Question 1

Frederic Bastiat's "Petition of the Candlemakers" most directly refutes which of the following arguments for protectionism?

Accepted Answer

A) increased domestic employment argument 
B) infant industry argument 
C) cheap foreign labor argument 
D) diversification-for-stability argument 
A) increased domestic employment argument 
B) infant industry argument 
C) cheap foreign labor argument 
D) diversification-for-stability argument

Question 2

Assume that a VER (voluntary export restraint)is imposed on an imported product. The difference between the domestic price and the world price is captured by

Accepted Answer

A) the government. 
B) foreign exporters. 
C) domestic consumers. 
D) domestic workers. 
A) the government. 
B) foreign exporters. 
C) domestic consumers. 
D) domestic workers.

Question 3

Answer the question on the basis of the accompanying production possibilities tables for two countries, Latalia and Trombonia.   Which of the following would be feasible terms for trade between Latalia and Trombonia?

Accepted Answer

A) 1 ton of beans for 1 ton of pork 
B) 2 tons of beans for 1 ton of pork 
C) 6 tons of beans for 1 ton of pork 
D) 4 tons of beans for 1 ton of pork 
A) 1 ton of beans for 1 ton of pork 
B) 2 tons of beans for 1 ton of pork 
C) 6 tons of beans for 1 ton of pork 
D) 4 tons of beans for 1 ton of pork

Question 4

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

Accepted Answer

A) True 
 B)False

Question 5

When a nation starts opening up to international trade, it will see falling prices for

Accepted Answer

A) goods that it exports. 
B) goods that it imports. 
C) goods that it has a comparative advantage in. 
D) all goods traded. 
A) goods that it exports. 
B) goods that it imports. 
C) goods that it has a comparative advantage in. 
D) all goods traded.

Question 6

Economists generally view offshoring as detrimental to the U.S. economy.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff in the amount Pc Pₜ , price and total quantity sold will be

Accepted Answer

A) Pₜ and x. 
B) Pc and z. 
C) Pₜ and y. 
D) Pₐ and x. 
A) Pₜ and x. 
B) Pc and z. 
C) Pₜ and y. 
D) Pₐ and x.

Question 9

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Accepted Answer

A) higher combined output. 
B) higher consumption and standard of living. 
C) rising total employment. 
D) consuming combinations of products that are outside their PPCs. 
A) higher combined output. 
B) higher consumption and standard of living. 
C) rising total employment. 
D) consuming combinations of products that are outside their PPCs.

Question 10

Answer the question using the accompanying cost ratios for two products, fish (F)and chicken (C), in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world.Singsong: 1F = 2CHarmony: 1F = 4CWhich one of the following would not be feasible terms for trade between Singsong and Harmony?

Accepted Answer

A) 1 fish for 2½ chicken 
B) 1 fish for 3 chicken 
C) 1 chicken for 1/5 of a fish 
D) 1 chicken for 1/3 of a fish 
A) 1 fish for 2½ chicken 
B) 1 fish for 3 chicken 
C) 1 chicken for 1/5 of a fish 
D) 1 chicken for 1/3 of a fish

Question 11

Refer to the graph, which shows the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. At what price will Econland be neither importing nor exporting the product?

Accepted Answer

A) $1.00 
B) $1.50 
C) $2.00 
D) $2.50 
A) $1.00 
B) $1.50 
C) $2.00 
D) $2.50

Question 12

Which of the following statements is false?

Accepted Answer

A) In recent years, the United States has had large annual trade deficits in goods. 
B) The United States imports some of the same categories of goods as it exports. 
C) China has the largest share of world exports. 
D) As a percentage of GDP, U.S. exports are the highest among the industrially advanced nations. 
A) In recent years, the United States has had large annual trade deficits in goods. 
B) The United States imports some of the same categories of goods as it exports. 
C) China has the largest share of world exports. 
D) As a percentage of GDP, U.S. exports are the highest among the industrially advanced nations.

Question 13

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs. The assumption made about the domestic production opportunity costs in both countries is that they are

Accepted Answer

A) constant. 
B) variable. 
C) increasing. 
D) decreasing. 
A) constant. 
B) variable. 
C) increasing. 
D) decreasing.

Question 14

The graph shows the production possibilities curves for two hypothetical nations, Orin and Pohl, which each make two hypothetical products, jaxs and keps. Which of the following statements is correct?

Accepted Answer

A) Orin has a comparative advantage in both jaxs and keps. 
B) Pohl has a comparative advantage in jaxs. 
C) The opportunity cost of making jaxs is lower in Orin than in Pohl. 
D) Orin is more efficient than Pohl. 
A) Orin has a comparative advantage in both jaxs and keps. 
B) Pohl has a comparative advantage in jaxs. 
C) The opportunity cost of making jaxs is lower in Orin than in Pohl. 
D) Orin is more efficient than Pohl.

Question 15

The data in the accompanying production possibilities tables (in millions of units)suggest that production in

Accepted Answer

A) Germany is subject to increasing opportunity costs and in the United States to constant opportunity costs. 
B) the United States is subject to increasing opportunity costs and in Germany to constant opportunity costs. 
C) both Germany and the United States is subject to constant opportunity costs. 
D) both Germany and the United States is subject to increasing opportunity costs. 
A) Germany is subject to increasing opportunity costs and in the United States to constant opportunity costs. 
B) the United States is subject to increasing opportunity costs and in Germany to constant opportunity costs. 
C) both Germany and the United States is subject to constant opportunity costs. 
D) both Germany and the United States is subject to increasing opportunity costs.

Question 16

The accompanying table gives data for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Qd), and Column 3 is the quantity supplied domestically (Qₛd). If the world price of the product is $6, then Country Y will

Accepted Answer

A) export 100 units of the product 
B) import 100 units of the product. 
C) export 300 units of the product. 
D) import 400 units of the product. 
A) export 100 units of the product 
B) import 100 units of the product. 
C) export 300 units of the product. 
D) import 400 units of the product.

Question 17

Whenever a foreign producer is selling a product like steel at a lower price than domestic producers, then dumping is being practiced and must be corrected.

Accepted Answer

A) True 
 B)False

Question 18

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 $1.60, 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 19

Refer to the diagram, which pertains to two nations and a specific product. In equilibrium, the nation represented by lines FA and FC will

Accepted Answer

A) export H to the country represented by lines GB and GD. 
B) import H from the country represented by lines GB and GD. 
C) pay price F for its imports. 
D) receive price G for its exports. 
A) export H to the country represented by lines GB and GD. 
B) import H from the country represented by lines GB and GD. 
C) pay price F for its imports. 
D) receive price G for its exports.

Question 20

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based on the assumption of

Accepted Answer

A) imperfect substitutability of resources between beer and pizza production. 
B) constant costs. 
C) decreasing costs. 
D) increasing costs. 
A) imperfect substitutability of resources between beer and pizza production. 
B) constant costs. 
C) decreasing costs. 
D) increasing costs.

Exam 26: International Trade

Frederic Bastiat's "Petition of the Candlemakers" most directly refutes which of the following arguments for protectionism?

Assume that a VER (voluntary export restraint)is imposed on an imported product. The difference between the domestic price and the world price is captured by

Answer the question on the basis of the accompanying production possibilities tables for two countries, Latalia and Trombonia. Which of the following would be feasible terms for trade between Latalia and Trombonia?

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

When a nation starts opening up to international trade, it will see falling prices for

Economists generally view offshoring as detrimental to the U.S. economy.

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

Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff in the amount Pc Pₜ , price and total quantity sold will be

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Refer to the graph, which shows the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. At what price will Econland be neither importing nor exporting the product?

Which of the following statements is false?

The graph shows the production possibilities curves for two hypothetical nations, Orin and Pohl, which each make two hypothetical products, jaxs and keps. Which of the following statements is correct?

The data in the accompanying production possibilities tables (in millions of units)suggest that production in

The accompanying table gives data for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Qd), and Column 3 is the quantity supplied domestically (Qₛd). If the world price of the product is $6, then Country Y will

Whenever a foreign producer is selling a product like steel at a lower price than domestic producers, then dumping is being practiced and must be corrected.

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 $1.60, this nation will experience a domestic

Refer to the diagram, which pertains to two nations and a specific product. In equilibrium, the nation represented by lines FA and FC will

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based on the assumption of

Limits, Alternatives, and Choices

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

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Refer to the diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. With a per-unit tariff in the amount P_c Pₜ , price and total quantity sold will be

The accompanying table gives data for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Q_d), and Column 3 is the quantity supplied domestically (Qₛ_d). If the world price of the product is $6, then Country Y will