producing cars.

Accepted Answer

A)  Both the United States and Canada 
B)  Neither the United States nor Canada 
C)  The United States 
D)  Canada 
A)  Both the United States and Canada 
B)  Neither the United States nor Canada 
C)  The United States 
D)  Canada

Question 20

Which model states that nations that are abundant in a factor will have a comparative advantage in a good whose production is intensive in that factor?

Accepted Answer

A)  the pauper labor fallacy model 
B)  the Ricardian model 
C)  the Heckscher-Ohlin model 
D)  the oligopoly model 
A)  the pauper labor fallacy model 
B)  the Ricardian model 
C)  the Heckscher-Ohlin model 
D)  the oligopoly model

Saudi Arabia has a tremendous comparative advantage in petroleum. Which factor is a source of this comparative advantage?

Canada, Mexico, and the United States have:

A tariff imposed on U.S. imports into Japan tends to _ U.S. producers and _ Japanese producers.

The MOST likely effects of tariffs and/or import quotas are to _ prices and to _ consumption of the protected goods in the importing country.

Chile has a comparative advantage over the United States in copper. Which factor is a source of this comparative advantage?

France and the United Kingdom both produce wine and cloth with constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England MUST have a comparative advantage in cloth production.

Use the following to answer questions: -(Figure: The Market for Roses) Use Figure: The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Producer surplus without international trade would be area:

If the executives of the U.S. silicon chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the _____ argument.

Use the following to answer questions: -(Figure: A Tariff on Oranges in South Africa) Use Figure: A Tariff on Oranges in South Africa. When the government imposes a tariff on imported oranges, the price of oranges in South Africa rises from P_W to P_T and there's a net _ to total surplus of _.

Which argument is one that is common for trade protection?

The World Trade Organization:

If Japan levies tariffs on U.S. goods entering Japan, this will tend to:

A tariff imposed on Japanese imports into the United States tends to _ U.S. producers and _ Japanese producers.

Relative to the size of their economy, many other countries engage in more foreign trade than the United States.

Use the following to answer questions: -(Figure: The Production Possibilities for Two Countries) Use Figure: The Production Possibilities for Two Countries. Malaysia has an absolute advantage in producing:

Honduras exports clothing to the United States, and the United States exports bulldozers to Honduras. Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre. If the world price equals $100 and there is free trade, producer surplus:

Use the following to answer questions: -(Table: Production Possibilities for the United States and Canada) Use Table: Production Possibilities for the United States and Canada. _____ has/have an absolute advantage in producing cars.

Which model states that nations that are abundant in a factor will have a comparative advantage in a good whose production is intensive in that factor?

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 5: International Trade

Saudi Arabia has a tremendous comparative advantage in petroleum. Which factor is a source of this comparative advantage?

Canada, Mexico, and the United States have:

A tariff imposed on U.S. imports into Japan tends to _____ U.S. producers and _____ Japanese producers.

The MOST likely effects of tariffs and/or import quotas are to _____ prices and to _____ consumption of the protected goods in the importing country.

Chile has a comparative advantage over the United States in copper. Which factor is a source of this comparative advantage?

France and the United Kingdom both produce wine and cloth with constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England MUST have a comparative advantage in cloth production.

Use the following to answer questions: -(Figure: The Market for Roses) Use Figure: The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus without international trade would be area:

If the executives of the U.S. silicon chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the _____ argument.

Which argument is one that is common for trade protection?

The World Trade Organization:

If Japan levies tariffs on U.S. goods entering Japan, this will tend to:

A tariff imposed on Japanese imports into the United States tends to _____ U.S. producers and _____ Japanese producers.

Relative to the size of their economy, many other countries engage in more foreign trade than the United States.

Use the following to answer questions: -(Figure: The Production Possibilities for Two Countries) Use Figure: The Production Possibilities for Two Countries. Malaysia has an absolute advantage in producing:

Honduras exports clothing to the United States, and the United States exports bulldozers to Honduras. Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that:

Use the following to answer questions: -(Figure: The Market for Beats by Dre) Use Figure: The Market for Beats by Dre. If the world price equals $100 and there is free trade, producer surplus:

Use the following to answer questions: -(Table: Production Possibilities for the United States and Canada) Use Table: Production Possibilities for the United States and Canada. _____ has/have an absolute advantage in producing cars.

Which model states that nations that are abundant in a factor will have a comparative advantage in a good whose production is intensive in that factor?

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

A tariff imposed on U.S. imports into Japan tends to _ U.S. producers and _ Japanese producers.

The MOST likely effects of tariffs and/or import quotas are to _ prices and to _ consumption of the protected goods in the importing country.

Use the following to answer questions: -(Figure: The Market for Roses) Use Figure: The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Producer surplus without international trade would be area:

A tariff imposed on Japanese imports into the United States tends to _ U.S. producers and _ Japanese producers.