Question 1

"Protection" is designed to help

Accepted Answer

A) firms whose relative inefficiency does not permit successful competition with imports. 
B) workers who have very high productivity, and cannot survive against low-paid foreign workers. 
C) government that needs revenue from tariffs and quotas to cover government spending. 
D) firms that are highly efficient and cannot survive against low-price foreign imports. 
A) firms whose relative inefficiency does not permit successful competition with imports. 
B) workers who have very high productivity, and cannot survive against low-paid foreign workers. 
C) government that needs revenue from tariffs and quotas to cover government spending. 
D) firms that are highly efficient and cannot survive against low-price foreign imports.

Question 2

Figure 34-6
​  
-From Figure 34-6, one can infer that

Accepted Answer

A) Honduras will be willing to trade bananas for corn at a unit ratio of no less than 2 corn:1 banana. 
B) Honduras will be willing to trade bananas as long as the unit exchange ratio is greater than 1/2 corn:1 banana. 
C) Honduras has no potential to gain from trade. 
D) Honduras will be unwilling to trade at an exchange ratio. 
A) Honduras will be willing to trade bananas for corn at a unit ratio of no less than 2 corn:1 banana. 
B) Honduras will be willing to trade bananas as long as the unit exchange ratio is greater than 1/2 corn:1 banana. 
C) Honduras has no potential to gain from trade. 
D) Honduras will be unwilling to trade at an exchange ratio.

Question 3

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

Accepted Answer

A) True 
 B)False

Question 4

Figure 34-7
​  
-In Figure 34-7, it is probably true that wages are

Accepted Answer

A) equal in Pestoland and Pastaland. 
B) greater in Pestoland than Pastaland. 
C) greater in Pastaland than in Pestoland. 
D) higher in pasta production than in pesto production in both countries. 
A) equal in Pestoland and Pastaland. 
B) greater in Pestoland than Pastaland. 
C) greater in Pastaland than in Pestoland. 
D) higher in pasta production than in pesto production in both countries.

Question 5

An import quota on a product normally does all of the following except

Accepted Answer

A) reduces the volume of that product traded. 
B) raises the price in the importing country. 
C) increases the price everywhere. 
D) reduces the price in the exporting country. 
A) reduces the volume of that product traded. 
B) raises the price in the importing country. 
C) increases the price everywhere. 
D) reduces the price in the exporting country.

Question 6

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

Accepted Answer

A) True 
 B)False

Question 7

Figure 34-9
​  
-In Figure 34-9, hostilities break out between Pastaland and Pestoland after Pestoland violates the Treaty of Basil.Consequently, trade stops and the price of pasta

Accepted Answer

A) rises to OJ in both countries. 
B) falls to OC in both countries. 
C) falls to OC in Pastaland and rises to OJ in Pestoland. 
D) rises to OJ in Pastaland and falls to OC in Pestoland. 
A) rises to OJ in both countries. 
B) falls to OC in both countries. 
C) falls to OC in Pastaland and rises to OJ in Pestoland. 
D) rises to OJ in Pastaland and falls to OC in Pestoland.

Question 8

A complicating factor in international trade is that

Accepted Answer

A) barter is the basis for trade between countries; money is not used. 
B) gold is used for payments; there are no international payments without gold. 
C) many other countries prefer to use the U.S.dollar as currency, causing monetary shortage in the United States. 
D) trade between countries requires different currencies rather than one currency. 
A) barter is the basis for trade between countries; money is not used. 
B) gold is used for payments; there are no international payments without gold. 
C) many other countries prefer to use the U.S.dollar as currency, causing monetary shortage in the United States. 
D) trade between countries requires different currencies rather than one currency.

Question 9

If Argentina has a large amount of farmland and Great Britain has many factories,

Accepted Answer

A) the two nations have no reason to trade. 
B) Argentina will be willing to trade but Great Britain will not. 
C) Great Britain will be willing to trade but Argentina will not. 
D) the two nations will probably engage in mutually advantageous trade. 
A) the two nations have no reason to trade. 
B) Argentina will be willing to trade but Great Britain will not. 
C) Great Britain will be willing to trade but Argentina will not. 
D) the two nations will probably engage in mutually advantageous trade.

Question 10

Table 34-4
​  
-Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States.If the United States and Japan trade with each other, what will happen to the output of television sets in the United States?

Accepted Answer

A) TV production in the United States will fall by 10,000 units. 
B) TV production in the United States will fall by 20,000 units. 
C) TV production in the United States will fall by 30,000 units. 
D) TV production in the United States will increase by 10,000 units. 
A) TV production in the United States will fall by 10,000 units. 
B) TV production in the United States will fall by 20,000 units. 
C) TV production in the United States will fall by 30,000 units. 
D) TV production in the United States will increase by 10,000 units.

Question 11

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Accepted Answer

A) True 
 B)False

Question 12

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice) will

Accepted Answer

A) import guns. 
B) have a comparative advantage in guns. 
C) have an absolute advantage in guns. 
D) have a comparative advantage in rice. 
A) import guns. 
B) have a comparative advantage in guns. 
C) have an absolute advantage in guns. 
D) have a comparative advantage in rice.

Question 13

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively, it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

Accepted Answer

The United States has the lower opportun

Question 14

-From Table 34-1, the opportunity cost of one bushel of wheat in Great Britain is

Accepted Answer

A) 1/4 yard of textiles. 
B) 3 yards of textiles. 
C) 12 yards of textiles. 
D) 4 yards of textiles. 
A) 1/4 yard of textiles. 
B) 3 yards of textiles. 
C) 12 yards of textiles. 
D) 4 yards of textiles.

Question 15

How can tariffs lead to a situation in which all parties to a trade lose?

Accepted Answer

In effect, a tariff amounts to governmen

Question 16

According to William Safire, "helpfulism" is basically protectionism.

Accepted Answer

A) True 
 B)False

Question 17

Figure 34-3
​  
-In Figure 34-3, the solid lines represent the respective production possibilities curves for the United States and Mexico.Which graphs show the correct consumption possibilities curves (dashed lines) after an agreement is reached to trade 1 unit of wheat for 1 unit of petroleum?

Accepted Answer

A) (1) and (4) 
B) (1) and (2) 
C) (2) and (3) 
D) (3) and (4) 
A) (1) and (4) 
B) (1) and (2) 
C) (2) and (3) 
D) (3) and (4)

Question 18

What is mercantilism? What are the draw backs of this doctrine?

Accepted Answer

Mercantilism is a doctrine that holds th

Question 19

A tariff is

Accepted Answer

A) a tax on imports. 
B) a tax on exports. 
C) a payment by the government to an exporter. 
D) a legal limit on the amount of a good that may be imported. 
A) a tax on imports. 
B) a tax on exports. 
C) a payment by the government to an exporter. 
D) a legal limit on the amount of a good that may be imported.

Question 20

A quota sets the maximum amount of a good that is permitted into a country.

Accepted Answer

A) True 
 B)False

Exam 34: International Trade and Comparative Advantage

"Protection" is designed to help

Figure 34-6 ​ -From Figure 34-6, one can infer that

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

Figure 34-7 ​ -In Figure 34-7, it is probably true that wages are

An import quota on a product normally does all of the following except

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

Figure 34-9 ​ -In Figure 34-9, hostilities break out between Pastaland and Pestoland after Pestoland violates the Treaty of Basil.Consequently, trade stops and the price of pasta

A complicating factor in international trade is that

If Argentina has a large amount of farmland and Great Britain has many factories,

Table 34-4 ​ -Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States.If the United States and Japan trade with each other, what will happen to the output of television sets in the United States?

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice) will

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively, it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

-From Table 34-1, the opportunity cost of one bushel of wheat in Great Britain is

How can tariffs lead to a situation in which all parties to a trade lose?

According to William Safire, "helpfulism" is basically protectionism.

Figure 34-3 ​ -In Figure 34-3, the solid lines represent the respective production possibilities curves for the United States and Mexico.Which graphs show the correct consumption possibilities curves (dashed lines) after an agreement is reached to trade 1 unit of wheat for 1 unit of petroleum?

What is mercantilism? What are the draw backs of this doctrine?

A tariff is

A quota sets the maximum amount of a good that is permitted into a 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 34-6 -From Figure 34-6, one can infer that

Figure 34-7 -In Figure 34-7, it is probably true that wages are

Figure 34-9 -In Figure 34-9, hostilities break out between Pastaland and Pestoland after Pestoland violates the Treaty of Basil.Consequently, trade stops and the price of pasta

Table 34-4 -Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States.If the United States and Japan trade with each other, what will happen to the output of television sets in the United States?

Figure 34-3 -In Figure 34-3, the solid lines represent the respective production possibilities curves for the United States and Mexico.Which graphs show the correct consumption possibilities curves (dashed lines) after an agreement is reached to trade 1 unit of wheat for 1 unit of petroleum?