Question 1

According to William Safire, "helpfulism" is basically protectionism.

Accepted Answer

A) True 
 B)False  True

Question 2

Opportunity cost refers to whatever is given up to obtain some item.

Accepted Answer

A) True 
 B)False  True

Question 3

Comparing international trade with trade among the different states of the United States shows that

Accepted Answer

A)  the logic of international trade is quite different from that of intranational trade. 
B)  the basic reasons for trade are equally applicable within a country or among countries. 
C)  there is no need to study international trade as a special subject. 
D)  All of the above are correct. 
A)  the logic of international trade is quite different from that of intranational trade. 
B)  the basic reasons for trade are equally applicable within a country or among countries. 
C)  there is no need to study international trade as a special subject. 
D)  All of the above are correct. B

Question 4

Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer.

Accepted Answer

A) True 
 B)False

Question 5

What is mercantilism? What are the draw backs of this doctrine?

Accepted Answer

Mercantilism is a doctrine that holds th

Question 6

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Accepted Answer

A)  it has no validity on noneconomic grounds. 
B)  it is unrelated to the United States' ability to wage war. 
C)  other nations will retaliate with tariffs against U.S. producers of war material. 
D)  industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf. 
A)  it has no validity on noneconomic grounds. 
B)  it is unrelated to the United States' ability to wage war. 
C)  other nations will retaliate with tariffs against U.S. producers of war material. 
D)  industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf.

Question 7

If a country has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Accepted Answer

A) True 
 B)False

Question 8

How extensively does the United States use quotas?

Accepted Answer

A)  Very little; there are few quotas on imports. 
B)  Selectively; there are more quotas than most people realize. 
C)  Widely; quotas are extensive and cover a wide range of goods. 
D)  Widely; although the United States prefers to use tariffs, which cover a wide range of goods. 
A)  Very little; there are few quotas on imports. 
B)  Selectively; there are more quotas than most people realize. 
C)  Widely; quotas are extensive and cover a wide range of goods. 
D)  Widely; although the United States prefers to use tariffs, which cover a wide range of goods.

Question 9

An import quota will ordinarily raise the price of the good in the importing country.

Accepted Answer

A) True 
 B)False

Question 10

Comparative advantage is a comparison among producers based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 11

A country has a comparative advantage over another in the production of gadgets if it can produce

Accepted Answer

A)  more gadgets than can the other country. 
B)  more gadgets than can any other country. 
C)  gadgets more efficiently than it can produce any other good. 
D)  gadgets at lower opportunity cost than can the other country. 
A)  more gadgets than can the other country. 
B)  more gadgets than can any other country. 
C)  gadgets more efficiently than it can produce any other good. 
D)  gadgets at lower opportunity cost than can the other country.

Question 12

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

Accepted Answer

A) True 
 B)False

Question 13

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

Accepted Answer

A)  fall. 
B)  rise. 
C)  exceed the price in foreign countries. 
D)  be below the price in foreign countries. 
E)  One cannot predict the impact on the price of the commodity. 
A)  fall. 
B)  rise. 
C)  exceed the price in foreign countries. 
D)  be below the price in foreign countries. 
E)  One cannot predict the impact on the price of the commodity.

Question 14

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Accepted Answer

A) True 
 B)False

Question 15

If Japan imposes a quota on imports of rice, the effect will be

Accepted Answer

A)  less rice and higher price in Japan, lower rice prices in exporting countries. 
B)  more rice and higher price in Japan, higher rice prices in exporting countries. 
C)  less rice and lower price in Japan, higher rice prices in exporting countries. 
D)  more rice and lower price in Japan, lower rice prices in exporting countries. 
E)  less rice and higher price in Japan, higher rice prices in exporting countries. 
A)  less rice and higher price in Japan, lower rice prices in exporting countries. 
B)  more rice and higher price in Japan, higher rice prices in exporting countries. 
C)  less rice and lower price in Japan, higher rice prices in exporting countries. 
D)  more rice and lower price in Japan, lower rice prices in exporting countries. 
E)  less rice and higher price in Japan, higher rice prices in exporting countries.

Question 16

"Protection" is designed to help

Accepted Answer

A)  firms whose relative inefficiency does not permit successful competition with imports. 
B)  workers who have very high productivity, and cannot survive against low-paid foreign workers. 
C)  government that needs revenue from tariffs and quotas to cover government spending. 
D)  firms that are highly efficient and cannot survive against low-price foreign imports. 
A)  firms whose relative inefficiency does not permit successful competition with imports. 
B)  workers who have very high productivity, and cannot survive against low-paid foreign workers. 
C)  government that needs revenue from tariffs and quotas to cover government spending. 
D)  firms that are highly efficient and cannot survive against low-price foreign imports.

Question 17

Suppose a country's workers can produce 4 watches per hour or 16 rings per hour. If there is no trade

Accepted Answer

A)  the opportunity cost of 1 watch is 4 rings. 
B)  the opportunity cost of 1 watch is 1/4th of a ring. 
C)  the opportunity cost of 1 watch is 5 rings. 
D)  the opportunity cost of 1 watch is 1/5th of a ring. 
A)  the opportunity cost of 1 watch is 4 rings. 
B)  the opportunity cost of 1 watch is 1/4th of a ring. 
C)  the opportunity cost of 1 watch is 5 rings. 
D)  the opportunity cost of 1 watch is 1/5th of a ring.

Question 18

"Free trade benefits one country at another country's expense." Evaluate this statement using economic analysis.

Accepted Answer

The statement is false. Trade

Question 19

Figure 34-7
 
In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute

Accepted Answer

A)  advantage in both pesto and pasta. 
B)  and comparative advantage in both pesto and pasta. 
C)  advantage in both goods, but a comparative advantage only in pesto. 
D)  advantage in pesto only and a comparative advantage only in pasta. 
A)  advantage in both pesto and pasta. 
B)  and comparative advantage in both pesto and pasta. 
C)  advantage in both goods, but a comparative advantage only in pesto. 
D)  advantage in pesto only and a comparative advantage only in pasta.

Question 20

Trade between nations usually means that

Accepted Answer

A)  one country is richer than another. 
B)  one country becomes richer while the other becomes poorer. 
C)  both trading nations show some gains. 
D)  one trading country is trying to "beggar its neighbor." 
A)  one country is richer than another. 
B)  one country becomes richer while the other becomes poorer. 
C)  both trading nations show some gains. 
D)  one trading country is trying to "beggar its neighbor."

Exam 34: International Trade and Comparative Advantage

According to William Safire, "helpfulism" is basically protectionism.

Opportunity cost refers to whatever is given up to obtain some item.

Comparing international trade with trade among the different states of the United States shows that

Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer.

What is mercantilism? What are the draw backs of this doctrine?

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

If a country has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

How extensively does the United States use quotas?

An import quota will ordinarily raise the price of the good in the importing country.

Comparative advantage is a comparison among producers based on opportunity cost.

A country has a comparative advantage over another in the production of gadgets if it can produce

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

If Japan imposes a quota on imports of rice, the effect will be

"Protection" is designed to help

Suppose a country's workers can produce 4 watches per hour or 16 rings per hour. If there is no trade

"Free trade benefits one country at another country's expense." Evaluate this statement using economic analysis.

Figure 34-7 In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute

Trade between nations usually means that

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Us Economy

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