Question 1

Accepted Answer

A)  xz and x. 
B)  xv and xz. 
C)  x and xz. 
D)  wy and w. 
A)  xz and x. 
B)  xv and xz. 
C)  x and xz. 
D)  wy and w.

Question 2

The world price for a traded product will be between the domestic no-trade prices of the trading
nations.

Accepted Answer

A) True 
 B)False

Question 3

A nation's import demand curve for a speciﬁc product

Accepted Answer

A)  is upsloping. 
B)  shows the amount of the product it will import at prices below its domestic price. 
C)  lies above its export supply curve for the product. 
D)  depends on domestic demand for the product, but not on domestic supply. 
A)  is upsloping. 
B)  shows the amount of the product it will import at prices below its domestic price. 
C)  lies above its export supply curve for the product. 
D)  depends on domestic demand for the product, but not on domestic supply.

Question 4

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.
$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { Supplied } \
\text { (Domestic) }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (Domestic) }
\end{array} \
\hline 12 & \$ 5 & 2 \
\hline 10 & 4 & 4 \
\hline 7 & 3 & 7 \
\hline 4 & 2 & 11 \
\hline 1 & 1 & 16 \
\hline
\end{array}$$ With a $1-per-unit tariff, price and total quantity sold will be

Accepted Answer

A)  $3 and 7 units. 
B)  $5 and 2 units. 
C)  $1 and 16 units. 
D)  $2 and 11 units. 
A)  $3 and 7 units. 
B)  $5 and 2 units. 
C)  $1 and 16 units. 
D)  $2 and 11 units.

Question 5

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units
of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta
are 60X and 40Y. If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before
specialization and trade, then we can say that the gains from specialization and trade are 10X and
10Y.

Accepted Answer

A) True 
 B)False

Question 6

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price for this product is $0.50, this nation will
Experience a domestic

Accepted Answer

A)  shortage of 160 units, which it will meet with 160 units of imports. 
B)  shortage of 160 units, which will increase the domestic price to $1.60. 
C)  surplus of 160 units, which it will export. 
D)  surplus of 160 units, which will reduce the world price to $1.00. 
A)  shortage of 160 units, which it will meet with 160 units of imports. 
B)  shortage of 160 units, which will increase the domestic price to $1.60. 
C)  surplus of 160 units, which it will export. 
D)  surplus of 160 units, which will reduce the world price to $1.00.

Question 7

The table shows a schedule of the import demand in Country $ A $ and the export supply in Country $ B $ at various dollar prices. Column 1 is the price of the product. Column 2 is the quantity demanded for imports $ \left(Q_{\text {diA) }}\right. $ in Country $ A $. Column 3 is the quantity of exports supplied $ \left(Q_{se B)}\right. $ by Country $ B $.
$\begin{array}{|c|c|c|}
\hline \text { Price } & Q_{\text {diA }} & Q_{\text {SeB }} \
\hline \$ 4.00 & 0 & 200 \
\hline 3.00 & 100 & 100 \
\hline 2.00 & 200 & 0 \
\hline 1.00 & 300 & 0 \
\hline
\end{array}$ The equilibrium world price in this two-nation model will be

Accepted Answer

A)  $4.00. 
B)  $3.00. 
C)  $2.00. 
D)  $1.00. 
A)  $4.00. 
B)  $3.00. 
C)  $2.00. 
D)  $1.00.

Question 8

Accepted Answer

A)  $P _ { a } \text { and } z$ 
B)  $P _ { a } \text { and } x$ 
C)  $P _ { c } \text { and } z$ 
D)  $P _ { c } \text { and v}  \text {. }$ 
A)  $P _ { a } \text { and } z$ 
B)  $P _ { a } \text { and } x$ 
C)  $P _ { c } \text { and } z$ 
D)  $P _ { c } \text { and v}  \text {. }$

Question 9

The basic difference in the economic effects of a tariff compared with a quota is that a

Accepted Answer

A)  quota reduces domestic consumption of the product, but a tariff does not. 
B)  tariff allows imports to increase if demand increases, whereas a quota does not. 
C)  tariff raises product prices, but a quota does not. 
D)  quota raises product prices, but a tariff does not. 
A)  quota reduces domestic consumption of the product, but a tariff does not. 
B)  tariff allows imports to increase if demand increases, whereas a quota does not. 
C)  tariff raises product prices, but a quota does not. 
D)  quota raises product prices, but a tariff does not.

Question 10

A key difference between import quotas and voluntary export restraints (VERs) is that the

Accepted Answer

A)  domestic government administers the former, whereas the foreign government administers the latter. 
B)  foreign government administers the former, whereas the domestic government administers the latter. 
C)  one is a tax, whereas the other is a quantity limit. 
D)  one raises the price of the imported product involved, whereas the other one does not. 
A)  domestic government administers the former, whereas the foreign government administers the latter. 
B)  foreign government administers the former, whereas the domestic government administers the latter. 
C)  one is a tax, whereas the other is a quantity limit. 
D)  one raises the price of the imported product involved, whereas the other one does not.

Question 11

Dumping is the sale of a product in a foreign market

Accepted Answer

A)  at a price below its domestic price or cost of production. 
B)  that does not meet the quality standards in the domestic market. 
C)  and is the principal means used to enforce nontariff barriers. 
D)  and is encouraged by voluntary export restraints. 
A)  at a price below its domestic price or cost of production. 
B)  that does not meet the quality standards in the domestic market. 
C)  and is the principal means used to enforce nontariff barriers. 
D)  and is encouraged by voluntary export restraints.

Question 12

$$\begin{array} { | c | c | c | } 
\hline & \begin{array} { c } 
\text { Meat per Worker } \
\text { per Day }
\end{array} & \begin{array} { c } 
\text { Houses per } \
\text { Worker per Day }
\end{array} \
\hline A & 40 & 80 \
\hline B & 10 & 40 \
\hline
\end{array}$$ The accompanying table shows labor-productivity ?gures in two countries facing constant costs. It can be deduced that

Accepted Answer

A)  country A can produce more meat and houses than country B. 
B)  country A has a comparative advantage in producing houses. 
C)  country B has the absolute advantage in producing houses. 
D)  country B has a comparative advantage in producing houses. 
A)  country A can produce more meat and houses than country B. 
B)  country A has a comparative advantage in producing houses. 
C)  country B has the absolute advantage in producing houses. 
D)  country B has a comparative advantage in producing houses.

Question 13

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel.
In this case,

Accepted Answer

A)  France has a comparative advantage in the production of chemicals. 
B)  Germany has a comparative advantage in the production of chemicals. 
C)  France has an absolute advantage in the production of chemicals. 
D)  Germany has an absolute advantage in the production of chemicals. 
A)  France has a comparative advantage in the production of chemicals. 
B)  Germany has a comparative advantage in the production of chemicals. 
C)  France has an absolute advantage in the production of chemicals. 
D)  Germany has an absolute advantage in the production of chemicals.

Question 14

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units
of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta
are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Accepted Answer

A) True 
 B)False

Question 15

Deﬁne a trade deﬁcit and a trade surplus. Does the United States have a trade deﬁcit or surplus in
goods? Services?

Accepted Answer

A trade deﬁcit occurs when imp

Question 16

An export subsidy for a product will beneﬁt

Accepted Answer

A)  domestic consumers of the product. 
B)  foreign producers of the product. 
C)  foreign consumers of the product. 
D)  the domestic taxpayers. 
A)  domestic consumers of the product. 
B)  foreign producers of the product. 
C)  foreign consumers of the product. 
D)  the domestic taxpayers.

Question 17

${ \text { Domestic Market For Steel, Alpha } }$
$\begin{array}{l}
\begin{array} { | c | c | c | } 
\hline Q _ { S } & P & Q _ { d } \
\hline 60 & \$ 5 & 10 \
\hline 40 & 4 & 20 \
\hline 30 & 3 & 30 \
\hline 20 & 2 & 40 \
\hline 10 & 1 & 50 \
\hline
\end{array}\\\

{ \text { Domestic Market For Steel, Beta } } \
\begin{array} { | c | c | c | } 
\hline Q _ { S } & P & Q _ { d } \
\hline 80 & \$ 5 & 20 \
\hline 70 & 4 & 30 \
\hline 60 & 3 & 40 \
\hline 50 & 2 & 50 \
\hline 40 & 1 & 60 \
\hline
\end{array}
\end{array}$ The accompanying tables show data for the hypothetical nations of Alpha and Beta. $Q _ { S }$ is domestic
Quantity supplied, and
$Q _ { d }$ is domestic quantity demanded. Alpha's export supply is represented by

Accepted Answer

A)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 40 \
\hline 4 & 20 \
\hline 3 & 0 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 50 \
\hline 4 & 20 \
\hline 3 & 0 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 60 \
\hline 4 & 30 \
\hline 3 & 0 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 40 \
\hline 4 & 30 \
\hline 3 & 15 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 40 \
\hline 4 & 20 \
\hline 3 & 0 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 50 \
\hline 4 & 20 \
\hline 3 & 0 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 60 \
\hline 4 & 30 \
\hline 3 & 0 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | c | } 
\hline P & Q \
\hline \$ 5 & 40 \
\hline 4 & 30 \
\hline 3 & 15 \
\hline
\end{array}$$

Question 18

Refer to the graphs. These production possibilities curves

Accepted Answer

A)  demonstrate that there can be gains from specialization and trade between the two nations. 
B)  reﬂect the law of increasing opportunity costs. 
C)  reﬂect the law of diminishing marginal utility. 
D)  imply that specialization will be incomplete. 
A)  demonstrate that there can be gains from specialization and trade between the two nations. 
B)  reﬂect the law of increasing opportunity costs. 
C)  reﬂect the law of diminishing marginal utility. 
D)  imply that specialization will be incomplete.

Question 19

$$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity Demanded } \
\text { Domestically }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity Supplied } \
\text { Domestically }
\end{array} \
\hline 1,400 & \$ 10 & 2,200 \
\hline 1,600 & 9 & 2,000 \
\hline 1,800 & 8 & 1,800 \
\hline 2,000 & 7 & 1,600 \
\hline 2,200 & 6 & 1,400 \
\hline 2,400 & 5 & 1,200 \
\hline
\end{array}$$ Refer to the accompanying table for a certain product's market in Econland. Assume that the world price of the product is $6. What would be the difference in the total revenue received by foreign
Producers after a quota of 400 units is imposed, compared against the total revenue received by
Foreign producers when a $1 per unit tariff is paid?

Accepted Answer

A)  $0 revenue difference 
B)  $100 more in revenue with a quota than with a tariff 
C)  $400 more in revenue with a quota than with a tariff 
D)  $400 more in revenue with a tariff than with a quota 
A)  $0 revenue difference 
B)  $100 more in revenue with a quota than with a tariff 
C)  $400 more in revenue with a quota than with a tariff 
D)  $400 more in revenue with a tariff than with a quota

Question 20

$$\begin{array}{l}
{ ~~~~~~~~~~~~~~~~~~~~~\text { Wat's Production Possibilities } }\
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Rice } & 750 & 600 & 450 & 300 & 150 & 0 \
\hline \text { Corn } & 0 & 50 & 100 & 150 & 200 & 250 \
\hline
\end{array}\\
{ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~\text { Xat's Production Possibilities } }\
\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Product } & A & B & C & D & E & F \
\hline \text { Rice } & 2,500 & 2,000 & 1,500 & 1,000 & 500 & 0 \
\hline \text { Corn } & 0 & 100 & 200 & 300 & 400 & 500 \
\hline
\end{array}
\end{array}$$ The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. Assume that Wat originally produced rice and corn at combination C and that
Xat originally produced combination B. If the nations now fully specialize based on comparative
Advantage, the total gains from specialization and trade are

Accepted Answer

A)  25 units of rice and 25 units of corn. 
B)  50 units of rice and 50 units of corn. 
C)  100 units of rice and 100 units of corn. 
D)  100 units of rice and 150 units of corn. 
A)  25 units of rice and 25 units of corn. 
B)  50 units of rice and 50 units of corn. 
C)  100 units of rice and 100 units of corn. 
D)  100 units of rice and 150 units of corn.

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

A nation's import demand curve for a speciﬁc product

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. Quantity Supplied (Domestic) Price Quantity Demanded (Domestic) 12 \ 5 2 10 4 4 7 3 7 4 2 11 1 1 16 With a $1-per-unit tariff, price and total quantity sold will be

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price for this product is $0.50, this nation will Experience a domestic

The basic difference in the economic effects of a tariff compared with a quota is that a

A key difference between import quotas and voluntary export restraints (VERs) is that the

Dumping is the sale of a product in a foreign market

Meat per Worker per Day Houses per Worker per Day A 40 80 B 10 40 The accompanying table shows labor-productivity ?gures in two countries facing constant costs. It can be deduced that

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Deﬁne a trade deﬁcit and a trade surplus. Does the United States have a trade deﬁcit or surplus in goods? Services?

An export subsidy for a product will beneﬁt

Refer to the graphs. These production possibilities curves

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

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Exam 20: International Trade

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

A nation's import demand curve for a speciﬁc product

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. Quantity Supplied (Domestic) Price Quantity Demanded (Domestic) 12 \ 5 2 10 4 4 7 3 7 4 2 11 1 1 16 With a $1-per-unit tariff, price and total quantity sold will be

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price for this product is $0.50, this nation will Experience a domestic

The basic difference in the economic effects of a tariff compared with a quota is that a

A key difference between import quotas and voluntary export restraints (VERs) is that the

Dumping is the sale of a product in a foreign market

Meat per Worker per Day Houses per Worker per Day A 40 80 B 10 40 The accompanying table shows labor-productivity ?gures in two countries facing constant costs. It can be deduced that

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Deﬁne a trade deﬁcit and a trade surplus. Does the United States have a trade deﬁcit or surplus in goods? Services?

An export subsidy for a product will beneﬁt

Refer to the graphs. These production possibilities curves

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