Question 1

The effect of international trade on U.S. factor markets is to:

Accepted Answer

A)  increase the wage of highly educated workers. 
B)  increase the wage of unskilled workers. 
C)  decrease the wage of both highly educated workers and unskilled workers. 
D)  increase the wage of both highly educated workers and unskilled workers. 
A)  increase the wage of highly educated workers. 
B)  increase the wage of unskilled workers. 
C)  decrease the wage of both highly educated workers and unskilled workers. 
D)  increase the wage of both highly educated workers and unskilled workers.

Question 2

Use the following to answer questions:  
-(Table: Production Possibilities in the United States and Colombia) Look at the table Production Possibilities in the United States and Colombia. Suppose that each nation specializes in producing the good in which it has the comparative advantage, and the two nations agree to trade. A year later we observe Colombia consuming 20 computers and 20 tons of coffee, and we observe the United States consuming 80 computers and 5 tons of coffee. How many computers does the United States export? How many tons of coffee does the United States import? If the world price of a computer is $500, what is the world price of a ton of coffee? Justify your answers.

Accepted Answer

With specialization, the United States w

Question 3

In which of the following areas does the United States significantly limit imports?

Accepted Answer

A)  computers 
B)  aircraft 
C)  agriculture 
D)  oil 
A)  computers 
B)  aircraft 
C)  agriculture 
D)  oil

Question 4

The model suggesting that countries will specialize in producing the good that uses its relatively abundant factor of production most intensively is referred to as the _____ model.

Accepted Answer

A)  Heckscher-Ohlin 
B)  absolute advantage 
C)  sweatshop labor 
D)  pauper labor fallacy 
A)  Heckscher-Ohlin 
B)  absolute advantage 
C)  sweatshop labor 
D)  pauper labor fallacy

Question 5

When a business hires people in other countries to perform various tasks, _____ has occurred.

Accepted Answer

A)  comparative advantage 
B)  globalization 
C)  offshore outsourcing 
D)  pauper labor 
A)  comparative advantage 
B)  globalization 
C)  offshore outsourcing 
D)  pauper labor

Question 6

Use the following to answer questions:
Scenario: The Production of Wheat and Toys   The table describes the production of two goods, wheat and toys, in country A and country B. Each country has a linear production possibility frontier with respect to its production of the two goods. The numbers in each column represent the total number of units each country could produce if it used all of its resources to produce the good.
-(Scenario: The Production of Wheat and Toys) Look at the scenario Production of Wheat and Toys. Country A has an absolute advantage in _____ and a comparative advantage in the production of _____.

Accepted Answer

A)  toys; wheat 
B)  toys; toys 
C)  wheat and toys; wheat 
D)  neither good; toys 
A)  toys; wheat 
B)  toys; toys 
C)  wheat and toys; wheat 
D)  neither good; toys

Question 7

The main difference between a tariff and an import quota is that:

Accepted Answer

A)  an import quota reduces imports more sharply than a tariff. 
B)  a tariff will cause higher prices than an import quota. 
C)  a tariff generates tax revenue, while an import quota generates rents to the license holders. 
D)  a tariff will cause lower prices than an import quota. 
A)  an import quota reduces imports more sharply than a tariff. 
B)  a tariff will cause higher prices than an import quota. 
C)  a tariff generates tax revenue, while an import quota generates rents to the license holders. 
D)  a tariff will cause lower prices than an import quota.

Question 8

Suppose a nation has freely imported sugar at the world price PW for many years. However, a new government administration decides to levy a tariff on imported sugar, and the price rises to Pt. Most economists report that this has caused inefficiency. How?

Accepted Answer

A tariff, like an excise tax, increases

Question 9

Use the following to answer questions:
Figure: The Market for Thumb Drives  
-(Figure: The Market for Thumb Drives) Look at the figure The Market for Thumb Drives. Assume that PA is the autarky price, PW is the world price, and D and S represent domestic demand and supply, respectively. Producer surplus in free trade equals the area:

Accepted Answer

A)  B + C. 
B)  B + C + D +E. 
C)  B + E. 
D)  E. 
A)  B + C. 
B)  B + C + D +E. 
C)  B + E. 
D)  E.

Question 10

Use the following to answer questions:  
-(Table: Production Possibilities) Look at the table Production Possibilities. The opportunity cost of 1 computer for _____ is _____.

Accepted Answer

A)  the United States; 2 
B)  Colombia; 0.5 
C)  the United States; 0.5 
D)  Colombia; 1 
A)  the United States; 2 
B)  Colombia; 0.5 
C)  the United States; 0.5 
D)  Colombia; 1

Question 11

Use the following to answer questions:
Figure: The Market for Oranges in South Africa  
-(Figure: The Market for Oranges in South Africa) Look at the figure The Market for Oranges in South Africa. In autarky, the price of oranges in South Africa is P1. When the economy is opened to trade, the price falls to PW and consumer surplus will _____ to area _____.

Accepted Answer

A)  fall; M 
B)  fall; M + N 
C)  rise; M + N + O 
D)  rise; M + N + O + P 
A)  fall; M 
B)  fall; M + N 
C)  rise; M + N + O 
D)  rise; M + N + O + P

Question 12

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

The effect of international trade on U.S. factor markets is to:

In which of the following areas does the United States significantly limit imports?

The model suggesting that countries will specialize in producing the good that uses its relatively abundant factor of production most intensively is referred to as the _____ model.

When a business hires people in other countries to perform various tasks, _____ has occurred.

The main difference between a tariff and an import quota is that:

Suppose a nation has freely imported sugar at the world price P_W for many years. However, a new government administration decides to levy a tariff on imported sugar, and the price rises to P_t. Most economists report that this has caused inefficiency. How?

Use the following to answer questions: -(Table: Production Possibilities) Look at the table Production Possibilities. The opportunity cost of 1 computer for _ is _.

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 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 8: International Trade

The effect of international trade on U.S. factor markets is to:

In which of the following areas does the United States significantly limit imports?

The model suggesting that countries will specialize in producing the good that uses its relatively abundant factor of production most intensively is referred to as the _____ model.

When a business hires people in other countries to perform various tasks, _____ has occurred.

The main difference between a tariff and an import quota is that:

Suppose a nation has freely imported sugar at the world price PW for many years. However, a new government administration decides to levy a tariff on imported sugar, and the price rises to Pt. Most economists report that this has caused inefficiency. How?

Use the following to answer questions: -(Table: Production Possibilities) Look at the table Production Possibilities. The opportunity cost of 1 computer for _____ is _____.

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 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Suppose a nation has freely imported sugar at the world price P_W for many years. However, a new government administration decides to levy a tariff on imported sugar, and the price rises to P_t. Most economists report that this has caused inefficiency. How?

Use the following to answer questions: -(Table: Production Possibilities) Look at the table Production Possibilities. The opportunity cost of 1 computer for _ is _.