Question 1

Colombia produces coffee with less labor and land than any other country; it therefore surely has

Accepted Answer

A) an absolute advantage in coffee production. 
B) a comparative advantage in coffee production. 
C) absolute efficiency in coffee production. 
D) a comparatively absolute advantage in coffee production. 
A) an absolute advantage in coffee production. 
B) a comparative advantage in coffee production. 
C) absolute efficiency in coffee production. 
D) a comparatively absolute advantage in coffee production.

Question 2

A tariff is a tax on imports imposed by the country that is importing the goods.

Accepted Answer

A) True 
 B)False

Question 3

Figure 34-9
​  
-In Figure 34-9, at price OC total quantity demanded exceeds quantity supplied and price will rise to

Accepted Answer

A) OJ in Pastaland. 
B) OA in Pestoland. 
C) OA in both countries. 
D) OJ in both countries. 
A) OJ in Pastaland. 
B) OA in Pestoland. 
C) OA in both countries. 
D) OJ in both countries.

Question 4

Comparing international trade with trade among the different states of the United States shows that

Accepted Answer

A) the logic of international trade is quite different from that of intranational trade. 
B) the basic reasons for trade are equally applicable within a country or among countries. 
C) there is no need to study international trade as a special subject. 
D) All of the above are correct. 
A) the logic of international trade is quite different from that of intranational trade. 
B) the basic reasons for trade are equally applicable within a country or among countries. 
C) there is no need to study international trade as a special subject. 
D) All of the above are correct.

Question 5

Are there impediments to international movement of labor and capital?

Accepted Answer

A) Yes, but they apply to labor only; capital mobility is almost completely free. 
B) Yes, although these apply to capital, and not to labor. 
C) Yes, there are significant (often prohibitive) restrictions on labor and capital mobility. 
D) No, these have been removed with the passage of recent trade legislation. 
A) Yes, but they apply to labor only; capital mobility is almost completely free. 
B) Yes, although these apply to capital, and not to labor. 
C) Yes, there are significant (often prohibitive) restrictions on labor and capital mobility. 
D) No, these have been removed with the passage of recent trade legislation.

Question 6

If Japan imposes a quota on imports of rice, the effect will be

Accepted Answer

A) less rice and higher price in Japan, lower rice prices in exporting countries. 
B) more rice and higher price in Japan, higher rice prices in exporting countries. 
C) less rice and lower price in Japan, higher rice prices in exporting countries. 
D) more rice and lower price in Japan, lower rice prices in exporting countries. 
E) less rice and higher price in Japan, higher rice prices in exporting countries. 
A) less rice and higher price in Japan, lower rice prices in exporting countries. 
B) more rice and higher price in Japan, higher rice prices in exporting countries. 
C) less rice and lower price in Japan, higher rice prices in exporting countries. 
D) more rice and lower price in Japan, lower rice prices in exporting countries. 
E) less rice and higher price in Japan, higher rice prices in exporting countries.

Question 7

If a nation does not have an absolute advantage in producing anything, it

Accepted Answer

A) has no comparative advantage either. 
B) will have a comparative advantage in the activity in which it is least inefficient. 
C) will try to get along without trade. 
D) will export raw materials and import finished products. 
A) has no comparative advantage either. 
B) will have a comparative advantage in the activity in which it is least inefficient. 
C) will try to get along without trade. 
D) will export raw materials and import finished products.

Question 8

Unequal distribution of resources is one of the main reasons for international trade.

Accepted Answer

A) True 
 B)False

Question 9

A program of protection that results in preserving jobs in certain industries

Accepted Answer

A) raises average productivity in all sectors of the economy. 
B) does so at very high cost to consumers of the products from those industries. 
C) is an efficient way to preserve employment and is cheaper than other forms of maintaining full employment. 
D) is an effective way of encouraging innovation and improvement in production. 
A) raises average productivity in all sectors of the economy. 
B) does so at very high cost to consumers of the products from those industries. 
C) is an efficient way to preserve employment and is cheaper than other forms of maintaining full employment. 
D) is an effective way of encouraging innovation and improvement in production.

Question 10

An export subsidy is a payment by the government to exporters to permit them to charge lower prices.

Accepted Answer

A) True 
 B)False

Question 11

____ is a doctrine that holds that exports are good for a country, whereas imports are harmful.

Accepted Answer

A) Supply-side economics 
B) Mercantilism 
C) Free trade 
D) Monetarism 
A) Supply-side economics 
B) Mercantilism 
C) Free trade 
D) Monetarism

Question 12

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 13

If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will

Accepted Answer

A) fall. 
B) rise. 
C) exceed the price in foreign countries. 
D) be below the price in foreign countries. 
A) fall. 
B) rise. 
C) exceed the price in foreign countries. 
D) be below the price in foreign countries.

Question 14

Is it possible for a country to have an absolute disadvantage and a comparative advantage in the production of a good?

Accepted Answer

A) No, these are incompatible on theoretical grounds. 
B) No, theory prevents it, but some economists claim it could occur. 
C) Yes, this situation can occur. 
D) Yes, in theory, although not in reality. 
A) No, these are incompatible on theoretical grounds. 
B) No, theory prevents it, but some economists claim it could occur. 
C) Yes, this situation can occur. 
D) Yes, in theory, although not in reality.

Question 15

Self-sufficiency is the best way to increase one's material welfare.

Accepted Answer

A) True 
 B)False

Question 16

Even though international trade is more complicated, supply and demand are still at the center of the price determination mechanism.

Accepted Answer

A) True 
 B)False

Question 17

Trade adjustment assistance provides special unemployment benefits, loans, retraining programs, and other aid to workers and firms that are harmed by foreign competition.

Accepted Answer

A) True 
 B)False

Question 18

What is an export subsidy? Discuss some of the recent examples where such subsidies were controversial.

Accepted Answer

An export subsidy is a government paymen

Question 19

Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor.Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor.Assume that this is typical of the labor force as a whole.Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?

Accepted Answer

From the numbers given, Vermont has the

Question 20

An import quota will ordinarily raise the price of the good in the importing country.

Accepted Answer

A) True 
 B)False

Exam 34: International Trade and Comparative Advantage

Colombia produces coffee with less labor and land than any other country; it therefore surely has

A tariff is a tax on imports imposed by the country that is importing the goods.

Figure 34-9 ​ -In Figure 34-9, at price OC total quantity demanded exceeds quantity supplied and price will rise to

Comparing international trade with trade among the different states of the United States shows that

Are there impediments to international movement of labor and capital?

If Japan imposes a quota on imports of rice, the effect will be

If a nation does not have an absolute advantage in producing anything, it

Unequal distribution of resources is one of the main reasons for international trade.

A program of protection that results in preserving jobs in certain industries

An export subsidy is a payment by the government to exporters to permit them to charge lower prices.

____ is a doctrine that holds that exports are good for a country, whereas imports are harmful.

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

If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will

Is it possible for a country to have an absolute disadvantage and a comparative advantage in the production of a good?

Self-sufficiency is the best way to increase one's material welfare.

Even though international trade is more complicated, supply and demand are still at the center of the price determination mechanism.

Trade adjustment assistance provides special unemployment benefits, loans, retraining programs, and other aid to workers and firms that are harmed by foreign competition.

What is an export subsidy? Discuss some of the recent examples where such subsidies were controversial.

An import quota will ordinarily raise the price of the good in the importing country.

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

Figure 34-9 -In Figure 34-9, at price OC total quantity demanded exceeds quantity supplied and price will rise to