Question 1

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

Accepted Answer

A) True 
 B)False  True

Question 2

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

Accepted Answer

A) A: maximum, B: zero 
B) A: maximum, B: maximum 
C) A: zero, B: maximum 
D) A: zero, B: minimum 
A) A: maximum, B: zero 
B) A: maximum, B: maximum 
C) A: zero, B: maximum 
D) A: zero, B: minimum A

Question 3

The estimated cost of automobile jobs saved due to limitations on foreign autos is $105,000 per job.Why is there a cost to saving jobs through protectionism?

Accepted Answer

When foreign cars are limited, consumers pay more for cars.In addition, the United States devotes too many resources to car production instead of more resources being transferred to where workers would be most productive.

Question 4

Dumping is a trade practice in which countries sell goods in a foreign market at cheaper prices than the goods can be produced domestically.

Accepted Answer

A) True 
 B)False

Question 5

Table 34-3
​
​
Output Per Unit Labor Input
​
Cotton
Wheat
Egypt
10
2
United States
20
20
-The data in Table 34-3 indicate that the United States has

Accepted Answer

A) an absolute advantage in both goods, and a comparative advantage in cotton. 
B) an absolute advantage in both goods, and a comparative advantage in wheat. 
C) only a comparative advantage in wheat. 
D) only a comparative advantage in cotton. 
A) an absolute advantage in both goods, and a comparative advantage in cotton. 
B) an absolute advantage in both goods, and a comparative advantage in wheat. 
C) only a comparative advantage in wheat. 
D) only a comparative advantage in cotton.

Question 6

In a situation of free trade,

Accepted Answer

A) countries with comparative advantage will export more than countries with comparative disadvantage import. 
B) the total quantity of an item exported will be greater than the total quantity imported. 
C) importing countries will always produce some good, so that total quantity imported is less than total quantity exported. 
D) the total quantity of an item exported will equal the total quantity imported. 
A) countries with comparative advantage will export more than countries with comparative disadvantage import. 
B) the total quantity of an item exported will be greater than the total quantity imported. 
C) importing countries will always produce some good, so that total quantity imported is less than total quantity exported. 
D) the total quantity of an item exported will equal the total quantity imported.

Question 7

A quota specifies the maximum amount of a good that is permitted into the country from abroad per unit of time.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week.From these numbers, we can conclude

Accepted Answer

A) Captain Canada has a comparative advantage in the production of hockey sticks. 
B) Captain Germany has a comparative advantage in the production of maple syrup. 
C) Captain Canada has an absolute advantage in the production of hockey sticks. 
D) All of the above conclusions are correct. 
A) Captain Canada has a comparative advantage in the production of hockey sticks. 
B) Captain Germany has a comparative advantage in the production of maple syrup. 
C) Captain Canada has an absolute advantage in the production of hockey sticks. 
D) All of the above conclusions are correct.

Question 9

Table 34-4
​  
-Table 34-4 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 10

Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers, we can conclude that

Accepted Answer

A) the United States has a comparative advantage in the production of cars. 
B) France has a comparative advantage in the production of wine. 
C) the United States has an absolute advantage in the production of cars. 
D) All of the above are correct. 
A) the United States has a comparative advantage in the production of cars. 
B) France has a comparative advantage in the production of wine. 
C) the United States has an absolute advantage in the production of cars. 
D) All of the above are correct.

Question 11

Figure 34-4
​  
-In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Accepted Answer

A) 1 for the United States and 5 for Egypt. 
B) 20 for the United States and 2 for Egypt. 
C) 1 for the United States and 2 for Egypt. 
D) 20 for the United States and 10 for Egypt. 
A) 1 for the United States and 5 for Egypt. 
B) 20 for the United States and 2 for Egypt. 
C) 1 for the United States and 2 for Egypt. 
D) 20 for the United States and 10 for Egypt.

Question 12

Figure 34-9
​  
-In Figure 34-9, Pestoland exports pasta to Pastaland.Equilibrium will occur when

Accepted Answer

A) points E and B are reached simultaneously. 
B) either E or B is reached. 
C) exports equal imports. 
D) exports are maximized. 
A) points E and B are reached simultaneously. 
B) either E or B is reached. 
C) exports equal imports. 
D) exports are maximized.

Question 13

If the United States imposed a 25 percent tariff on imports of minivans, the effect would be to

Accepted Answer

A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports. 
A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports.

Question 14

What are the two approaches followed by the U.S.government to ease the burden on the victims of free trade?

Accepted Answer

The U.S.government follows two basic app

Question 15

When other nations Orient "dump" products on the U.S.market, they

Accepted Answer

A) sell at prices that do not cover costs of production. 
B) sell at prices lower than prices charged to their own domestic customers. 
C) expect the United States to help pay any industrialists' losses. 
D) All of the above are true. 
A) sell at prices that do not cover costs of production. 
B) sell at prices lower than prices charged to their own domestic customers. 
C) expect the United States to help pay any industrialists' losses. 
D) All of the above are true.

Question 16

Figure 34-7
​  
-In Figure 34-7, CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland, respectively.If both countries are given the opportunity to trade at prices indicated by CF,

Accepted Answer

A) both will refuse trade. 
B) both will agree to trade. 
C) Pestoland will wish to trade, but Pastaland will not. 
D) Pastaland will wish to trade, but Pestoland will not. 
A) both will refuse trade. 
B) both will agree to trade. 
C) Pestoland will wish to trade, but Pastaland will not. 
D) Pastaland will wish to trade, but Pestoland will not.

Question 17

William Safire argues that a unilateral free trade policy is a disaster if

Accepted Answer

A) the governments of the nations' trading partners practice "helpfulism." 
B) infant industries are allowed to expire. 
C) the national defense is endangered. 
D) it hurts the poor. 
A) the governments of the nations' trading partners practice "helpfulism." 
B) infant industries are allowed to expire. 
C) the national defense is endangered. 
D) it hurts the poor.

Question 18

Table 34-4
​  
-Table 34-4 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 Japan?

Accepted Answer

A) P = $100, Q = 100 
B) P = $200, Q = 85 
C) P = $300, Q = 70 
D) P = $400, Q = 60 
A) P = $100, Q = 100 
B) P = $200, Q = 85 
C) P = $300, Q = 70 
D) P = $400, Q = 60

Question 19

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Accepted Answer

A) remain unchanged in that nation. 
B) rise and then fall below where it was originally. 
C) rise in that nation. 
D) drop in that nation. 
A) remain unchanged in that nation. 
B) rise and then fall below where it was originally. 
C) rise in that nation. 
D) drop in that nation.

Question 20

The principle of comparative advantage states that countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners.

Accepted Answer

A) True 
 B)False

Exam 34: International Trade and Comparative Advantage

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

The estimated cost of automobile jobs saved due to limitations on foreign autos is $105,000 per job.Why is there a cost to saving jobs through protectionism?

Dumping is a trade practice in which countries sell goods in a foreign market at cheaper prices than the goods can be produced domestically.

Table 34-3 ​ ​ Output Per Unit Labor Input ​ Cotton Wheat Egypt 10 2 United States 20 20 -The data in Table 34-3 indicate that the United States has

In a situation of free trade,

A quota specifies the maximum amount of a good that is permitted into the country from abroad per unit of time.

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week.From these numbers, we can conclude

Table 34-4 ​ -Table 34-4 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?

Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers, we can conclude that

Figure 34-4 ​ -In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Figure 34-9 ​ -In Figure 34-9, Pestoland exports pasta to Pastaland.Equilibrium will occur when

If the United States imposed a 25 percent tariff on imports of minivans, the effect would be to

What are the two approaches followed by the U.S.government to ease the burden on the victims of free trade?

When other nations Orient "dump" products on the U.S.market, they

Figure 34-7 ​ -In Figure 34-7, CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland, respectively.If both countries are given the opportunity to trade at prices indicated by CF,

William Safire argues that a unilateral free trade policy is a disaster if

Table 34-4 ​ -Table 34-4 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 Japan?

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

The principle of comparative advantage states that countries should specialize in the production of goods for which they have a lower opportunity cost of production than their trading partners.

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

Filters

Table 34-3 Output Per Unit Labor Input Cotton Wheat Egypt 10 2 United States 20 20 -The data in Table 34-3 indicate that the United States has

Table 34-4 -Table 34-4 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?

Figure 34-4 -In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Figure 34-9 -In Figure 34-9, Pestoland exports pasta to Pastaland.Equilibrium will occur when

Figure 34-7 -In Figure 34-7, CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland, respectively.If both countries are given the opportunity to trade at prices indicated by CF,

Table 34-4 -Table 34-4 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 Japan?