Question 1

Import tariffs beneﬁt the consumers of the product involved.

Accepted Answer

A) True 
 B)False

Question 2

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
${ \text { Alpha's production possibilities } }$
$\begin{array}{l}
\begin{array} { | l | c | c | c | c | c | } 
\hline & A & B & C & D & E \
\hline \text { Fish (Tons) } & 80 & 60 & 40 & 20 & 0 \
\hline \text { Chips (Tons) } & 0 & 5 & 10 & 15 & 20 \
\hline
\end{array}\\\
{ \text { Beta's production possibilities } } \
\begin{array} { | l | c | c | c | c | c | } 
\hline & A & B & C & D & E \
\hline \text { Fish (Tons) } & 240 & 180 & 120 & 60 & 0 \
\hline \text { Chips (Tons) } & 0 & 10 & 20 & 30 & 40 \
\hline
\end{array}
\end{array}$ The domestic opportunity cost of

Accepted Answer

A)  producing a ton of chips in Alpha is 1/5 of a ton of ?sh. $$1 / 5$$ 
B)  producing a ton of chips in Beta is 6 tons of ?sh. 
C)  catching a ton of ?sh in Alpha is 5 tons of chips. 
D)  catching a ton of ?sh in Beta is 6 tons of chips. 
A)  producing a ton of chips in Alpha is 1/5 of a ton of ?sh. $$1 / 5$$ 
B)  producing a ton of chips in Beta is 6 tons of ?sh. 
C)  catching a ton of ?sh in Alpha is 5 tons of chips. 
D)  catching a ton of ?sh in Beta is 6 tons of chips.

Question 3

Refer to the graph, which shows the domestic demand and supply curves for a speciﬁc product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will

Accepted Answer

A)  import 500 units. 
B)  import 100 units. 
C)  import 400 units. 
D)  export 100 units. 
A)  import 500 units. 
B)  import 100 units. 
C)  import 400 units. 
D)  export 100 units.

Question 4

In 2018, U.S. exports of services ______ U.S. imports of services by about _____.

Accepted Answer

A)  exceeded; $20 B 
B)  fell short of; $20 B 
C)  exceeded; $270 B 
D)  fell short of; $220 B 
A)  exceeded; $20 B 
B)  fell short of; $20 B 
C)  exceeded; $270 B 
D)  fell short of; $220 B

Question 5

The principle of comparative advantage indicates that mutually beneﬁcial international trade can take place only when

Accepted Answer

A)  tariffs are eliminated. 
B)  transportation costs are almost zero. 
C)  relative costs of production differ between nations. 
D)  a country can produce more of some product than other nations can. 
A)  tariffs are eliminated. 
B)  transportation costs are almost zero. 
C)  relative costs of production differ between nations. 
D)  a country can produce more of some product than other nations can.

Question 6

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

Accepted Answer

A)  the production possibilities curves of any two nations are identical. 
B)  a nation's production possibilities and trading possibilities lines coincide. 
C)  a nation's trading possibilities line lies to the right of its production possibilities line. 
D)  a nation's production possibilities line lies to the right of its trading possibilities line. 
A)  the production possibilities curves of any two nations are identical. 
B)  a nation's production possibilities and trading possibilities lines coincide. 
C)  a nation's trading possibilities line lies to the right of its production possibilities line. 
D)  a nation's production possibilities line lies to the right of its trading possibilities line.

Question 7

What insights about international trade came from Adam Smith and David Ricardo?

Accepted Answer

In 1776, Adam Smith used the concept of

Question 8

Trade adjustment assistance provides subsidies to companies that have lost business to foreign
ﬁrms.

Accepted Answer

A) True 
 B)False

Question 9

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons.
Gamma's production possibilities
$\begin{array} { | l | c | c | c | c | c | } 
\hline & A & B & C & D & E \
\hline Tea & 120 & 90 & 60 & 30 & 0 \
\hline Pots & 0 & 30 & 60 & 90 & 120 \
\hline
\end{array}$
Sigma's production possibilities
$\begin{array} { | l | c | c | c | c | c | } 
\hline & A & B & C & D & E \
\hline Tea & 40 & 30 & 20 & 10 & 0 \
\hline Pots & 0 & 30 & 60 & 90 & 120 \
\hline
\end{array}$ Assume that before specialization and trade, Gamma and Sigma both chose production possibility "A)" Now if each specializes according to comparative advantage, the gains from specialization and Trade will be

Accepted Answer

A)  40 tons of pots. 
B)  20 tons of tea and 20 tons of pots. 
C)  20 tons of tea. 
D)  40 tons of tea. 
A)  40 tons of pots. 
B)  20 tons of tea and 20 tons of pots. 
C)  20 tons of tea. 
D)  40 tons of tea.

Question 10

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in
both goods.

Accepted Answer

A) True 
 B)False

Question 11

The World Trade Organization was established as a successor to

Accepted Answer

A)  GATT. 
B)  NAFTA. 
C)  the EU. 
D)  the Doha Development Agenda. 
A)  GATT. 
B)  NAFTA. 
C)  the EU. 
D)  the Doha Development Agenda.

Question 12

Adam Smith recognized the beneﬁts from trade based on ____, and David Ricardo recognized the beneﬁts from trade based on ____.

Accepted Answer

A)  comparative advantage; resource endowments 
B)  absolute advantage; comparative advantage 
C)  absolute advantage; resource endowments 
D)  comparative advantage; absolute advantage 
A)  comparative advantage; resource endowments 
B)  absolute advantage; comparative advantage 
C)  absolute advantage; resource endowments 
D)  comparative advantage; absolute advantage

Question 13

Graphical analysis of tariffs reveals that

Accepted Answer

A)  they beneﬁt domestic consumers at the expense of domestic producers. 
B)  revenue gains outweigh the costs to domestic consumers. 
C)  they increase domestic production of the good for which imports face tariffs. 
D)  although the beneﬁts are not shared equally, everyone in the domestic economy beneﬁts from tariffs. 
A)  they beneﬁt domestic consumers at the expense of domestic producers. 
B)  revenue gains outweigh the costs to domestic consumers. 
C)  they increase domestic production of the good for which imports face tariffs. 
D)  although the beneﬁts are not shared equally, everyone in the domestic economy beneﬁts from tariffs.

Question 14

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines

Accepted Answer

A)  5 and 6. 
B)  5 and 7. 
C)  6 and 8. 
D)  7 and 8. 
A)  5 and 6. 
B)  5 and 7. 
C)  6 and 8. 
D)  7 and 8.

Question 15

Export subsidies are designed to aid domestic producers.

Accepted Answer

A) True 
 B)False

Question 16

The number of countries belonging to the World Trade Organization (WTO), as of 2018, is about

Accepted Answer

A)  164. 
B)  125. 
C)  80. 
D)  202. 
A)  164. 
B)  125. 
C)  80. 
D)  202.

Question 17

In the theory of comparative advantage, a good should be produced in that nation where

Accepted Answer

A)  the production possibilities line lies further to the right than the trading possibilities line. 
B)  its cost is least in terms of alternative goods that might otherwise be produced. 
C)  its absolute cost in terms of real resources used is least. 
D)  its absolute money cost of production is least. 
A)  the production possibilities line lies further to the right than the trading possibilities line. 
B)  its cost is least in terms of alternative goods that might otherwise be produced. 
C)  its absolute cost in terms of real resources used is least. 
D)  its absolute money cost of production is least.

Question 18

$$\begin{array}{l}
{ ~~~~~~~~~~~~~~~~~~\text { Germany Production Possibilities } } \
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Autos } & 0 & 4 & 8 & 12 & 16 & 20 \
\hline \text { Chemicals } & 40 & 32 & 24 & 16 & 8 & 0 \
\hline
\end{array}\\
{ ~~~~~~~~~~~~~~~~~~~~~~~\text { U.S. Production Possibilities } } \
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Autos } & 0 & 3 & 6 & 9 & 12 & 15 \
\hline \text { Chemicals } & 60 & 48 & 36 & 24 & 12 & 0 \
\hline
\end{array}
\end{array}$$ Refer to the accompanying production possibilities tables. Data are in millions of units. Assume that prior to specialization and trade, Germany and the United States both choose production possibility C. Now if each specializes according to its comparative advantage, the resulting gains from
Specialization and trade will be

Accepted Answer

A)  8 million units of autos. 
B)  6 million units of autos. 
C)  6 million units of autos and 8 million units of chemicals. 
D)  8 million units of autos and 6 million units of chemicals. 
A)  8 million units of autos. 
B)  6 million units of autos. 
C)  6 million units of autos and 8 million units of chemicals. 
D)  8 million units of autos and 6 million units of chemicals.

Question 19

If a nation starts exporting a product to the rest of the world, then the price of that product in the
exporting nation will rise.

Accepted Answer

A) True 
 B)False

Question 20

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The opportunity cost of producing a

Accepted Answer

A)  pizza is 2 beers in both countries. 
B)  beer is ½ pizza in both countries. 
C)  pizza in East Lothian is 1 beer. 
D)  beer in West Lothian is ½ pizza. 
A)  pizza is 2 beers in both countries. 
B)  beer is ½ pizza in both countries. 
C)  pizza in East Lothian is 1 beer. 
D)  beer in West Lothian is ½ pizza.

Import tariffs beneﬁt the consumers of the product involved.

Refer to the graph, which shows the domestic demand and supply curves for a speciﬁc product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will

In 2018, U.S. exports of services __ U.S. imports of services by about _.

The principle of comparative advantage indicates that mutually beneﬁcial international trade can take place only when

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

What insights about international trade came from Adam Smith and David Ricardo?

Trade adjustment assistance provides subsidies to companies that have lost business to foreign ﬁrms.

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

The World Trade Organization was established as a successor to

Adam Smith recognized the beneﬁts from trade based on , and David Ricardo recognized the beneﬁts from trade based on .

Graphical analysis of tariffs reveals that

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines

Export subsidies are designed to aid domestic producers.

The number of countries belonging to the World Trade Organization (WTO), as of 2018, is about

In the theory of comparative advantage, a good should be produced in that nation where

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The opportunity cost of producing a

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 20: International Trade

Import tariffs beneﬁt the consumers of the product involved.

Refer to the graph, which shows the domestic demand and supply curves for a speciﬁc product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will

In 2018, U.S. exports of services ______ U.S. imports of services by about _____.

The principle of comparative advantage indicates that mutually beneﬁcial international trade can take place only when

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

What insights about international trade came from Adam Smith and David Ricardo?

Trade adjustment assistance provides subsidies to companies that have lost business to foreign ﬁrms.

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

The World Trade Organization was established as a successor to

Adam Smith recognized the beneﬁts from trade based on ____, and David Ricardo recognized the beneﬁts from trade based on ____.

Graphical analysis of tariffs reveals that

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines

Export subsidies are designed to aid domestic producers.

The number of countries belonging to the World Trade Organization (WTO), as of 2018, is about

In the theory of comparative advantage, a good should be produced in that nation where

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The opportunity cost of producing a

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

In 2018, U.S. exports of services __ U.S. imports of services by about _.

Adam Smith recognized the beneﬁts from trade based on , and David Ricardo recognized the beneﬁts from trade based on .