Question 1

Comparative advantage arises from:

Accepted Answer

A)  differences in climate, factor endowments, and technology. 
B)  absolute advantage. 
C)  countries engaging in autarkic behavior. 
D)  an emphasis on export production. 
A)  differences in climate, factor endowments, and technology. 
B)  absolute advantage. 
C)  countries engaging in autarkic behavior. 
D)  an emphasis on export production.

Question 2

Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats is _____ sweater(s).

Accepted Answer

A)  1 
B)  3 
C)  22 
D)  28 
A)  1 
B)  3 
C)  22 
D)  28

Question 3

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. 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, then the new consumption point for Tahoe after trade is _____ bushels of wheat and _____head of cattle.

Accepted Answer

A)  120; 140 
B)  120; 60 
C)  60; 120 
D)  400; 200 
A)  120; 140 
B)  120; 60 
C)  60; 120 
D)  400; 200

Question 4

Assume that a tariff is imposed on Chinese imports into the United States. This tariff is likely to _____ U.S. producers and _____ Chinese producers.

Accepted Answer

A)  penalize; penalize 
B)  benefit; benefit 
C)  benefit; penalize 
D)  penalize; benefit 
A)  penalize; penalize 
B)  benefit; benefit 
C)  benefit; penalize 
D)  penalize; benefit

Question 5

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. In the United States the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

Accepted Answer

A)  80,000 
B)  60,000 
C)  40,000 
D)  20,000 
A)  80,000 
B)  60,000 
C)  40,000 
D)  20,000

Question 6

Use the following to answer questions:  
-(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing 105 units of petroleum is _____ units of machinery.

Accepted Answer

A)  35 
B)  70 
C)  90 
D)  160 
A)  35 
B)  70 
C)  90 
D)  160

Question 7

Use the following to answer questions:
Figure: The Market for Roses  
-(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus with international trade would be area:

Accepted Answer

A)  X + Y + Z. 
B)  W + X + Y. 
C)  X + Y. 
D)  Y. 
A)  X + Y + Z. 
B)  W + X + Y. 
C)  X + Y. 
D)  Y.

Question 8

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. Tahoe has an absolute advantage in producing:

Accepted Answer

A)  wheat only. 
B)  cattle only. 
C)  both wheat and cattle. 
D)  neither wheat nor cattle. 
A)  wheat only. 
B)  cattle only. 
C)  both wheat and cattle. 
D)  neither wheat nor cattle.

Question 9

Some advocates of trade protection in the domestic market for steel argue that it is needed to protect domestic steelworkers' jobs. Why are economists usually unconvinced by this argument?

Accepted Answer

While trade protection in the steel indu

Question 10

On a production possibility frontier, opportunity cost is:

Accepted Answer

A)  the decrease in the output of one good when the output of the other good is increased. 
B)  the rate at which people are willing to exchange goods as determined by demand and supply. 
C)  the dollar cost of the good given up to get another good. 
D)  independent of the slope of the curve. 
A)  the decrease in the output of one good when the output of the other good is increased. 
B)  the rate at which people are willing to exchange goods as determined by demand and supply. 
C)  the dollar cost of the good given up to get another good. 
D)  independent of the slope of the curve.

Question 11

When a country moves from autarky to free international trade, consumers and producers in the import and export sectors all gain (i.e., both consumer surplus and producer surplus increase in both sectors).

Accepted Answer

A) True 
 B)False

Question 12

The _____ analyzes trade under the assumption that opportunity costs are constant and therefore production possibility frontiers are straight lines.

Accepted Answer

A)  pauper labor fallacy model 
B)  Ricardian model 
C)  Heckscher-Ohlin model 
D)  oligopoly model 
A)  pauper labor fallacy model 
B)  Ricardian model 
C)  Heckscher-Ohlin model 
D)  oligopoly model

Question 13

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. In the United States the opportunity cost of producing 30,000 barrels of crude oil is _____ tractors.

Accepted Answer

A)  60 
B)  80 
C)  100 
D)  120 
A)  60 
B)  80 
C)  100 
D)  120

Question 14

Use the following to answer questions:
Figure: The Domestic Market for Rice  
-(Figure: The Domestic Market for Rice) Look at the figure The Domestic Market for Rice. Assume that PA is the autarky price and PW is the world price. Before international trade, consumer surplus is equal to the area:

Accepted Answer

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

Question 15

Use the following to answer question:
Figure: The Market for Digital Cameras with Tariff  
-(Figure: The Market for Digital Cameras with Tariff) Look at the figure The Market for Digital Cameras with Tariff. The domestic price is PA and the world price is PW. The government decides to impose a tariff on each imported digital camera, and the new price is Pt. Identify the area corresponding to the tax revenue collected by the government. Identify the area corresponding to the deadweight loss that results from the tariff.

Accepted Answer

The tax revenue is equal to (P_t - P_W) × (Q

Question 16

Use the following to answer questions:  
-(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. _____ has (have) an absolute advantage in producing lumber.

Accepted Answer

A)  Both the United States and Canada 
B)  Neither the United States nor Canada 
C)  The United States 
D)  Canada 
A)  Both the United States and Canada 
B)  Neither the United States nor Canada 
C)  The United States 
D)  Canada

Question 17

Use the following to answer questions:
Figure: The Market for Melons in Russia II  
-(Figure: The Markets for Melons in Russia II) Look at the figure The Market for Melons in Russia II. If the world price is $10 and a tariff of $5 is imposed on this market, the burden of the tariff will be borne by:

Accepted Answer

A)  both producers and consumers. 
B)  consumers. 
C)  producers. 
D)  the government. 
A)  both producers and consumers. 
B)  consumers. 
C)  producers. 
D)  the government.

Question 18

When a country exchanges goods with another country, in the short run:

Accepted Answer

A)  producers in the exporting industry may be better 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 are better off. 
A)  producers in the exporting industry may be better 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 are better off.

Question 19

Since the production of clothing is labor-intensive relative to the production of wheat and China is labor-abundant relative to most countries, we expect China to export clothing.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer questions:
Figure: A Tariff on Oranges in South Africa  
-(Figure: A Tariff on Oranges in South Africa) Look at the figure A Tariff on Oranges in South Africa. When the government imposes a tariff on imported oranges, the price of oranges in South Africa rises from PW to PT and there's a net _____ to total surplus of _____.

Accepted Answer

A)  addition; I + J + K+ L 
B)  addition; I + J + K 
C)  reduction; I + K 
D)  reduction; I + J + K + L 
A)  addition; I + J + K+ L 
B)  addition; I + J + K 
C)  reduction; I + K 
D)  reduction; I + J + K + L

Comparative advantage arises from:

Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats is _____ sweater(s).

Assume that a tariff is imposed on Chinese imports into the United States. This tariff is likely to _ U.S. producers and _ Chinese producers.

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. In the United States the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing 105 units of petroleum is _____ units of machinery.

Use the following to answer questions: Figure: The Market for Roses -(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Producer surplus with international trade would be area:

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. Tahoe has an absolute advantage in producing:

Some advocates of trade protection in the domestic market for steel argue that it is needed to protect domestic steelworkers' jobs. Why are economists usually unconvinced by this argument?

On a production possibility frontier, opportunity cost is:

When a country moves from autarky to free international trade, consumers and producers in the import and export sectors all gain (i.e., both consumer surplus and producer surplus increase in both sectors).

The _____ analyzes trade under the assumption that opportunity costs are constant and therefore production possibility frontiers are straight lines.

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. In the United States the opportunity cost of producing 30,000 barrels of crude oil is _____ tractors.

Use the following to answer questions: Figure: The Domestic Market for Rice -(Figure: The Domestic Market for Rice) Look at the figure The Domestic Market for Rice. Assume that P_A is the autarky price and P_W is the world price. Before international trade, consumer surplus is equal to the area:

Use the following to answer questions: -(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. _____ has (have) an absolute advantage in producing lumber.

Use the following to answer questions: Figure: The Market for Melons in Russia II -(Figure: The Markets for Melons in Russia II) Look at the figure The Market for Melons in Russia II. If the world price is $10 and a tariff of $5 is imposed on this market, the burden of the tariff will be borne by:

When a country exchanges goods with another country, in the short run:

Since the production of clothing is labor-intensive relative to the production of wheat and China is labor-abundant relative to most countries, we expect China to export clothing.

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

Comparative advantage arises from:

Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats is _____ sweater(s).

Assume that a tariff is imposed on Chinese imports into the United States. This tariff is likely to _____ U.S. producers and _____ Chinese producers.

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. In the United States the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost in Mexico of producing 105 units of petroleum is _____ units of machinery.

Use the following to answer questions: Figure: The Market for Roses -(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus with international trade would be area:

Some advocates of trade protection in the domestic market for steel argue that it is needed to protect domestic steelworkers' jobs. Why are economists usually unconvinced by this argument?

On a production possibility frontier, opportunity cost is:

When a country moves from autarky to free international trade, consumers and producers in the import and export sectors all gain (i.e., both consumer surplus and producer surplus increase in both sectors).

The _____ analyzes trade under the assumption that opportunity costs are constant and therefore production possibility frontiers are straight lines.

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. In the United States the opportunity cost of producing 30,000 barrels of crude oil is _____ tractors.

Use the following to answer questions: Figure: The Domestic Market for Rice -(Figure: The Domestic Market for Rice) Look at the figure The Domestic Market for Rice. Assume that PA is the autarky price and PW is the world price. Before international trade, consumer surplus is equal to the area:

Use the following to answer questions: -(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. _____ has (have) an absolute advantage in producing lumber.

Use the following to answer questions: Figure: The Market for Melons in Russia II -(Figure: The Markets for Melons in Russia II) Look at the figure The Market for Melons in Russia II. If the world price is $10 and a tariff of $5 is imposed on this market, the burden of the tariff will be borne by:

When a country exchanges goods with another country, in the short run:

Since the production of clothing is labor-intensive relative to the production of wheat and China is labor-abundant relative to most countries, we expect China to export clothing.

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

Assume that a tariff is imposed on Chinese imports into the United States. This tariff is likely to _ U.S. producers and _ Chinese producers.

Use the following to answer questions: Figure: The Market for Roses -(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Producer surplus with international trade would be area:

Use the following to answer questions: Figure: The Domestic Market for Rice -(Figure: The Domestic Market for Rice) Look at the figure The Domestic Market for Rice. Assume that P_A is the autarky price and P_W is the world price. Before international trade, consumer surplus is equal to the area: