Question 1

If a market begins to engage in international trade, we can assume that:

Accepted Answer

A)  producers in the exporting industry may be worse off. 
B)  consumers of the imported good may be worse off. 
C)  consumers of the exported good may be better off. 
D)  producers in the importing industry may be worse off. 
A)  producers in the exporting industry may be worse off. 
B)  consumers of the imported good may be worse off. 
C)  consumers of the exported good may be better off. 
D)  producers in the importing industry may be worse off.

Question 2

Use the following to answer questions:
Figure: Comparative Advantage and the Production Possibility Frontier  
-(Figure: Comparative Advantage and the Production Possibility Frontier) Look at the figure Comparative Advantage and the Production Possibility Frontier. _____ has an absolute advantage in the production of _____ and a comparative advantage in the production of _____.

Accepted Answer

A)  The United States; computers; roses 
B)  Colombia; computers; roses 
C)  The United States; computers; computers 
D)  Colombia; roses; computers 
A)  The United States; computers; roses 
B)  Colombia; computers; roses 
C)  The United States; computers; computers 
D)  Colombia; roses; computers

Question 3

Use the following to answer questions:  
-(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The United States has a comparative advantage in _____ and Mexico has a comparative advantage in _____.

Accepted Answer

A)  both goods; neither good 
B)  neither good; both goods 
C)  tractors; crude oil 
D)  crude oil; tractors 
A)  both goods; neither good 
B)  neither good; both goods 
C)  tractors; crude oil 
D)  crude oil; tractors

Question 4

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 producer surplus will _____ to area _____.

Accepted Answer

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

Question 5

Use the following to answer questions:
Figure: The Market for Roses  
-If a nation imports a good when the economy is opened to trade, the domestic price of the good will _____ and domestic consumption will _____.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall

Question 6

Countries that trade based on the Heckscher-Ohlin model will find that:

Accepted Answer

A)  their import goods tend to utilize their relatively scarce factors of production most intensively. 
B)  the goods they export tend to use their relatively scarce factors of production most intensively. 
C)  countries with a relative abundance of capital will export goods that use labor intensively. 
D)  the concept of absolute advantage determines which goods they should export and import. 
A)  their import goods tend to utilize their relatively scarce factors of production most intensively. 
B)  the goods they export tend to use their relatively scarce factors of production most intensively. 
C)  countries with a relative abundance of capital will export goods that use labor intensively. 
D)  the concept of absolute advantage determines which goods they should export and import.

Question 7

Use the following to answer questions:
Figure: The Production Possibility Frontiers for Jackson and Tahoe  
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. Assume each nation specializes completely, based on comparative advantage, and the price of 1 head of cattle equals the price of 2 bushels of wheat. If Jackson exports 120 bushels of wheat to Tahoe, Tahoe will export _____ head of cattle to Jackson.

Accepted Answer

A)  120 
B)  60 
C)  240 
D)  200 
A)  120 
B)  60 
C)  240 
D)  200

Question 8

If the United States removed the tariffs and quotas on sugar, in the U.S. market for sugar:

Accepted Answer

A)  consumer surplus would not change. 
B)  consumer surplus would decrease. 
C)  total surplus would decrease. 
D)  producer surplus would decrease. 
A)  consumer surplus would not change. 
B)  consumer surplus would decrease. 
C)  total surplus would decrease. 
D)  producer surplus would decrease.

Question 9

Use the following to answer questions:
Figure: The Production Possibilities for Two Countries  
-(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Trade will NOT take place if 1 radio trades for:

Accepted Answer

A)  0.25 tire. 
B)  1 tire. 
C)  1.5 tires. 
D)  1.75 tires. 
A)  0.25 tire. 
B)  1 tire. 
C)  1.5 tires. 
D)  1.75 tires.

Question 10

In the case of U.S. trade protection, quota rents for the most important import licenses are earned by:

Accepted Answer

A)  foreign governments. 
B)  the U.S. government. 
C)  U.S. producers of the good. 
D)  importers who pay the highest price to get the licenses. 
A)  foreign governments. 
B)  the U.S. government. 
C)  U.S. producers of the good. 
D)  importers who pay the highest price to get the licenses.

Question 11

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 12

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to 
A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to

Question 13

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 14

The belief that importing goods from low-wage countries will hurt the standard of living of workers in the importing country is known as the:

Accepted Answer

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

Question 15

A blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada. This blockade will:

Accepted Answer

A)  increase the consumer surplus for American lumber consumers. 
B)  decrease the producer surplus for Canadian lumber producers. 
C)  increase the total surplus for the American lumber market. 
D)  increase the total surplus for the Canadian lumber market. 
A)  increase the consumer surplus for American lumber consumers. 
B)  decrease the producer surplus for Canadian lumber producers. 
C)  increase the total surplus for the American lumber market. 
D)  increase the total surplus for the Canadian lumber market.

Question 16

Use the following to answer questions:
Figure: The Market for Laptop Sleeves  
-(Figure: The Market for Laptop Sleeves) Look at the figure The Market for Laptop Sleeves. Assume that S and D are the domestic supply and demand curves and the world price is PW. Identify the area of government tax revenue when a tariff raises the domestic price from the world price to PT.

Accepted Answer

A)  D + E + F 
B)  D + F 
C)  E 
D)  B 
A)  D + E + F 
B)  D + F 
C)  E 
D)  B

Question 17

The term autarky refers to a country that:

Accepted Answer

A)  trades goods and services based upon the principle of comparative advantage. 
B)  trades goods and services based upon the principle of absolute advantage. 
C)  trades goods and services based upon the principle of Ricardian advantage. 
D)  does not trade with other countries. 
A)  trades goods and services based upon the principle of comparative advantage. 
B)  trades goods and services based upon the principle of absolute advantage. 
C)  trades goods and services based upon the principle of Ricardian advantage. 
D)  does not trade with other countries.

Question 18

Use the following to answer questions:
Figure: The Market for MP3 Players  
-(Figure: The Market for MP3 Players) Look at the figure The Market for MP3 Players. Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve. In the market for MP3 players, the autarky price equals:

Accepted Answer

A)  $140. 
B)  $120. 
C)  $110. 
D)  $100. 
A)  $140. 
B)  $120. 
C)  $110. 
D)  $100.

Question 19

Sri Lanka's comparative advantage over the United States in textiles can be explained by its:

Accepted Answer

A)  labor abundance. 
B)  mild climate. 
C)  advanced technology. 
D)  increasing returns. 
A)  labor abundance. 
B)  mild climate. 
C)  advanced technology. 
D)  increasing returns.

Question 20

Use the following to answer questions:
Figure: The Market for Calculators  
-(Figure: The Market for Calculators) Look at the figure The Market for Calculators. Assume that S and D represent the domestic demand and supply of calculators. The world price, PW, equals $100. The government imposes a quota restricting imports to 25 calculators. The domestic price rises to _____ and the quota rent is equal to area _____.

Accepted Answer

A)  $120; K + L 
B)  $150; K + H + I + L 
C)  $120; H + I 
D)  $150; G + H + I + J 
A)  $120; K + L 
B)  $150; K + H + I + L 
C)  $120; H + I 
D)  $150; G + H + I + J

If a market begins to engage in international trade, we can assume that:

Use the following to answer questions: -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The United States has a comparative advantage in _ and Mexico has a comparative advantage in _.

Use the following to answer questions: Figure: The Market for Roses -If a nation imports a good when the economy is opened to trade, the domestic price of the good will _ and domestic consumption will _.

Countries that trade based on the Heckscher-Ohlin model will find that:

If the United States removed the tariffs and quotas on sugar, in the U.S. market for sugar:

Use the following to answer questions: Figure: The Production Possibilities for Two Countries -(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Trade will NOT take place if 1 radio trades for:

In the case of U.S. trade protection, quota rents for the most important import licenses are earned by:

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

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

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

The belief that importing goods from low-wage countries will hurt the standard of living of workers in the importing country is known as the:

A blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada. This blockade will:

The term autarky refers to a country that:

Sri Lanka's comparative advantage over the United States in textiles can be explained by its:

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

If a market begins to engage in international trade, we can assume that:

Use the following to answer questions: -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The United States has a comparative advantage in _____ and Mexico has a comparative advantage in _____.

Use the following to answer questions: Figure: The Market for Roses -If a nation imports a good when the economy is opened to trade, the domestic price of the good will _____ and domestic consumption will _____.

Countries that trade based on the Heckscher-Ohlin model will find that:

If the United States removed the tariffs and quotas on sugar, in the U.S. market for sugar:

Use the following to answer questions: Figure: The Production Possibilities for Two Countries -(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Trade will NOT take place if 1 radio trades for:

In the case of U.S. trade protection, quota rents for the most important import licenses are earned by:

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

If a country's price in the absence of trade is lower than the price with trade, then the domestic quantity supplied with trade is _____ the domestic quantity demanded.

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

The belief that importing goods from low-wage countries will hurt the standard of living of workers in the importing country is known as the:

A blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada. This blockade will:

The term autarky refers to a country that:

Sri Lanka's comparative advantage over the United States in textiles can be explained by its:

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

Use the following to answer questions: -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. The United States has a comparative advantage in _ and Mexico has a comparative advantage in _.

Use the following to answer questions: Figure: The Market for Roses -If a nation imports a good when the economy is opened to trade, the domestic price of the good will _ and domestic consumption will _.

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