Question 1

A common fallacy that is used to oppose trade is the idea that

Accepted Answer

A) the only gains from trade go to the rich, so the poor must lose. 
B) "you get what you pay for." 
C) "if it's not broken, don't fix it." 
D) one country's gain must be another's loss. 
E) what is true for one is true for all. 
A) the only gains from trade go to the rich, so the poor must lose. 
B) "you get what you pay for." 
C) "if it's not broken, don't fix it." 
D) one country's gain must be another's loss. 
E) what is true for one is true for all.

Question 2

The strategic argument for protectionism holds that a nation may sometimes have to threaten protectionism to induce other countries to drop their own protectionist measures.

Accepted Answer

A) True 
 B)False

Question 3

If producers have different opportunity costs of production, trade will allow them to consume outside their production possibility frontiers.

Accepted Answer

A) True 
 B)False

Question 4

Economists say that voluntary exchange makes both parties better off. What is the explanation that they offer to back up this conclusion?

Accepted Answer

This analysis was developed in Chapter 1

Question 5

A quota brings a more serious misallocation of resources than a tariff.

Accepted Answer

A) True 
 B)False

Question 6

If a country's workers can produce 10 hamburgers per hour or 5 bags of French fries per hour. If there is no trade, the price of 1 bag of fries is 2 hamburgers.

Accepted Answer

A) True 
 B)False

Question 7

Figure 34-3 ​
 
In Figure 34-3, the solid lines represent the respective production possibilities curves for the United States and Mexico. Which graphs show the correct consumption possibilities curves (dashed lines)after an agreement is reached to trade 1 unit of wheat for 1 unit of petroleum?

Accepted Answer

A) (1)and (4) 
B) (1)and (2) 
C) (2)and (3) 
D) (3)and (4) 
A) (1)and (4) 
B) (1)and (2) 
C) (2)and (3) 
D) (3)and (4)

Question 8

Why is comparative advantage rather than absolute advantage the basis for trade?

Accepted Answer

The concept of comparative advantage emp

Question 9

Trade between two nations is complicated by

Accepted Answer

A) the variability in exchange rates of the respective nation's currencies. 
B) different production techniques in the nations. 
C) the age and experience of the respective nation's diplomats. 
D) the variability in climate between the nations. 
A) the variability in exchange rates of the respective nation's currencies. 
B) different production techniques in the nations. 
C) the age and experience of the respective nation's diplomats. 
D) the variability in climate between the nations.

Question 10

If two countries voluntarily trade two goods with one another, the rate of exchange between the goods must fall in between the price ratios that would prevail in the two countries in the absence of trade.

Accepted Answer

A) True 
 B)False

Question 11

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

Accepted Answer

A) lower the standard of living in both countries. 
B) raise the standard of living in both countries. 
C) make some workers less efficient. 
D) lead to an inappropriate allocation of resources. 
A) lower the standard of living in both countries. 
B) raise the standard of living in both countries. 
C) make some workers less efficient. 
D) lead to an inappropriate allocation of resources.

Question 12

When can a country gain a price advantage on imports by imposing a tariff?

Accepted Answer

A) When it is the largest country with absolute advantage in all goods 
B) When it has a comparative advantage in the production of all goods 
C) When it can do so without other countries retaliating with tariffs 
D) When trade agreements prohibit quotas but permit tariffs 
A) When it is the largest country with absolute advantage in all goods 
B) When it has a comparative advantage in the production of all goods 
C) When it can do so without other countries retaliating with tariffs 
D) When trade agreements prohibit quotas but permit tariffs

Question 13

Table 34-4 ​   Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If the United States and Japan decide to trade with each other, what will happen to the output of television sets in Japan?

Accepted Answer

A) TV production in Japan will fall by 10,000 units. 
B) TV production in Japan will fall by 20,000 units. 
C) TV production in Japan will fall by 30,000 units. 
D) TV production in Japan will increase by 10,000 units. 
A) TV production in Japan will fall by 10,000 units. 
B) TV production in Japan will fall by 20,000 units. 
C) TV production in Japan will fall by 30,000 units. 
D) TV production in Japan will increase by 10,000 units.

Question 14

The essential logic behind international trade is not different from that underlying trade among different states. Why, then, do we study international trade as a special subject?

Accepted Answer

There are at least three reasons. 
1. Do

Question 15

Tariffs are different from quotas because they

Accepted Answer

A) increase government revenue. 
B) increase profits. 
C) increase the quantity traded. 
D) place all the burden on foreigners. 
A) increase government revenue. 
B) increase profits. 
C) increase the quantity traded. 
D) place all the burden on foreigners.

Question 16

The following table shows the units of output a worker can produce per month in country A and country B.   The opportunity cost of I unit of food in country A is

Accepted Answer

A) ¼ of a unit of electronics. 
B) ½ of a unit of electronics. 
C) 1\3 of a unit of electronics. 
D) All of these. 
A) ¼ of a unit of electronics. 
B) ½ of a unit of electronics. 
C) 1\3 of a unit of electronics. 
D) All of these.

Question 17

Figure 34-7 ​
 
In Figure 34-7, where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland, Pastaland is

Accepted Answer

A) better at producing pasta and pesto than Pestoland. 
B) better at producing pasta, but relatively inefficient in producing pesto. 
C) relatively better at producing pasta than pesto. 
D) relatively better at producing pesto than pasta. 
A) better at producing pasta and pesto than Pestoland. 
B) better at producing pasta, but relatively inefficient in producing pesto. 
C) relatively better at producing pasta than pesto. 
D) relatively better at producing pesto than pasta.

Question 18

A tariff is a tax on imports imposed by the country that is importing the goods.

Accepted Answer

A) True 
 B)False

Question 19

Compare and contrast the effects of a quota and a tariff on imports. Be sure to include both short-run and long-run effects in your answer.

Accepted Answer

A quota is a quantity restriction on imp

Question 20

Figure 34-5 ​
 
From the graph in Figure 34-5 (curves show output per unit of labor input), one can infer that

Accepted Answer

A) in terms of TVs, computers are more expensive in China than Japan. 
B) in terms of computers, TVs are more expensive in China than Japan. 
C) China should produce more TVs and fewer computers. 
D) All of the above are correct. 
A) in terms of TVs, computers are more expensive in China than Japan. 
B) in terms of computers, TVs are more expensive in China than Japan. 
C) China should produce more TVs and fewer computers. 
D) All of the above are correct.

Exam 21: International Trade and Comparative Advantage

A common fallacy that is used to oppose trade is the idea that

The strategic argument for protectionism holds that a nation may sometimes have to threaten protectionism to induce other countries to drop their own protectionist measures.

If producers have different opportunity costs of production, trade will allow them to consume outside their production possibility frontiers.

Economists say that voluntary exchange makes both parties better off. What is the explanation that they offer to back up this conclusion?

A quota brings a more serious misallocation of resources than a tariff.

If a country's workers can produce 10 hamburgers per hour or 5 bags of French fries per hour. If there is no trade, the price of 1 bag of fries is 2 hamburgers.

Figure 34-3 ​ In Figure 34-3, the solid lines represent the respective production possibilities curves for the United States and Mexico. Which graphs show the correct consumption possibilities curves (dashed lines)after an agreement is reached to trade 1 unit of wheat for 1 unit of petroleum?

Why is comparative advantage rather than absolute advantage the basis for trade?

Trade between two nations is complicated by

If two countries voluntarily trade two goods with one another, the rate of exchange between the goods must fall in between the price ratios that would prevail in the two countries in the absence of trade.

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

When can a country gain a price advantage on imports by imposing a tariff?

Table 34-4 ​ Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If the United States and Japan decide to trade with each other, what will happen to the output of television sets in Japan?

The essential logic behind international trade is not different from that underlying trade among different states. Why, then, do we study international trade as a special subject?

Tariffs are different from quotas because they

The following table shows the units of output a worker can produce per month in country A and country B. The opportunity cost of I unit of food in country A is

Figure 34-7 ​ In Figure 34-7, where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland, Pastaland is

A tariff is a tax on imports imposed by the country that is importing the goods.

Compare and contrast the effects of a quota and a tariff on imports. Be sure to include both short-run and long-run effects in your answer.

Figure 34-5 ​ From the graph in Figure 34-5 (curves show output per unit of labor input), one can infer that

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Contemporary Issues in the Us Economy

Filters

Figure 34-3 In Figure 34-3, the solid lines represent the respective production possibilities curves for the United States and Mexico. Which graphs show the correct consumption possibilities curves (dashed lines)after an agreement is reached to trade 1 unit of wheat for 1 unit of petroleum?

Table 34-4 Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If the United States and Japan decide to trade with each other, what will happen to the output of television sets in Japan?

Figure 34-7 In Figure 34-7, where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland, Pastaland is

Figure 34-5 From the graph in Figure 34-5 (curves show output per unit of labor input), one can infer that