Question 1

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

Accepted Answer

A) True 
 B)False

Question 2

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market.
Figure 20.1
  
-Refer to Figure 20.1. If the price of coffee in the international market is $14:

Accepted Answer

A)  there will be an excess demand of 10 pounds in Columbia's domestic market. 
B)  Columbia's domestic market for coffee will be in equilibrium. 
C)  there will be an excess demand for Columbian coffee in the international market. 
D)  the international market for coffee will be in equilibrium. 
E)  Columbia will export 4 pounds of coffee. 
A)  there will be an excess demand of 10 pounds in Columbia's domestic market. 
B)  Columbia's domestic market for coffee will be in equilibrium. 
C)  there will be an excess demand for Columbian coffee in the international market. 
D)  the international market for coffee will be in equilibrium. 
E)  Columbia will export 4 pounds of coffee.

Question 3

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.
Table 20.2
  
-According to Table 20.2, Australia has:

Accepted Answer

A)  a comparative disadvantage in the production of both food and computers. 
B)  a comparative advantage in the production of computers. 
C)  a comparative disadvantage in the production of computers. 
D)  a comparative advantage in the production of food. 
E)  a comparative advantage in the production of both food and computers. 
A)  a comparative disadvantage in the production of both food and computers. 
B)  a comparative advantage in the production of computers. 
C)  a comparative disadvantage in the production of computers. 
D)  a comparative advantage in the production of food. 
E)  a comparative advantage in the production of both food and computers.

Question 4

The simultaneous import and export of goods in the same industry by a particular country is known as interindustry trade.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following countries receives the largest share of U.S. exports?

Accepted Answer

A)  Mexico 
B)  Germany 
C)  Japan 
D)  Canada 
E)  United Kingdom 
A)  Mexico 
B)  Germany 
C)  Japan 
D)  Canada 
E)  United Kingdom

Question 6

The table below shows units of wheat and cloth produced by each worker per day in both the countries.
Table 20.1
  
-Which of the following can be inferred from the information provided in Table 20.1?

Accepted Answer

A)  India has a comparative advantage in the production of wheat. 
B)  India has a comparative advantage in the production of both wheat and cloth. 
C)  It will be beneficial for the U.S. to produce and export wheat. 
D)  India will be better off by producing and exporting cloth. 
E)  The U.S. has a comparative advantage in the production of both wheat and cloth. 
A)  India has a comparative advantage in the production of wheat. 
B)  India has a comparative advantage in the production of both wheat and cloth. 
C)  It will be beneficial for the U.S. to produce and export wheat. 
D)  India will be better off by producing and exporting cloth. 
E)  The U.S. has a comparative advantage in the production of both wheat and cloth.

Question 7

The following table shows that in one day poultry farmers in Arkansas can produce 3 cartons of eggs, while poultry farmers in Idaho can produce 2 cartons of eggs. It takes Arkansas potato farmers one day to produce 30 tons of potatoes, while Idaho potato farmers produce 10 tons of potatoes in that same time.
Table 20.4
  
-According to Table 20.4, what is the opportunity cost of 1 crate of eggs in Idaho?

Accepted Answer

A)  2 tons of potatoes 
B)  One-fifth of a ton of potatoes 
C)  10 tons of potatoes 
D)  5 tons of potatoes 
E)  One-tenth of a ton of potatoes 
A)  2 tons of potatoes 
B)  One-fifth of a ton of potatoes 
C)  10 tons of potatoes 
D)  5 tons of potatoes 
E)  One-tenth of a ton of potatoes

Question 8

According to the Ricardian model, the source of comparative advantage is:

Accepted Answer

A)  differences in labor productivity in the different countries. 
B)  differences in foreign trade policies followed by the governments of the various countries. 
C)  differences in resource endowments of the economies. 
D)  differences in the fields of research and development in the countries. 
E)  differences in the taste and preferences of the consumers in the different countries. 
A)  differences in labor productivity in the different countries. 
B)  differences in foreign trade policies followed by the governments of the various countries. 
C)  differences in resource endowments of the economies. 
D)  differences in the fields of research and development in the countries. 
E)  differences in the taste and preferences of the consumers in the different countries.

Question 9

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.
Table 20.2
  
-According to Table 20.2, what is the opportunity cost of 1 computer in the Philippines?

Accepted Answer

A)  6 units of food 
B)  Three-fifths of a unit of food 
C)  One-sixth of a unit of food 
D)  2 units of food 
E)  1 unit of food 
A)  6 units of food 
B)  Three-fifths of a unit of food 
C)  One-sixth of a unit of food 
D)  2 units of food 
E)  1 unit of food

Question 10

Which of the following factors are least likely to affect what countries end up trading in the international market?

Accepted Answer

A)  International trade tariffs 
B)  Government debt levels 
C)  Comparative advantages 
D)  Differences in tastes 
E)  Different technological needs 
A)  International trade tariffs 
B)  Government debt levels 
C)  Comparative advantages 
D)  Differences in tastes 
E)  Different technological needs

Question 11

The following table shows that in one day poultry farmers in Arkansas can produce 3 cartons of eggs, while poultry farmers in Idaho can produce 2 cartons of eggs. It takes Arkansas potato farmers one day to produce 30 tons of potatoes, while Idaho potato farmers produce 10 tons of potatoes in that same time.
Table 20.4
  
-According to Table 20.4, the limits to the terms of trade in eggs are 1 carton of eggs in exchange for:

Accepted Answer

A)  between 5 and 10 tons of potatoes. 
B)  between 2 tons and 10 tons of potatoes. 
C)  between 10 tons and 30 tons of potatoes. 
D)  between one-fifth and one-tenth of a ton of potatoes. 
E)  between 1 and 10 tons of potatoes. 
A)  between 5 and 10 tons of potatoes. 
B)  between 2 tons and 10 tons of potatoes. 
C)  between 10 tons and 30 tons of potatoes. 
D)  between one-fifth and one-tenth of a ton of potatoes. 
E)  between 1 and 10 tons of potatoes.

Question 12

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Accepted Answer

A)  the monetary value of other forgone goods is lower than that of other nations. 
B)  the monetary value of other forgone goods is greater than that of other nations. 
C)  forgone output of other goods is higher than that of other nations. 
D)  forgone output of other goods is lower than that of other nations. 
E)  forgone output of other goods is equal to that of other nations. 
A)  the monetary value of other forgone goods is lower than that of other nations. 
B)  the monetary value of other forgone goods is greater than that of other nations. 
C)  forgone output of other goods is higher than that of other nations. 
D)  forgone output of other goods is lower than that of other nations. 
E)  forgone output of other goods is equal to that of other nations.

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

The simultaneous import and export of goods in the same industry by a particular country is known as interindustry trade.

Which of the following countries receives the largest share of U.S. exports?

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 -Which of the following can be inferred from the information provided in Table 20.1?

According to the Ricardian model, the source of comparative advantage is:

Which of the following factors are least likely to affect what countries end up trading in the international market?

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 19: World Trade Equilibrium

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

The simultaneous import and export of goods in the same industry by a particular country is known as interindustry trade.

Which of the following countries receives the largest share of U.S. exports?

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 -Which of the following can be inferred from the information provided in Table 20.1?

According to the Ricardian model, the source of comparative advantage is:

Which of the following factors are least likely to affect what countries end up trading in the international market?

A country has a comparative advantage when the opportunity cost of producing a good in terms of:

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters