Question 1

If production is subject to economies of scale,_____.

Accepted Answer

A) countries can gain from trade if each nation specializes 
B) the domestic price will be above the world price and the quantity produced will be below the free trade level 
C) higher output levels result in higher average production costs 
D) every consumer gets to buy goods at their market-clearing prices 
E) autarky will be preferred to trade 
A) countries can gain from trade if each nation specializes 
B) the domestic price will be above the world price and the quantity produced will be below the free trade level 
C) higher output levels result in higher average production costs 
D) every consumer gets to buy goods at their market-clearing prices 
E) autarky will be preferred to trade

Question 2

The declining industries argument was formulated as a rationale for protecting emerging domestic industries from foreign competition.

Accepted Answer

A) True 
 B)False

Question 3

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the number of baseballs purchased in the United States is _____.

Accepted Answer

A) 4,000 
B) 6,000 
C) 8,000 
D) 10,000 
E) 12,000 
A) 4,000 
B) 6,000 
C) 8,000 
D) 10,000 
E) 12,000

Question 4

When a country imposes trade restrictions,the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.

Accepted Answer

A) True 
 B)False

Question 5

Whenever the opportunity costs of goods are significantly different in different countries,there are gains from specialization and trade.

Accepted Answer

A) True 
 B)False

Question 6

It is possible for one country to have a comparative advantage in the production of all products.

Accepted Answer

A) True 
 B)False

Question 7

A World Trade Organization (WTO)member country must offer to all other member countries:

Accepted Answer

A) common market guarantees. 
B) the same trade concessions. 
C) the same basket of commodities. 
D) import substitutions. 
E) the same resources with equal efficiency. 
A) common market guarantees. 
B) the same trade concessions. 
C) the same basket of commodities. 
D) import substitutions. 
E) the same resources with equal efficiency.

Question 8

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball,then _____ baseballs are imported.

Accepted Answer

A) 4,000 
B) 6,000 
C) 8,000 
D) 10,000 
E) 12,000 
A) 4,000 
B) 6,000 
C) 8,000 
D) 10,000 
E) 12,000

Question 9

Which of the following results in international specialization?

Accepted Answer

A) Differing consumer tastes 
B) Diseconomies of scale in production 
C) A high world price for a good 
D) Diminishing returns to a variable factor of production 
E) Differences in benefits that consumers and producers get from domestic market exchange 
A) Differing consumer tastes 
B) Diseconomies of scale in production 
C) A high world price for a good 
D) Diminishing returns to a variable factor of production 
E) Differences in benefits that consumers and producers get from domestic market exchange

Question 10

In a two-country,two-commodity framework,when one country has an absolute advantage in the production of both commodities,_____.

Accepted Answer

A) autarky is always preferred to trade 
B) differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains 
C) the country with the lowest opportunity cost of production is the least competitive in international markets 
D) the countries gain from mutual trade as long as tastes differ across countries 
E) the countries gain from specialization and exchange as long as they are the same size 
A) autarky is always preferred to trade 
B) differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains 
C) the country with the lowest opportunity cost of production is the least competitive in international markets 
D) the countries gain from mutual trade as long as tastes differ across countries 
E) the countries gain from specialization and exchange as long as they are the same size

Question 11

Suppose Aharoni and Kalinga are the only two countries in the world and they produce computers and shoes.Aharoni has 100 workers,and Kalinga has 200 workers.The table below shows the per-day production possibilities for each country.Aharoni has:
Table 19.1:
?
$$\begin{array} { | l | l | l | } 
\hline & \begin{array} { l } 
\text { Computers } \
\text { (units) }
\end{array} & \begin{array} { l } 
\text { Shoes } \
\text { (pairs) }
\end{array} \
\hline \text { Aharoni } & 600 & 300 \
\hline \text { Kalinga } & 200 & 400 \
\hline
\end{array}$$

Accepted Answer

A) an absolute advantage in computers only. 
B) an absolute advantage in shoes only. 
C) a comparative advantage in computers. 
D) a comparative advantage in shoes. 
E) neither absolute advantage nor comparative advantage in computers. 
A) an absolute advantage in computers only. 
B) an absolute advantage in shoes only. 
C) a comparative advantage in computers. 
D) a comparative advantage in shoes. 
E) neither absolute advantage nor comparative advantage in computers.

Question 12

A charge levied on imports in terms of a fixed percentage of value is known as a(n):

Accepted Answer

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

Question 13

The consumption possibilities frontier shows:

Accepted Answer

A) a nation's possible combinations of goods available as a result of specialization and exchange. 
B) a nation's opportunity cost of producing different goods for consumption. 
C) possible combinations of goods that residents of a nation consume at different income levels. 
D) the difference between the most that consumers would pay for a good and the actual amount they pay. 
E) a nation's possible combinations of how much of one good exchanges for another. 
A) a nation's possible combinations of goods available as a result of specialization and exchange. 
B) a nation's opportunity cost of producing different goods for consumption. 
C) possible combinations of goods that residents of a nation consume at different income levels. 
D) the difference between the most that consumers would pay for a good and the actual amount they pay. 
E) a nation's possible combinations of how much of one good exchanges for another.

Question 14

In the United States,dumping:

Accepted Answer

A) is encouraged because it lowers prices for consumers. 
B) is prohibited by the Trade Agreements Act of 1979. 
C) is encouraged by domestic consumers who benefit from lower prices. 
D) is encouraged by the government because it encourages competition. 
E) was prohibited in 1947 by the provisions of General Agreement on Tariffs and Trade (GATT). 
A) is encouraged because it lowers prices for consumers. 
B) is prohibited by the Trade Agreements Act of 1979. 
C) is encouraged by domestic consumers who benefit from lower prices. 
D) is encouraged by the government because it encourages competition. 
E) was prohibited in 1947 by the provisions of General Agreement on Tariffs and Trade (GATT).

Question 15

If wage rates are lower in Mexico than in Germany,labor costs per unit of output can still be higher in Mexico.

Accepted Answer

A) True 
 B)False

Question 16

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit,the import quota that would least affect the level of imports in this country is_____.

Accepted Answer

A) $3.00 per unit 
B) $2.00 per unit 
C) 50 units per month 
D) 100 units per month 
E) 150 units per month 
A) $3.00 per unit 
B) $2.00 per unit 
C) 50 units per month 
D) 100 units per month 
E) 150 units per month

Question 17

According to some economists,the protection granted to infant industries should be:

Accepted Answer

A) terminated after one year. 
B) to protect emerging domestic industries. 
C) restricted to firms that face little competition. 
D) based on absolute advantage. 
E) based on opportunity costs. 
A) terminated after one year. 
B) to protect emerging domestic industries. 
C) restricted to firms that face little competition. 
D) based on absolute advantage. 
E) based on opportunity costs.

Question 18

Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not true of dumping?

Accepted Answer

A) In the country where products are dumped,consumer surplus grows as a result of the dumping. 
B) Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C) Critics of dumping recommend applying a tariff as a correct antidumping measure. 
D) A major difficulty with dumping by firms in other countries is that it drives up prices for the domestic consumer. 
E) Predatory dumping is often aimed at driving domestic producers out of business. 
A) In the country where products are dumped,consumer surplus grows as a result of the dumping. 
B) Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C) Critics of dumping recommend applying a tariff as a correct antidumping measure. 
D) A major difficulty with dumping by firms in other countries is that it drives up prices for the domestic consumer. 
E) Predatory dumping is often aimed at driving domestic producers out of business.

Question 20

A tariff is a tax on either imports or exports.

Accepted Answer

A) True 
 B)False

If production is subject to economies of scale,_____.

The declining industries argument was formulated as a rationale for protecting emerging domestic industries from foreign competition.

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the number of baseballs purchased in the United States is _____.

When a country imposes trade restrictions,the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.

Whenever the opportunity costs of goods are significantly different in different countries,there are gains from specialization and trade.

It is possible for one country to have a comparative advantage in the production of all products.

A World Trade Organization (WTO)member country must offer to all other member countries:

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball,then _____ baseballs are imported.

Which of the following results in international specialization?

In a two-country,two-commodity framework,when one country has an absolute advantage in the production of both commodities,_____.

A charge levied on imports in terms of a fixed percentage of value is known as a(n):

The consumption possibilities frontier shows:

In the United States,dumping:

If wage rates are lower in Mexico than in Germany,labor costs per unit of output can still be higher in Mexico.

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit,the import quota that would least affect the level of imports in this country is_____.

According to some economists,the protection granted to infant industries should be:

Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.

Which of the following is not true of dumping?

A tariff is a tax on either imports or exports.

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

Exam 17: International Trade

If production is subject to economies of scale,_____.

The declining industries argument was formulated as a rationale for protecting emerging domestic industries from foreign competition.

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the number of baseballs purchased in the United States is _____.

When a country imposes trade restrictions,the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.

Whenever the opportunity costs of goods are significantly different in different countries,there are gains from specialization and trade.

It is possible for one country to have a comparative advantage in the production of all products.

A World Trade Organization (WTO)member country must offer to all other member countries:

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball,then _____ baseballs are imported.

Which of the following results in international specialization?

In a two-country,two-commodity framework,when one country has an absolute advantage in the production of both commodities,_____.

A charge levied on imports in terms of a fixed percentage of value is known as a(n):

The consumption possibilities frontier shows:

In the United States,dumping:

If wage rates are lower in Mexico than in Germany,labor costs per unit of output can still be higher in Mexico.

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit,the import quota that would least affect the level of imports in this country is_____.

According to some economists,the protection granted to infant industries should be:

Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.

Which of the following is not true of dumping?

A tariff is a tax on either imports or exports.

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