Question 1

One of the major reasons why nations trade is that

Accepted Answer

A) nations choose to trade for largely unknown reasons. 
B) resources are not equally distributed across the planet. 
C) nations wish to exert cultural influence abroad. 
D) nations wish to copy others and need imports to study. 
A) nations choose to trade for largely unknown reasons. 
B) resources are not equally distributed across the planet. 
C) nations wish to exert cultural influence abroad. 
D) nations wish to copy others and need imports to study.

Question 2

A country can gain by importing a good that it can make itself if

Accepted Answer

A) this enables the country to make another good in which it is extremely efficient. 
B) it has an absolute disadvantage in the good. 
C) this permits the country to establish comparative advantage in the good. 
D) All of the above are correct. 
A) this enables the country to make another good in which it is extremely efficient. 
B) it has an absolute disadvantage in the good. 
C) this permits the country to establish comparative advantage in the good. 
D) All of the above are correct.

Question 3

Suppose that a tariff is imposed on imports of minivans. Show graphically what the effect is in terms of price and quantity of imports. Be sure that your graph is completely and correctly labeled. What determines how much of the tariff is paid by the buyers of the minivans?

Accepted Answer

Figure 34-12 @#IMG-DLM& 
See Figure 34-12. The tar

Question 4

The effect of an import quota is to

Accepted Answer

A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports. 
A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports.

Question 5

____ is a doctrine that holds that exports are good for a country, whereas imports are harmful.

Accepted Answer

A) Supply-side economics 
B) Mercantilism 
C) Free trade 
D) Monetarism 
A) Supply-side economics 
B) Mercantilism 
C) Free trade 
D) Monetarism

Question 6

If a nation has a comparative advantage in the production of a good,

Accepted Answer

A) it can produce that good at a lower opportunity cost than its trading partner 
B) it can produce the good using fewer resources than its trading partner. 
C) it can benefit by restricting imports of that good. 
D) None of these. 
A) it can produce that good at a lower opportunity cost than its trading partner 
B) it can produce the good using fewer resources than its trading partner. 
C) it can benefit by restricting imports of that good. 
D) None of these.

Question 7

Is the call for protection on the basis of national defense valid?

Accepted Answer

A) No, because protection has no place in national defense. 
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 national defense. 
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 8

If England uses one week's time to produce 10 yards of cloth or 2 barrels of wine and Portugal uses one week's time to produce 12 yards of cloth or 6 barrels of wine, England has the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 9

The basic concept behind strategic trade policy is that free trade is the best policy to pursue, but some countries don't play by those rules. Therefore,

Accepted Answer

A) it makes no sense to engage in trade at all, and it makes sense to be self-sufficient. 
B) it makes sense to restrict imports of items that are of military significance in order to maintain a strong defense posture. 
C) it makes sense to threaten to protect markets unless other nations agree to open theirs. 
D) it makes no sense to export items of strategic importance to other nations, because they should make them on their own. 
A) it makes no sense to engage in trade at all, and it makes sense to be self-sufficient. 
B) it makes sense to restrict imports of items that are of military significance in order to maintain a strong defense posture. 
C) it makes sense to threaten to protect markets unless other nations agree to open theirs. 
D) it makes no sense to export items of strategic importance to other nations, because they should make them on their own.

Question 10

Self-sufficiency is the best way to increase one's material welfare.

Accepted Answer

A) True 
 B)False

Question 11

The following table shows the units of output a worker can produce per month in country A and country B.   Which of the following statements about absolute advantage is true?

Accepted Answer

A) Country A has the absolute advantage in the production of food while country B has the absolute advantage in the production of electronics. 
B) Country A has the absolute advantage in the production of both food and electronics. 
C) Country B has the absolute advantage in the production of both food and electronics. 
D) All of these. 
A) Country A has the absolute advantage in the production of food while country B has the absolute advantage in the production of electronics. 
B) Country A has the absolute advantage in the production of both food and electronics. 
C) Country B has the absolute advantage in the production of both food and electronics. 
D) All of these.

Question 12

"The United States has more oil in Alaska than there is oil in Kuwait. Therefore, the United States should stop importing oil." Evaluate this statement using economic analysis.

Accepted Answer

While the statement is based on absolute

Question 13

Voluntary exchange is based on the principle that all parties must gain from trade.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that with 1 unit of labor, Canada can produce 40 TVs or 20 computers. With 1 unit of labor, Taiwan can produce 30 TVs or 10 computers. Which of the following is correct?

Accepted Answer

A) Taiwan has a comparative advantage in the production of computers. 
B) Canada has an absolute advantage in the production of neither good. 
C) Canada has a comparative advantage in the production of computers. 
D) Taiwan has an absolute advantage in the production of computers. 
E) Taiwan has an absolute advantage in the production of TVs. 
A) Taiwan has a comparative advantage in the production of computers. 
B) Canada has an absolute advantage in the production of neither good. 
C) Canada has a comparative advantage in the production of computers. 
D) Taiwan has an absolute advantage in the production of computers. 
E) Taiwan has an absolute advantage in the production of TVs.

Question 15

If England uses one week's time to produce 10 yards of cloth or 2 barrels of wine and Portugal uses one week's time to produce 12 yards of cloth or 6 barrels of wine, then England has a comparative advantage in the production of cloth.

Accepted Answer

A) True 
 B)False

Question 16

In William Safire's 1983 essay, "Smoot-Hawley Lives," he argues that the United States should

Accepted Answer

A) threaten retaliation if trading partners practice protectionism. 
B) pursue a unilateral free trade policy regardless of what others do. 
C) limit government's role in the economy. 
A) threaten retaliation if trading partners practice protectionism. 
B) pursue a unilateral free trade policy regardless of what others do. 
C) limit government's role in the economy.

Question 17

Figure 34-6 ​
 
From the graph in Figure 34-6, the opportunity cost of a unit of bananas is

Accepted Answer

A) 4 units of corn for England and 1\2 unit of corn for Honduras. 
B) 1\4 unit of corn for England and 2 units of bananas in England. 
C) 8 units of corn in England and 3 units of corn in Honduras. 
D) 4 units of corn in England and 12 units of corn in Honduras. 
A) 4 units of corn for England and 1\2 unit of corn for Honduras. 
B) 1\4 unit of corn for England and 2 units of bananas in England. 
C) 8 units of corn in England and 3 units of corn in Honduras. 
D) 4 units of corn in England and 12 units of corn in Honduras.

Question 18

Unequal distribution of resources is one of the main reasons for international trade.

Accepted Answer

A) True 
 B)False

Question 19

Strategic trade policy relies on threats of protectionism to protect free trade.

Accepted Answer

A) True 
 B)False

Question 20

If a nation does not have an absolute advantage in producing anything, it

Accepted Answer

A) has no comparative advantage either. 
B) will have a comparative advantage in the activity in which it is least inefficient. 
C) will try to get along without trade. 
D) will export raw materials and import finished products. 
A) has no comparative advantage either. 
B) will have a comparative advantage in the activity in which it is least inefficient. 
C) will try to get along without trade. 
D) will export raw materials and import finished products.

Exam 21: International Trade and Comparative Advantage

One of the major reasons why nations trade is that

A country can gain by importing a good that it can make itself if

Suppose that a tariff is imposed on imports of minivans. Show graphically what the effect is in terms of price and quantity of imports. Be sure that your graph is completely and correctly labeled. What determines how much of the tariff is paid by the buyers of the minivans?

The effect of an import quota is to

____ is a doctrine that holds that exports are good for a country, whereas imports are harmful.

If a nation has a comparative advantage in the production of a good,

Is the call for protection on the basis of national defense valid?

If England uses one week's time to produce 10 yards of cloth or 2 barrels of wine and Portugal uses one week's time to produce 12 yards of cloth or 6 barrels of wine, England has the comparative advantage in both goods.

The basic concept behind strategic trade policy is that free trade is the best policy to pursue, but some countries don't play by those rules. Therefore,

Self-sufficiency is the best way to increase one's material welfare.

The following table shows the units of output a worker can produce per month in country A and country B. Which of the following statements about absolute advantage is true?

"The United States has more oil in Alaska than there is oil in Kuwait. Therefore, the United States should stop importing oil." Evaluate this statement using economic analysis.

Voluntary exchange is based on the principle that all parties must gain from trade.

Suppose that with 1 unit of labor, Canada can produce 40 TVs or 20 computers. With 1 unit of labor, Taiwan can produce 30 TVs or 10 computers. Which of the following is correct?

If England uses one week's time to produce 10 yards of cloth or 2 barrels of wine and Portugal uses one week's time to produce 12 yards of cloth or 6 barrels of wine, then England has a comparative advantage in the production of cloth.

In William Safire's 1983 essay, "Smoot-Hawley Lives," he argues that the United States should

Figure 34-6 ​ From the graph in Figure 34-6, the opportunity cost of a unit of bananas is

Unequal distribution of resources is one of the main reasons for international trade.

Strategic trade policy relies on threats of protectionism to protect free trade.

If a nation does not have an absolute advantage in producing anything, it

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 34-6 From the graph in Figure 34-6, the opportunity cost of a unit of bananas is