Question 1

Arguments made against free trade include all of the following except

Accepted Answer

A) national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. 
B) infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. 
C) dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. 
D) free trade is inflationary and should be restricted in the domestic interest. 
E) if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against. 
A) national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. 
B) infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. 
C) dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. 
D) free trade is inflationary and should be restricted in the domestic interest. 
E) if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against.

Question 2

Exhibit 33-1
   ​
-Refer to Exhibit 33-1. The opportunity cost of one unit of X in country B is

Accepted Answer

A) 1 unit of Y. 
B) 0.33 units of Y. 
C) 2 units of Y. 
D) 20 units of Y. 
A) 1 unit of Y. 
B) 0.33 units of Y. 
C) 2 units of Y. 
D) 20 units of Y.

Question 3

Exhibit 33-9
​
  
-Refer to Exhibit 33-9. For country Y, the opportunity cost of producing one unit of good B is __________ unit(s) of good A.

Accepted Answer

A) 1.5 
B) 2 
C) 2/3 
D) 1/3 
E) 3 
A) 1.5 
B) 2 
C) 2/3 
D) 1/3 
E) 3

Question 4

Exhibit 33-3
​
  
-Refer to Exhibit 33-3. The world price is PW. If a tariff is imposed the price rises to PW + T. Because of the tariff, consumers' surplus is reduced by an amount equal to the area of

Accepted Answer

A) 1 + 2 + 3. 
B) 1 + 2. 
C) 1 + 2 + 3 + 4. 
D) 3 + 4. 
E) 2 + 3 + 4. 
A) 1 + 2 + 3. 
B) 1 + 2. 
C) 1 + 2 + 3 + 4. 
D) 3 + 4. 
E) 2 + 3 + 4.

Question 5

Exhibit 33-11
​
  
-Refer to Exhibit 33-11. PW is the price that exists in the market before a tariff is imposed and PW + T is the price that exists in the market after a tariff is imposed. Tariff revenues equal the area

Accepted Answer

A) DBCG. 
B) EBCF. 
C) CFG. 
D) BCGE. 
E) DBCF. 
A) DBCG. 
B) EBCF. 
C) CFG. 
D) BCGE. 
E) DBCF.

Question 6

Exhibit 33-1
   ​
-Refer to Exhibit 33-1. Considering the data, which of the following terms of trade would both countries agree to?

Accepted Answer

A) 1 unit of X for 2 units of Y 
B) 1 unit of X for 3 units of Y 
C) 1 unit of X for 1 unit of Y 
D) 1 unit of X for 1.75 units of Y 
E) all of the above 
A) 1 unit of X for 2 units of Y 
B) 1 unit of X for 3 units of Y 
C) 1 unit of X for 1 unit of Y 
D) 1 unit of X for 1.75 units of Y 
E) all of the above

Question 7

Producers' surplus is the difference between the price __________ receive for a good and the __________ price for which they would have __________ the good.

Accepted Answer

A) sellers; maximum; sold 
B) buyers; maximum; bought 
C) sellers; minimum; sold 
D) buyers; minimum; bought 
A) sellers; maximum; sold 
B) buyers; maximum; bought 
C) sellers; minimum; sold 
D) buyers; minimum; bought

Question 8

Exhibit 33-2
​
  
-Refer to Exhibit 33-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, the world price is PW. If there is a policy change such that imports are prohibited, the price becomes PN. U.S. producers are better off if imports are __________; specifically, their producers' surplus changes by area __________.

Accepted Answer

A) permitted; PWDE 
B) permitted; PN BDPW 
C) prohibited; BDC 
D) prohibited; PNBDPW 
A) permitted; PWDE 
B) permitted; PN BDPW 
C) prohibited; BDC 
D) prohibited; PNBDPW

Question 9

A tariff is a

Accepted Answer

A) tax imposed on domestic producers of export goods. 
B) legal limit on the amount of a good that can be imported. 
C) tax imposed on imported goods. 
D) legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country. 
A) tax imposed on domestic producers of export goods. 
B) legal limit on the amount of a good that can be imported. 
C) tax imposed on imported goods. 
D) legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country.

Question 10

The law of comparative advantage can be used to explain why many couples divide up their household duties along gender lines.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 33-11
​
  
-Refer to Exhibit 33-11. A tariff raises the price in the market from PW to PW + T. As a result, U.S. domestic sales rise from __________.

Accepted Answer

A) Q1 to Q4 
B) Q3 to Q2 
C) Q1 to Q3 
D) Q4 to Q2 
E) Q3 to Q4 
A) Q1 to Q4 
B) Q3 to Q2 
C) Q1 to Q3 
D) Q4 to Q2 
E) Q3 to Q4

Question 12

International trade policies are largely advocated, argued, and lobbied for based more on their distributional effects than on their aggregate or overall effects. What does this imply?

Accepted Answer

A) Producers will lobby for protectionism even though they may know that their gains from protectionism will be outweighed by the losses to consumers. 
B) Consumers care more about how policies affect them than how policies affect them and everyone else, too. 
C) Tariffs are more effective than quotas. 
D) Consumers' surplus will rise (when it rises) more than producers' surplus will fall (when it falls). 
E) none of the above 
A) Producers will lobby for protectionism even though they may know that their gains from protectionism will be outweighed by the losses to consumers. 
B) Consumers care more about how policies affect them than how policies affect them and everyone else, too. 
C) Tariffs are more effective than quotas. 
D) Consumers' surplus will rise (when it rises) more than producers' surplus will fall (when it falls). 
E) none of the above

Question 13

Dumping refers to a country

Accepted Answer

A) imposing a retaliatory tariff against the subsidized products of a foreign country. 
B) selling a good abroad at a price that is below its cost and lower than the price charged in the domestic market. 
C) selling a good abroad at a price that is above its cost and higher than the price charged in the domestic market. 
D) a and c 
E) all of the above 
A) imposing a retaliatory tariff against the subsidized products of a foreign country. 
B) selling a good abroad at a price that is below its cost and lower than the price charged in the domestic market. 
C) selling a good abroad at a price that is above its cost and higher than the price charged in the domestic market. 
D) a and c 
E) all of the above

Question 14

Exhibit 33-6
​
  
-Refer to Exhibit 33-6. Which of the following is true?

Accepted Answer

A) Country A has a comparative advantage in both cheese and wine. 
B) Country B has a comparative advantage in both cheese and wine. 
C) Country A has a comparative advantage in cheese, and country B has a comparative advantage in wine. 
D) Country B has a comparative advantage in cheese, and country A has a comparative advantage in wine. 
E) none of the above 
A) Country A has a comparative advantage in both cheese and wine. 
B) Country B has a comparative advantage in both cheese and wine. 
C) Country A has a comparative advantage in cheese, and country B has a comparative advantage in wine. 
D) Country B has a comparative advantage in cheese, and country A has a comparative advantage in wine. 
E) none of the above

Question 15

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

Accepted Answer

A) True 
 B)False

Question 16

The answer is: "It allows the inhabitants of a country to consume at a level beyond its production possibilities frontier." What is the question?

Accepted Answer

A) What do newly discovered resources do? 
B) What does technology do? 
C) What does specialization and international trade do? 
D) What does specialization do? 
E) a and b 
A) What do newly discovered resources do? 
B) What does technology do? 
C) What does specialization and international trade do? 
D) What does specialization do? 
E) a and b

Question 17

Which of the following founders of the United States used the infant-industry argument to support trade restrictions?

Accepted Answer

A) Thomas Jefferson 
B) Alexander Hamilton 
C) James Madison 
D) John Jay 
A) Thomas Jefferson 
B) Alexander Hamilton 
C) James Madison 
D) John Jay

Question 18

In contrast to a tariff, a quota does not

Accepted Answer

A) reduce consumers' surplus. 
B) increase producers' surplus. 
C) generate revenues for government. 
D) raise price. 
E) c and d 
A) reduce consumers' surplus. 
B) increase producers' surplus. 
C) generate revenues for government. 
D) raise price. 
E) c and d

Question 19

Which of the following is a major import for the United States?

Accepted Answer

A) corn 
B) soybeans 
C) coal 
D) fish 
E) none of the above 
A) corn 
B) soybeans 
C) coal 
D) fish 
E) none of the above

Question 20

Comparative advantage is the ability to produce a good at a lower opportunity cost than others.

Accepted Answer

A) True 
 B)False

Exam 33: International Trade

Arguments made against free trade include all of the following except

Exhibit 33-1 ​ -Refer to Exhibit 33-1. The opportunity cost of one unit of X in country B is

Exhibit 33-9 ​ -Refer to Exhibit 33-9. For country Y, the opportunity cost of producing one unit of good B is __________ unit(s) of good A.

Exhibit 33-3 ​ -Refer to Exhibit 33-3. The world price is PW. If a tariff is imposed the price rises to PW + T. Because of the tariff, consumers' surplus is reduced by an amount equal to the area of

Exhibit 33-11 ​ -Refer to Exhibit 33-11. PW is the price that exists in the market before a tariff is imposed and PW + T is the price that exists in the market after a tariff is imposed. Tariff revenues equal the area

Exhibit 33-1 ​ -Refer to Exhibit 33-1. Considering the data, which of the following terms of trade would both countries agree to?

Producers' surplus is the difference between the price __________ receive for a good and the __________ price for which they would have __________ the good.

A tariff is a

The law of comparative advantage can be used to explain why many couples divide up their household duties along gender lines.

Exhibit 33-11 ​ -Refer to Exhibit 33-11. A tariff raises the price in the market from PW to PW + T. As a result, U.S. domestic sales rise from __________.

International trade policies are largely advocated, argued, and lobbied for based more on their distributional effects than on their aggregate or overall effects. What does this imply?

Dumping refers to a country

Exhibit 33-6 ​ -Refer to Exhibit 33-6. Which of the following is true?

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

The answer is: "It allows the inhabitants of a country to consume at a level beyond its production possibilities frontier." What is the question?

Which of the following founders of the United States used the infant-industry argument to support trade restrictions?

In contrast to a tariff, a quota does not

Which of the following is a major import for the United States?

Comparative advantage is the ability to produce a good at a lower opportunity cost than others.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

Exhibit 33-1 -Refer to Exhibit 33-1. The opportunity cost of one unit of X in country B is

Exhibit 33-9 -Refer to Exhibit 33-9. For country Y, the opportunity cost of producing one unit of good B is __________ unit(s) of good A.

Exhibit 33-3 -Refer to Exhibit 33-3. The world price is P_W. If a tariff is imposed the price rises to P_W + T. Because of the tariff, consumers' surplus is reduced by an amount equal to the area of

Exhibit 33-11 -Refer to Exhibit 33-11. P_W is the price that exists in the market before a tariff is imposed and P_{W + T} is the price that exists in the market after a tariff is imposed. Tariff revenues equal the area

Exhibit 33-1 -Refer to Exhibit 33-1. Considering the data, which of the following terms of trade would both countries agree to?

Producers' surplus is the difference between the price receive for a good and the price for which they would have __ the good.

Exhibit 33-11 -Refer to Exhibit 33-11. A tariff raises the price in the market from P_W to P_{W + T}. As a result, U.S. domestic sales rise from __________.

Exhibit 33-6 -Refer to Exhibit 33-6. Which of the following is true?