Question 1

The effect of opening trade between countries is

Accepted Answer

A)  living standards rise in the country with efficient, high-pay workers. 
B)  both countries can exploit comparative advantage and increase productivity. 
C)  total world production increases as both countries specialize in specific goods. 
D)  All of the above are correct. 
A)  living standards rise in the country with efficient, high-pay workers. 
B)  both countries can exploit comparative advantage and increase productivity. 
C)  total world production increases as both countries specialize in specific goods. 
D)  All of the above are correct.

Question 2

Figure 18-1
  
-In Figure 18-1,

Accepted Answer

A)  Great Britain has an absolute advantage over Germany in the production of both scientific equipment and woolens. 
B)  Germany has a comparative advantage over Great Britain in the production of woolens. 
C)  Great Britain has a comparative advantage in the production of woolens. 
D)  Great Britain should export scientific equipment to Germany, and Germany should export woolens to Great Britain. 
A)  Great Britain has an absolute advantage over Germany in the production of both scientific equipment and woolens. 
B)  Germany has a comparative advantage over Great Britain in the production of woolens. 
C)  Great Britain has a comparative advantage in the production of woolens. 
D)  Great Britain should export scientific equipment to Germany, and Germany should export woolens to Great Britain.

Question 3

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

Accepted Answer

A) True 
 B)False

Question 4

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine, England has the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 5

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

Accepted Answer

A)  effectively, ineffectively 
B)  haphazardly, carefully 
C)  equally, capriciously 
D)  unfairly, fairly 
E)  unequally, unequally 
A)  effectively, ineffectively 
B)  haphazardly, carefully 
C)  equally, capriciously 
D)  unfairly, fairly 
E)  unequally, unequally

Question 6

"The United States has more oil in Alaska than there is oil in Kuwait.Therefore, the United States should stop importing oil." Evaluate this statement using economic analysis.

Accepted Answer

While the statement is based on absolute

Question 7

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

A)  No, because protection has no place in industrial development. 
B)  No, protection is always improper. 
C)  Uncertain, economic theory has no answer to this question. 
D)  Yes, although it can be overstated and abused. 
A)  No, because protection has no place in industrial development. 
B)  No, protection is always improper. 
C)  Uncertain, economic theory has no answer to this question. 
D)  Yes, although it can be overstated and abused.

Question 8

Table 18-4
 $\begin{array}{ccccccc}
\text { Quantity }&\text { Quantity }&\text { Quantity }&\text { Quantity }&\
\text { Price per } & \text { Demanded } & \text { Supplied } & \text { Demanded } & \text { Supplied } \
\text { TV } & \text { in United States } & \text { in United States } & \text { Japan } & \text { Japan } \
\underline {\text { (dollars) }} &\underline { \text { (thousands) }} & \underline { \text { (thousands) }}  &\underline { \text { (thousands) }} & \underline { \text { (thousands) }}  \
100 & 100 & 10 & 100 & 25 \
200 & 85 & 20 & 85 & 50 \
300 & 70 & 30 & 70 & 70 \
400 & 60 & 40 & 60 & 80 \
500 & 50 & 50& 50 & 90 \
600 & 40 & 60 & 40 & 100 \
700 & 30 & 70 & 30 & 110 \
800 & 30 & 80 & 20 & 120
\end{array}$
-Table 18-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries, what are the equilibrium price and quantity in the United States?

Accepted Answer

A)  P = $100, Q = 100 
B)  P = $200, Q = 85 
C)  P = $300, Q = 70 
D)  P = $500, Q = 50 
A)  P = $100, Q = 100 
B)  P = $200, Q = 85 
C)  P = $300, Q = 70 
D)  P = $500, Q = 50

Question 9

Which of the following might lead a nation to engage in international trade?

Accepted Answer

A)  Differences in natural endowments such as climate 
B)  Differences in skills of labor force 
C)  Differences in endowments of natural resources 
D)  All of the above are correct. 
A)  Differences in natural endowments such as climate 
B)  Differences in skills of labor force 
C)  Differences in endowments of natural resources 
D)  All of the above are correct.

Question 10

In the long run, foreign labor remains cheap when and if

Accepted Answer

A)  it becomes highly efficient and competes successfully internationally. 
B)  countries erect barriers to trade between poor countries. 
C)  productivity increases more rapidly in poor countries than in rich countries. 
D)  it remains inefficient compared to other countries' labor. 
A)  it becomes highly efficient and competes successfully internationally. 
B)  countries erect barriers to trade between poor countries. 
C)  productivity increases more rapidly in poor countries than in rich countries. 
D)  it remains inefficient compared to other countries' labor.

Question 11

Specialization is a major obstacle to international trade.

Accepted Answer

A) True 
 B)False

Question 12

A country's comparative advantage can be illustrated by the graph of the production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 13

Figure 18-5
  
-From the graph in Figure 18-5 (curves show output per unit of labor input), one can infer that

Accepted Answer

A)  in terms of TVs, computers are more expensive in China than Japan. 
B)  in terms of computers, TVs are more expensive in China than Japan. 
C)  China should produce more TVs and fewer computers. 
D)  All of the above are correct. 
A)  in terms of TVs, computers are more expensive in China than Japan. 
B)  in terms of computers, TVs are more expensive in China than Japan. 
C)  China should produce more TVs and fewer computers. 
D)  All of the above are correct.

Question 14

A tariff is a limitation on the amount of a good that can be imported.

Accepted Answer

A) True 
 B)False

Question 15

The economic effects of a quota are identical to those of a tariff.

Accepted Answer

A) True 
 B)False

Question 16

According to the ____ view, a nation's wealth consists of the amount of gold or other monies at its command.

Accepted Answer

A)  Keynesian 
B)  free trade 
C)  mercantilist 
D)  monetarist 
A)  Keynesian 
B)  free trade 
C)  mercantilist 
D)  monetarist

Question 17

Table 18-2
 $\begin{array}{r}
\text { Output Per Unit Labor Input }\
\begin{array}{lcc}
& \underline {\text {  England }}& \underline {\text {  Portugal }}\
\text {  Cloth } \quad\quad\quad&  20\quad &  24\quad \
\text {  Wine } &  2\quad & 12\quad  \
\end{array}
\end{array}$

-Using the data from Table 18-2, suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Accepted Answer

A)  16 wine, 8 cloth. 
B)  16 wine, 16 cloth. 
C)  12 wine, 12 cloth. 
D)  8 wine, 16 cloth. 
A)  16 wine, 8 cloth. 
B)  16 wine, 16 cloth. 
C)  12 wine, 12 cloth. 
D)  8 wine, 16 cloth.

Question 18

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Accepted Answer

A) True 
 B)False

Question 19

Carefully define the following terms and explain their importance to the study of economics.
a.specialization
b.absolute advantage
c.comparative advantage
d.quota
e.trade adjustment assistance

Accepted Answer

a.Specialization means that a country de

Question 20

One nation can gain from an exchange only at the expense of another.

Accepted Answer

A) True 
 B)False

Exam 35: International Trade and Comparative Advantage

The effect of opening trade between countries is

Figure 18-1 -In Figure 18-1,

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine, England has the comparative advantage in both goods.

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

"The United States has more oil in Alaska than there is oil in Kuwait.Therefore, the United States should stop importing oil." Evaluate this statement using economic analysis.

Is the call for protection on the basis of "infant industry" valid?

Which of the following might lead a nation to engage in international trade?

In the long run, foreign labor remains cheap when and if

Specialization is a major obstacle to international trade.

A country's comparative advantage can be illustrated by the graph of the production possibilities frontier.

Figure 18-5 -From the graph in Figure 18-5 (curves show output per unit of labor input), one can infer that

A tariff is a limitation on the amount of a good that can be imported.

The economic effects of a quota are identical to those of a tariff.

According to the ____ view, a nation's wealth consists of the amount of gold or other monies at its command.

Table 18-2 Output Per Unit Labor Input Cloth 20 24 Wine 2 12 -Using the data from Table 18-2, suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Carefully define the following terms and explain their importance to the study of economics. a.specialization b.absolute advantage c.comparative advantage d.quota e.trade adjustment assistance

One nation can gain from an exchange only at the expense of another.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

A tariff on imports affects foreign suppliers ; a quota affects foreign suppliers .