Question 1

A protective tariff will

Accepted Answer

A) increase the sales of foreign exporters. 
B) increase the price and sales of domestic producers. 
C) increase the welfare of domestic consumers. 
D) create an efficiency gain in the domestic economy. 
A) increase the sales of foreign exporters. 
B) increase the price and sales of domestic producers. 
C) increase the welfare of domestic consumers. 
D) create an efficiency gain in the domestic economy.

Question 2

Export subsidies are designed to aid domestic producers.

Accepted Answer

A) True 
 B)False

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

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Accepted Answer

A) True 
 B)False

Question 5

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 6

U.S. exports of goods and services (on a national income account basis)are about

Accepted Answer

A) 20 percent of U.S. GDP. 
B) 8 percent of U.S. GDP. 
C) 28 percent of U.S. GDP. 
D) 12 percent of U.S. GDP. 
A) 20 percent of U.S. GDP. 
B) 8 percent of U.S. GDP. 
C) 28 percent of U.S. GDP. 
D) 12 percent of U.S. GDP.

Question 7

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.   If the economy was opened to free trade and the world price of $1 prevailed, the price and quantity sold of this product would be

Accepted Answer

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

Question 8

Which nation had the largest share of world exports in 2018?

Accepted Answer

A) Japan 
B) Germany 
C) China 
D) United States 
A) Japan 
B) Germany 
C) China 
D) United States

Question 9

What is the World Trade Organization and what assistance does it provide to its members?

Accepted Answer

The Uruguay Round agreement established

Question 10

The accompanying table gives maximum-output alternatives for Brazil and Poland. If the two nations open up trade with each other, then

Accepted Answer

A) Poland will import wine. 
B) Brazil will import wine. 
C) Poland should specialize in wine. 
D) Brazil will not benefit from specialization and trade. 
A) Poland will import wine. 
B) Brazil will import wine. 
C) Poland should specialize in wine. 
D) Brazil will not benefit from specialization and trade.

Question 11

In a two-nation, two-good world, which of the following statements is true?

Accepted Answer

A) One nation cannot possibly have an absolute advantage over the other nation in both products. 
B) If one nation has the comparative advantage in one product, then the other nation would have the comparative advantage in the other product. 
C) One nation will always have the comparative advantage over the other nation in one of the products. 
D) If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product. 
A) One nation cannot possibly have an absolute advantage over the other nation in both products. 
B) If one nation has the comparative advantage in one product, then the other nation would have the comparative advantage in the other product. 
C) One nation will always have the comparative advantage over the other nation in one of the products. 
D) If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product.

Question 12

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size.   The given data show that

Accepted Answer

A) Beta has a comparative advantage in producing chips. 
B) Alpha has a comparative advantage in catching fish. 
C) Alpha is subject to constant costs and Beta is subject to increasing costs. 
D) Beta is more efficient than Alpha both in catching fish and in producing chips. 
A) Beta has a comparative advantage in producing chips. 
B) Alpha has a comparative advantage in catching fish. 
C) Alpha is subject to constant costs and Beta is subject to increasing costs. 
D) Beta is more efficient than Alpha both in catching fish and in producing chips.

Question 13

The World Trade Organization comprises 28 European nations and is dedicated to abolishing trade barriers and integrating their economies.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Research studies indicate that

Accepted Answer

A) U.S. producers gain more from tariffs than U.S. consumers lose. 
B) the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. 
C) the revenue from tariffs equals the total cost that tariffs impose on consumers. 
D) U.S. consumers lose more from tariffs than U.S. producers gain. 
A) U.S. producers gain more from tariffs than U.S. consumers lose. 
B) the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. 
C) the revenue from tariffs equals the total cost that tariffs impose on consumers. 
D) U.S. consumers lose more from tariffs than U.S. producers gain.

Question 16

In a two-nation model, the equilibrium world price will occur where

Accepted Answer

A) one nation's export supply curve intersects the other nation's import demand curve. 
B) exports are exactly twice the level of imports. 
C) both nations' export supply curves are horizontal. 
D) both nations' import demand curves are vertical. 
A) one nation's export supply curve intersects the other nation's import demand curve. 
B) exports are exactly twice the level of imports. 
C) both nations' export supply curves are horizontal. 
D) both nations' import demand curves are vertical.

Question 17

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 of Pc Pₜ , the total amount of tariff revenue collected on this product will be

Accepted Answer

A) Pₐ Pₜ × wy. 
B) Pc Pₐ × x. 
C) Pc Pₜ × wy. 
D) Pc Pₜ × z. 
A) Pₐ Pₜ × wy. 
B) Pc Pₐ × x. 
C) Pc Pₜ × wy. 
D) Pc Pₜ × z.

Question 18

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

Accepted Answer

A) has chosen to specialize in the production of cheese. 
B) has chosen to specialize in the production of beef. 
C) has decided to trade beef for cheese. 
D) is relatively more efficient than its trading partners in producing both cheese and beef. 
A) has chosen to specialize in the production of cheese. 
B) has chosen to specialize in the production of beef. 
C) has decided to trade beef for cheese. 
D) is relatively more efficient than its trading partners in producing both cheese and beef.

Question 19

Refer to the accompanying table for a certain product's market in Econland. If Econland was entirely closed to international trade, the equilibrium price and quantity would be

Accepted Answer

A) $9 and 2,000 units. 
B) $8 and 1,800 units. 
C) $7 and 2,000 units. 
D) $6 and 1,400 units. 
A) $9 and 2,000 units. 
B) $8 and 1,800 units. 
C) $7 and 2,000 units. 
D) $6 and 1,400 units.

Question 20

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.

Exam 26: International Trade

A protective tariff will

Export subsidies are designed to aid domestic producers.

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

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Dumping is the sale of a product in a foreign market

U.S. exports of goods and services (on a national income account basis)are about

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. If the economy was opened to free trade and the world price of $1 prevailed, the price and quantity sold of this product would be

Which nation had the largest share of world exports in 2018?

What is the World Trade Organization and what assistance does it provide to its members?

The accompanying table gives maximum-output alternatives for Brazil and Poland. If the two nations open up trade with each other, then

In a two-nation, two-good world, which of the following statements is true?

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size. The given data show that

The World Trade Organization comprises 28 European nations and is dedicated to abolishing trade barriers and integrating their economies.

Graphical analysis of tariffs reveals that

Research studies indicate that

In a two-nation model, the equilibrium world price will occur where

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 of Pc Pₜ , the total amount of tariff revenue collected on this product will be

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

Refer to the accompanying table for a certain product's market in Econland. If Econland was entirely closed to international trade, the equilibrium price and quantity would be

Refer to the graphs. These production possibilities curves

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 of P_c Pₜ , the total amount of tariff revenue collected on this product will be