Question 1

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

Accepted Answer

A) True 
 B)False

Question 2

-From Table 34-1, the United States

Accepted Answer

A) has an absolute advantage over Great Britain in the production of textiles. 
B) has an absolute advantage over Great Britain in the production of wheat. 
C) has a comparative advantage in the production of textiles. 
D) should export textiles to Great Britain. 
A) has an absolute advantage over Great Britain in the production of textiles. 
B) has an absolute advantage over Great Britain in the production of wheat. 
C) has a comparative advantage in the production of textiles. 
D) should export textiles to Great Britain.

Question 3

Imports are goods produced abroad and sold domestically.

Accepted Answer

A) True 
 B)False

Question 4

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

Accepted Answer

A) It accepts the situation and does nothing about it. 
B) It seeks greater efficiency in order to offset the tariff. 
C) It refuses to sell to the country that imposes the tariff. 
D) It retaliates by imposing tariffs or quotas on items from the other country. 
A) It accepts the situation and does nothing about it. 
B) It seeks greater efficiency in order to offset the tariff. 
C) It refuses to sell to the country that imposes the tariff. 
D) It retaliates by imposing tariffs or quotas on items from the other country.

Question 5

Suppose a country's workers can produce 4 watches per hour or 16 rings per hour.If there is no trade

Accepted Answer

A) domestic price of 1 ring is 1/4th of a watch. 
B) domestic price of 1 ring is 4 watches. 
C) domestic price of 1 ring is 5 watches. 
D) all of these. 
A) domestic price of 1 ring is 1/4th of a watch. 
B) domestic price of 1 ring is 4 watches. 
C) domestic price of 1 ring is 5 watches. 
D) all of these.

Question 6

If a country has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Accepted Answer

A) True 
 B)False

Question 7

Labor is defined as cheap only if its productivity is very low.

Accepted Answer

A) True 
 B)False

Question 8

Nothing raises the standard of living more than a greater

Accepted Answer

A) abundance of goods. 
B) effort of production. 
C) population. 
D) number of import tariffs. 
E) All of the above are true. 
A) abundance of goods. 
B) effort of production. 
C) population. 
D) number of import tariffs. 
E) All of the above are true.

Question 9

A country has an absolute advantage over another in the production of widgets if it can produce

Accepted Answer

A) widgets using smaller quantities of resources than can the other country. 
B) more widgets than can the other country. 
C) widgets more efficiently than can the other country. 
D) widgets at a lower opportunity cost than can the other country. 
A) widgets using smaller quantities of resources than can the other country. 
B) more widgets than can the other country. 
C) widgets more efficiently than can the other country. 
D) widgets at a lower opportunity cost than can the other country.

Question 10

A common fallacy that is used to oppose trade is the idea that

Accepted Answer

A) the only gains from trade go to the rich, so the poor must lose. 
B) "you get what you pay for." 
C) "if it's not broken, don't fix it." 
D) one country's gain must be another's loss. 
E) what is true for one is true for all. 
A) the only gains from trade go to the rich, so the poor must lose. 
B) "you get what you pay for." 
C) "if it's not broken, don't fix it." 
D) one country's gain must be another's loss. 
E) what is true for one is true for all.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an extreme form of risk associated with investing in a foreign country?

Accepted Answer

A) Credit risk 
B) Labor unrest 
C) Expropriation 
D) Immigration rules 
A) Credit risk 
B) Labor unrest 
C) Expropriation 
D) Immigration rules

Question 13

Figure 34-9
​  
-In Figure 34-9, Pestoland at price OA

Accepted Answer

A) is importing MN pasta from Pastaland. 
B) is exporting MN pasta to Pastaland. 
C) is exporting XY pasta to Pastaland. 
D) is exporting OZ pasta to Pastaland. 
A) is importing MN pasta from Pastaland. 
B) is exporting MN pasta to Pastaland. 
C) is exporting XY pasta to Pastaland. 
D) is exporting OZ pasta to Pastaland.

Question 14

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 15

For many years the U.S.government imposed quotas on cheap, Middle Eastern oil imports.The U.S.consumer consequently paid $3 billion more per year for oil products.A likely rationale for such a policy is

Accepted Answer

A) people in the oil industry deserved the transfer. 
B) conservation. 
C) one cannot be dependent on foreign supplies of so crucial a resource. 
D) American oil was of higher quality and deserved a higher price. 
A) people in the oil industry deserved the transfer. 
B) conservation. 
C) one cannot be dependent on foreign supplies of so crucial a resource. 
D) American oil was of higher quality and deserved a higher price.

Question 16

The main reason why one nation trades with another is to

Accepted Answer

A) save its natural resources from rapid depletion. 
B) exploit the advantages of specialization. 
C) eliminate the danger of retaliation from other nations. 
D) improve political alliances. 
A) save its natural resources from rapid depletion. 
B) exploit the advantages of specialization. 
C) eliminate the danger of retaliation from other nations. 
D) improve political alliances.

Question 17

A restriction of imports that is accomplished by a quota normally

Accepted Answer

A) can be accomplished also by a tariff. 
B) cannot be replicated exactly by imposing a tariff. 
C) can be accomplished also by an export subsidy. 
D) can be accomplished also by negotiations within GATT. 
A) can be accomplished also by a tariff. 
B) cannot be replicated exactly by imposing a tariff. 
C) can be accomplished also by an export subsidy. 
D) can be accomplished also by negotiations within GATT.

Question 18

Table 34-4
​  
-Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States.If Japan and the United States trade with each other, which country will export television sets and how many?

Accepted Answer

A) Japan will export 20,000 television sets to the United States. 
B) Japan will export 30,000 television sets to the United States. 
C) The United States will export 20,000 television sets to Japan. 
D) The United States will export 40,000 television sets to Japan. 
A) Japan will export 20,000 television sets to the United States. 
B) Japan will export 30,000 television sets to the United States. 
C) The United States will export 20,000 television sets to Japan. 
D) The United States will export 40,000 television sets to Japan.

Question 19

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Accepted Answer

A) it has no validity on noneconomic grounds. 
B) it is unrelated to the United States' ability to wage war. 
C) other nations will retaliate with tariffs against U.S.producers of war material. 
D) industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf. 
A) it has no validity on noneconomic grounds. 
B) it is unrelated to the United States' ability to wage war. 
C) other nations will retaliate with tariffs against U.S.producers of war material. 
D) industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf.

Question 20

Figure 34-2
​  
-In Figure 34-2, if the United States and Mexico are negotiating to trade wheat for petroleum,

Accepted Answer

A) the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B) Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C) the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D) if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not. 
A) the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B) Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C) the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D) if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not.

Exam 34: International Trade and Comparative Advantage

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

-From Table 34-1, the United States

Imports are goods produced abroad and sold domestically.

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

Suppose a country's workers can produce 4 watches per hour or 16 rings per hour.If there is no trade

If a country has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Labor is defined as cheap only if its productivity is very low.

Nothing raises the standard of living more than a greater

A country has an absolute advantage over another in the production of widgets if it can produce

A common fallacy that is used to oppose trade is the idea that

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

Which of the following is an extreme form of risk associated with investing in a foreign country?

Figure 34-9 ​ -In Figure 34-9, Pestoland at price OA

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

For many years the U.S.government imposed quotas on cheap, Middle Eastern oil imports.The U.S.consumer consequently paid $3 billion more per year for oil products.A likely rationale for such a policy is

The main reason why one nation trades with another is to

A restriction of imports that is accomplished by a quota normally

Table 34-4 ​ -Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States.If Japan and the United States trade with each other, which country will export television sets and how many?

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Figure 34-2 ​ -In Figure 34-2, if the United States and Mexico are negotiating to trade wheat for petroleum,

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, Pestoland at price OA

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

Table 34-4 -Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States.If Japan and the United States trade with each other, which country will export television sets and how many?

Figure 34-2 -In Figure 34-2, if the United States and Mexico are negotiating to trade wheat for petroleum,