Question 1

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

Accepted Answer

A) elasticity of demand. 
B) elasticity of supply. 
C) how important the good is. 
D) income elasticity. 
E) cross elasticity of demand with domestic products. 
A) elasticity of demand. 
B) elasticity of supply. 
C) how important the good is. 
D) income elasticity. 
E) cross elasticity of demand with domestic products.

Question 2

The logic of why international trade increases well-being is

Accepted Answer

A) a major revision of the logic of why trade within a country increases well-being. 
B) completely different from the logic of why trade within a country increases well-being. 
C) a narrow, special case of the logic of why trade within a country increases well-being. 
D) no different from the logic of why trade within a country increases well-being. 
A) a major revision of the logic of why trade within a country increases well-being. 
B) completely different from the logic of why trade within a country increases well-being. 
C) a narrow, special case of the logic of why trade within a country increases well-being. 
D) no different from the logic of why trade within a country increases well-being.

Question 3

If South Korea 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 4

A tariff affects imports

Accepted Answer

A) by limiting quantity and raising price to a higher level. 
B) by reducing quantity demanded so that supply falls. 
C) by increasing supply, raising price, and reducing demand. 
D) by raising price and reducing quantity demanded. 
A) by limiting quantity and raising price to a higher level. 
B) by reducing quantity demanded so that supply falls. 
C) by increasing supply, raising price, and reducing demand. 
D) by raising price and reducing quantity demanded.

Question 5

Figure 34-4 ​
 
In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Accepted Answer

A) 1 for the United States and 5 for Egypt. 
B) 20 for the United States and 2 for Egypt. 
C) 1 for the United States and 2 for Egypt. 
D) 20 for the United States and 10 for Egypt. 
A) 1 for the United States and 5 for Egypt. 
B) 20 for the United States and 2 for Egypt. 
C) 1 for the United States and 2 for Egypt. 
D) 20 for the United States and 10 for Egypt.

Question 6

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 7

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 8

Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?

Accepted Answer

From the numbers given, Vermont has the

Question 9

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

A) No, because protection has no place in industrial development. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused. 
A) No, because protection has no place in industrial development. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused.

Question 10

Table 34-1
  From Table 34-1, the United States

Accepted Answer

A) has an absolute advantage over Great Britain in the production of textiles. 
B) has an absolute advantage over Great Britain in the production of wheat. 
C) has a comparative advantage in the production of textiles. 
D) should export textiles to Great Britain. 
A) has an absolute advantage over Great Britain in the production of textiles. 
B) has an absolute advantage over Great Britain in the production of wheat. 
C) has a comparative advantage in the production of textiles. 
D) should export textiles to Great Britain.

Question 11

A tariff is better than a quota because

Accepted Answer

A) it does not distort trade as much. 
B) quotas are inflexible. 
C) tariffs produce tax revenue. 
D) quotas hurt domestic producers; tariffs hurt foreign producers. 
A) it does not distort trade as much. 
B) quotas are inflexible. 
C) tariffs produce tax revenue. 
D) quotas hurt domestic producers; tariffs hurt foreign producers.

Question 12

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

Accepted Answer

A) increase in Japanese cars goes into the revenue of U.S. automakers. 
B) increase in Japanese cars goes into the revenue of Japanese automakers. 
C) increase in Japanese cars goes into the revenue of the U.S. government. 
D) decrease in Japanese cars comes out of the revenue of U.S. automakers. 
E) decrease in Japanese cars comes out of the revenue of the U.S. government. 
A) increase in Japanese cars goes into the revenue of U.S. automakers. 
B) increase in Japanese cars goes into the revenue of Japanese automakers. 
C) increase in Japanese cars goes into the revenue of the U.S. government. 
D) decrease in Japanese cars comes out of the revenue of U.S. automakers. 
E) decrease in Japanese cars comes out of the revenue of the U.S. government.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 34-9 ​
 
In Figure 34-9, Pestoland at price OA

Accepted Answer

A) is importing MN pasta from Pastaland. 
B) is exporting MN pasta to Pastaland. 
C) is exporting XY pasta to Pastaland. 
D) is exporting OZ pasta to Pastaland. 
A) is importing MN pasta from Pastaland. 
B) is exporting MN pasta to Pastaland. 
C) is exporting XY pasta to Pastaland. 
D) is exporting OZ pasta to Pastaland.

Question 15

Absolute advantage is the ability to produce a good using fewer inputs than another producer.

Accepted Answer

A) True 
 B)False

Question 16

Japan and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice)will

Accepted Answer

A) import guns. 
B) have a comparative advantage in guns. 
C) have an absolute advantage in guns. 
D) have a comparative advantage in rice. 
A) import guns. 
B) have a comparative advantage in guns. 
C) have an absolute advantage in guns. 
D) have a comparative advantage in rice.

Question 17

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 18

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Accepted Answer

A) remain unchanged in that nation. 
B) rise and then fall below where it was originally. 
C) rise in that nation. 
D) drop in that nation. 
A) remain unchanged in that nation. 
B) rise and then fall below where it was originally. 
C) rise in that nation. 
D) drop in that nation.

Question 19

Labor is defined as cheap only if its productivity is very low.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 21: International Trade and Comparative Advantage

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

The logic of why international trade increases well-being is

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

A tariff affects imports

Figure 34-4 ​ In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

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

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

Is the call for protection on the basis of "infant industry" valid?

Table 34-1 From Table 34-1, the United States

A tariff is better than a quota because

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

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

Figure 34-9 ​ In Figure 34-9, Pestoland at price OA

Absolute advantage is the ability to produce a good using fewer inputs than another producer.

Japan and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice)will

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

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Labor is defined as cheap only if its productivity is very low.

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

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 34-4 In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

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

Figure 34-9 In Figure 34-9, Pestoland at price OA