Question 1

In terms of absolute dollar volume, the top 3 leaders in world exports are

Accepted Answer

A) Japan, China, and the European Union. 
B) the United States, England, and Canada. 
C) Germany, England, and the United States. 
D) China, the United States, and Germany. 
A) Japan, China, and the European Union. 
B) the United States, England, and Canada. 
C) Germany, England, and the United States. 
D) China, the United States, and Germany.

Question 2

The accompanying table shows the output (either machines or wine)that each unit of input in France and Germany can produce. We see that

Accepted Answer

A) France has an absolute advantage over Germany in producing either output. 
B) Germany has an absolute disadvantage in producing wine. 
C) Germany has no absolute advantage over France in producing either output. 
D) France will see no economic basis for trading with Germany. 
A) France has an absolute advantage over Germany in producing either output. 
B) Germany has an absolute disadvantage in producing wine. 
C) Germany has no absolute advantage over France in producing either output. 
D) France will see no economic basis for trading with Germany.

Question 3

The impact of increasing, as opposed to constant, costs is to

Accepted Answer

A) intensify and prolong the comparative advantages that any nation may have initially. 
B) expand the limits of the terms of trade. 
C) cause the bases for further specialization to disappear as nations specialize according to comparative advantage. 
D) cause nations to realize economies of scale in those products in which they specialize. 
A) intensify and prolong the comparative advantages that any nation may have initially. 
B) expand the limits of the terms of trade. 
C) cause the bases for further specialization to disappear as nations specialize according to comparative advantage. 
D) cause nations to realize economies of scale in those products in which they specialize.

Question 4

In the real world, specialization is rarely complete because

Accepted Answer

A) nations normally experience increasing opportunity costs in producing more of the product in which they are specializing. 
B) production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin. 
C) one nation's imports are necessarily another nation's exports. 
D) international law prohibits monopolies. 
A) nations normally experience increasing opportunity costs in producing more of the product in which they are specializing. 
B) production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin. 
C) one nation's imports are necessarily another nation's exports. 
D) international law prohibits monopolies.

Question 5

What is the principle of comparative advantage?

Accepted Answer

The principle of comparative advantage i

Question 6

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qₛis domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because, at $4,

Accepted Answer

A) both nations want to import steel. 
B) both nations want to export steel. 
C) Beta wants to export more than Alpha. 
D) Alpha wants to import more than Beta. 
A) both nations want to import steel. 
B) both nations want to export steel. 
C) Beta wants to export more than Alpha. 
D) Alpha wants to import more than Beta.

Question 7

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if

Accepted Answer

A) Nation A produces products that are more capital-intensive and exports them to Nation B in return for products from Nation B that are more labor-intensive. 
B) Nation A produces products that are more labor-intensive and exports them to Nation B in return for products from Nation B that are more capital-intensive. 
C) Nation B produces products that are more labor-intensive and exports them to Nation A in return for products from Nation A that are more capital-intensive. 
D) Nations A and B each produce capital-intensive and labor-intensive goods and trade them with each other. 
A) Nation A produces products that are more capital-intensive and exports them to Nation B in return for products from Nation B that are more labor-intensive. 
B) Nation A produces products that are more labor-intensive and exports them to Nation B in return for products from Nation B that are more capital-intensive. 
C) Nation B produces products that are more labor-intensive and exports them to Nation A in return for products from Nation A that are more capital-intensive. 
D) Nations A and B each produce capital-intensive and labor-intensive goods and trade them with each other.

Question 8

The principal concept behind comparative advantage is that a nation should

Accepted Answer

A) maximize its volume of trade with other nations. 
B) use tariffs and quotas to protect the production of vital products for the nation. 
C) concentrate production on those products for which it has the lowest domestic opportunity cost. 
D) strive to be self-sufficient in the production of essential goods and services. 
A) maximize its volume of trade with other nations. 
B) use tariffs and quotas to protect the production of vital products for the nation. 
C) concentrate production on those products for which it has the lowest domestic opportunity cost. 
D) strive to be self-sufficient in the production of essential goods and services.

Question 9

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

Accepted Answer

A) the price of German bicycles to increase in the United States. 
B) employment to decrease in the German bicycle industry. 
C) employment to decrease in the U.S. bicycle industry. 
D) profits to rise in the U.S. bicycle industry. 
A) the price of German bicycles to increase in the United States. 
B) employment to decrease in the German bicycle industry. 
C) employment to decrease in the U.S. bicycle industry. 
D) profits to rise in the U.S. bicycle industry.

Question 10

Among the principal exports of the United States are agricultural products.

Accepted Answer

A) True 
 B)False

Question 11

A nation will neither export nor import a specific product when its

Accepted Answer

A) domestic price equals the world price. 
B) export supply curve lies above its import demand curve. 
C) export supply curve is upsloping. 
D) import demand curve is downsloping. 
A) domestic price equals the world price. 
B) export supply curve lies above its import demand curve. 
C) export supply curve is upsloping. 
D) import demand curve is downsloping.

Question 12

The term trade deficit refers to a situation where

Accepted Answer

A) government spending (including transfer payments)exceeds tax revenues. 
B) a nation's purchases from other nations are less than its sales to other nations. 
C) assets are less than liabilities. 
D) exports are less than imports. 
A) government spending (including transfer payments)exceeds tax revenues. 
B) a nation's purchases from other nations are less than its sales to other nations. 
C) assets are less than liabilities. 
D) exports are less than imports.

Question 13

In a two-nation, two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Accepted Answer

A) True 
 B)False

Question 14

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

Accepted Answer

A) labor costs and product prices are not related. 
B) there is no discernible relationship between wage rates and labor productivity. 
C) wage rates and labor productivity are directly related. 
D) wage rates and labor productivity are inversely related. 
A) labor costs and product prices are not related. 
B) there is no discernible relationship between wage rates and labor productivity. 
C) wage rates and labor productivity are directly related. 
D) wage rates and labor productivity are inversely related.

Question 15

The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. The mutually beneficial terms of trade will be

Accepted Answer

A) less than 2 units of rice for 1 unit of corn. 
B) greater than 4 units of rice for 1 unit of corn. 
C) between 3 and 5 units of corn for 1 unit of rice. 
D) between 3 and 5 units of rice for 1 unit of corn. 
A) less than 2 units of rice for 1 unit of corn. 
B) greater than 4 units of rice for 1 unit of corn. 
C) between 3 and 5 units of corn for 1 unit of rice. 
D) between 3 and 5 units of rice for 1 unit of corn.

Question 16

Refer to the graphs. Stanville has a comparative advantage in producing

Accepted Answer

A) product A. 
B) product B. 
C) both product A and B. 
D) neither product A nor B. 
A) product A. 
B) product B. 
C) both product A and B. 
D) neither product A nor B.

Question 17

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 18

Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that

Accepted Answer

A) there is no reason for them to trade services. 
B) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. 
C) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. 
D) Madison has the comparative advantage in both services. 
A) there is no reason for them to trade services. 
B) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. 
C) Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. 
D) Madison has the comparative advantage in both services.

Question 19

Describe the economic reasons why businesses use offshoring.

Accepted Answer

Offshoring is the practice of shifting w

Question 20

Common arguments often raised to present the case for protectionism include the following, except

Accepted Answer

A) protecting infant industries until they mature. 
B) protection against foreign suppliers' dumping. 
C) raising domestic employment in specific industries. 
D) reducing the price of the product to consumers. 
A) protecting infant industries until they mature. 
B) protection against foreign suppliers' dumping. 
C) raising domestic employment in specific industries. 
D) reducing the price of the product to consumers.

Exam 26: International Trade

In terms of absolute dollar volume, the top 3 leaders in world exports are

The accompanying table shows the output (either machines or wine)that each unit of input in France and Germany can produce. We see that

The impact of increasing, as opposed to constant, costs is to

In the real world, specialization is rarely complete because

What is the principle of comparative advantage?

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qₛis domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because, at $4,

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if

The principal concept behind comparative advantage is that a nation should

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

Among the principal exports of the United States are agricultural products.

A nation will neither export nor import a specific product when its

The term trade deficit refers to a situation where

In a two-nation, two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. The mutually beneficial terms of trade will be

Refer to the graphs. Stanville has a comparative advantage in producing

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

Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that

Describe the economic reasons why businesses use offshoring.

Common arguments often raised to present the case for protectionism include the following, except

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

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qₛis domestic quantity supplied, and Q_d is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because, at $4,