Question 1

If production is subject to economies of scale,countries can gain from trade if each nation specializes in the production of a good.

Accepted Answer

A) True 
 B)False

Question 2

If resources are equally adaptable to the production of different goods,the production possibilities frontier of a country will be an upward-sloping,concave curve.

Accepted Answer

A) True 
 B)False

Question 3

The World Trade Organization (WTO):

Accepted Answer

A) became,in 1995,the institutionalized and more comprehensive successor to the General Agreement on Tariffs and Trade (GATT). 
B) was established in 1947 by 23 member countries to reduce trade restrictions. 
C) was established in 1980 to oppose and counteract the policies of the General Agreement on Tariffs and Trade (GATT). 
D) meets in different countries every few years to analyze each country's trade policies and restrictions. 
E) was based on an international treaty that expired in 1990. 
A) became,in 1995,the institutionalized and more comprehensive successor to the General Agreement on Tariffs and Trade (GATT). 
B) was established in 1947 by 23 member countries to reduce trade restrictions. 
C) was established in 1980 to oppose and counteract the policies of the General Agreement on Tariffs and Trade (GATT). 
D) meets in different countries every few years to analyze each country's trade policies and restrictions. 
E) was based on an international treaty that expired in 1990.

Question 4

Some countries export products at prices below the cost of production or the price charged in the domestic market.This practice is called:

Accepted Answer

A) cream skimming. 
B) import substitution. 
C) monopoly pricing. 
D) dumping. 
E) arbitrage. 
A) cream skimming. 
B) import substitution. 
C) monopoly pricing. 
D) dumping. 
E) arbitrage.

Question 5

Relative to quotas,tariffs lead to a greater change in the quantity of a good demanded by consumers.

Accepted Answer

A) True 
 B)False

Question 6

One of the main motives for the United States to negotiate a free trade agreement with Mexico was to:

Accepted Answer

A) increase immigration into the United States. 
B) encourage Mexico's recent drive to achieve a more market-oriented economy. 
C) attract more Mexican investment. 
D) achieve political union with Mexico. 
E) help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries. 
A) increase immigration into the United States. 
B) encourage Mexico's recent drive to achieve a more market-oriented economy. 
C) attract more Mexican investment. 
D) achieve political union with Mexico. 
E) help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries.

Question 7

Which of the following reasons best explains why the United States is a net importer of crude oil and metals and a net exporter of farm crops?

Accepted Answer

A) Differences in resource endowments 
B) Economies of scale 
C) Differences in tastes 
D) Import quota 
E) Import tariffs 
A) Differences in resource endowments 
B) Economies of scale 
C) Differences in tastes 
D) Import quota 
E) Import tariffs

Question 8

A lump-sum tax per unit on imports is known as:

Accepted Answer

A) a specific tariff. 
B) an import quota. 
C) an ad valorem tariff. 
D) an import concession. 
E) an import substitution. 
A) a specific tariff. 
B) an import quota. 
C) an ad valorem tariff. 
D) an import concession. 
E) an import substitution.

Question 9

The international treaty established to negotiate lower trade restrictions is known as the:

Accepted Answer

A) World Bank Act. 
B) General Agreement on Tariffs and Trade (GATT). 
C) International Association for Free Trade (IAFT). 
D) Countries United for Free Trade (CUFT). 
E) International Development Fund. 
A) World Bank Act. 
B) General Agreement on Tariffs and Trade (GATT). 
C) International Association for Free Trade (IAFT). 
D) Countries United for Free Trade (CUFT). 
E) International Development Fund.

Question 10

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,_____.

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 11

The source of gains from trade is _____.

Accepted Answer

A) tariff revenue 
B) self-sufficiency 
C) terms of trade 
D) absolute advantage 
E) comparative advantage 
A) tariff revenue 
B) self-sufficiency 
C) terms of trade 
D) absolute advantage 
E) comparative advantage

Question 12

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year.Which of the following would be true in such a case?

Accepted Answer

A) The U.S.consumers would lose more consumer surplus in the case of tariffs than quotas. 
B) The U.S.producers would gain more in the case of quotas than tariffs. 
C) The change in quantity demanded would be greater in the case of tariffs than quotas. 
D) The tariff revenue would go to U.S.government;quota benefits may go to foreign producers. 
E) The U.S.export market would shrink more in the case of quotas than tariffs. 
A) The U.S.consumers would lose more consumer surplus in the case of tariffs than quotas. 
B) The U.S.producers would gain more in the case of quotas than tariffs. 
C) The change in quantity demanded would be greater in the case of tariffs than quotas. 
D) The tariff revenue would go to U.S.government;quota benefits may go to foreign producers. 
E) The U.S.export market would shrink more in the case of quotas than tariffs.

Question 13

Suppose one worker in New Ralph Island can produce 40 walking sticks or 10 boomerangs each hour.The opportunity cost of producing 1 walking stick is _____.

Accepted Answer

A) 40 boomerangs 
B) 0.01 hour of labor 
C) 4 boomerangs 
D) 0.25 boomerangs 
E) 0.5 hours of labor 
A) 40 boomerangs 
B) 0.01 hour of labor 
C) 4 boomerangs 
D) 0.25 boomerangs 
E) 0.5 hours of labor

Question 14

International trade between countries typically produces a winner and a loser.Generally,it is the more economically advanced country that gains at the expense of the less developed nation.

Accepted Answer

A) True 
 B)False

Question 15

Differences in tastes among nations:

Accepted Answer

A) make gains from trade possible even in the absence of differences in resource endowments. 
B) make gains from trade possible only when there are differences in resource endowments. 
C) negate any potential gains from trade. 
D) are caused by differences in resource endowments. 
E) occur only among countries whose people are of different religions. 
A) make gains from trade possible even in the absence of differences in resource endowments. 
B) make gains from trade possible only when there are differences in resource endowments. 
C) negate any potential gains from trade. 
D) are caused by differences in resource endowments. 
E) occur only among countries whose people are of different religions.

Question 16

Which of the following is true of predatory dumping?

Accepted Answer

A) It may be a way to encourage the development of domestic production of a good. 
B) It may drive out established firms. 
C) There are a great number of documented cases of predatory dumping. 
D) Once the competition is gone,the exporting firm lowers the price in the foreign market. 
E) Even after the dumpers have established their monopoly position in the foreign market,they prevent the entry of other firms into the market. 
A) It may be a way to encourage the development of domestic production of a good. 
B) It may drive out established firms. 
C) There are a great number of documented cases of predatory dumping. 
D) Once the competition is gone,the exporting firm lowers the price in the foreign market. 
E) Even after the dumpers have established their monopoly position in the foreign market,they prevent the entry of other firms into the market.

Question 17

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Based on the table,it can be said that the opportunity cost of 1 T-shirt in Bodoni is _____.
Table 19.1
?
$$\begin{array} { | c | c | c | c | } 
\hline  { \text { Cambria } } & & { \text { Bodoni } } \
\hline \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } & \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } \
\hline 20 & 0 & 100 & 0 \
\hline 18 & 80 & 90 & 100 \
\hline 16 & 160 & 80 & 200 \
\hline 14 & 240 & 70 & 300 \
\hline 12 & 320 & 60 & 400 \
\hline 10 & 400 & 50 & 500 \
\hline 8 & 480 & 40 & 600 \
\hline 6 & 560 & 30 & 700 \
\hline 4 & 640 & 20 & 800 \
\hline 2 & 720 & 10 & 900 \
\hline 0 & 800 & 0 & 1,000 \
\hline
\end{array}$$

Accepted Answer

A) 0.9 ton of rice 
B) 0.5 ton of rice 
C) 0.75 ton of rice 
D) 0.01 ton of rice 
E) 0.02 ton of rice 
A) 0.9 ton of rice 
B) 0.5 ton of rice 
C) 0.75 ton of rice 
D) 0.01 ton of rice 
E) 0.02 ton of rice

Question 18

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Based on the table,it can be said that trade between Bodoni and Cambria will benefit Cambria but not Bodoni.
Table 19.1
?
 $$\begin{array} { | c | c | c | c | } 
\hline { \text { Cambria } } & & { \text { Bodoni } } \
\hline \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } & \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } \
\hline 20 & 0 & 100 & 0 \
\hline 0 & 800 & 0 & 1000 \
\hline
\end{array}$$

Accepted Answer

A) True 
 B)False

Question 19

The temporary sale of products in a foreign market at prices below cost to eliminate competitors in that foreign market is referred to as:

Accepted Answer

A) rent seeking. 
B) rebating. 
C) sporadic dumping. 
D) predatory dumping. 
E) import substitution. 
A) rent seeking. 
B) rebating. 
C) sporadic dumping. 
D) predatory dumping. 
E) import substitution.

Question 20

International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency.

Accepted Answer

A) True 
 B)False

If production is subject to economies of scale,countries can gain from trade if each nation specializes in the production of a good.

If resources are equally adaptable to the production of different goods,the production possibilities frontier of a country will be an upward-sloping,concave curve.

The World Trade Organization (WTO):

Some countries export products at prices below the cost of production or the price charged in the domestic market.This practice is called:

Relative to quotas,tariffs lead to a greater change in the quantity of a good demanded by consumers.

One of the main motives for the United States to negotiate a free trade agreement with Mexico was to:

Which of the following reasons best explains why the United States is a net importer of crude oil and metals and a net exporter of farm crops?

A lump-sum tax per unit on imports is known as:

The international treaty established to negotiate lower trade restrictions is known as the:

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,_____.

The source of gains from trade is _____.

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year.Which of the following would be true in such a case?

Suppose one worker in New Ralph Island can produce 40 walking sticks or 10 boomerangs each hour.The opportunity cost of producing 1 walking stick is _____.

International trade between countries typically produces a winner and a loser.Generally,it is the more economically advanced country that gains at the expense of the less developed nation.

Differences in tastes among nations:

Which of the following is true of predatory dumping?

The temporary sale of products in a foreign market at prices below cost to eliminate competitors in that foreign market is referred to as:

International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Finance

Economic Development

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Exam 17: International Trade

If production is subject to economies of scale,countries can gain from trade if each nation specializes in the production of a good.

If resources are equally adaptable to the production of different goods,the production possibilities frontier of a country will be an upward-sloping,concave curve.

The World Trade Organization (WTO):

Some countries export products at prices below the cost of production or the price charged in the domestic market.This practice is called:

Relative to quotas,tariffs lead to a greater change in the quantity of a good demanded by consumers.

One of the main motives for the United States to negotiate a free trade agreement with Mexico was to:

Which of the following reasons best explains why the United States is a net importer of crude oil and metals and a net exporter of farm crops?

A lump-sum tax per unit on imports is known as:

The international treaty established to negotiate lower trade restrictions is known as the:

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,_____.

The source of gains from trade is _____.

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year.Which of the following would be true in such a case?

Suppose one worker in New Ralph Island can produce 40 walking sticks or 10 boomerangs each hour.The opportunity cost of producing 1 walking stick is _____.

International trade between countries typically produces a winner and a loser.Generally,it is the more economically advanced country that gains at the expense of the less developed nation.

Differences in tastes among nations:

Which of the following is true of predatory dumping?

The temporary sale of products in a foreign market at prices below cost to eliminate competitors in that foreign market is referred to as:

International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency.

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Finance

Economic Development

Filters