Question 1

How does the imposition of a tariff reduce the price of imports?

Accepted Answer

A)  At the lower quantity supplied, the price to the importer is lower than if there were free trade. 
B)  At the lower quantity demanded, the price to the importer is lower than if there were free trade. 
C)  Supply of the product is increased from domestic production, reducing the price of the imports. 
D)  Demand for the product is decreased, so that price must fall. 
A)  At the lower quantity supplied, the price to the importer is lower than if there were free trade. 
B)  At the lower quantity demanded, the price to the importer is lower than if there were free trade. 
C)  Supply of the product is increased from domestic production, reducing the price of the imports. 
D)  Demand for the product is decreased, so that price must fall.

Question 2

Figure 18-7
  
-In Figure 18-7,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 3

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Accepted Answer

A) True 
 B)False

Question 4

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 a

Question 5

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

Accepted Answer

A) True 
 B)False

Question 6

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

Accepted Answer

Low-paid workers may also be low-product

Question 7

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 non-economic 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 non-economic 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 8

One nation can gain from an exchange only at the expense of another.

Accepted Answer

A) True 
 B)False

Question 9

When every country does what it is best at,

Accepted Answer

A)  every other nation will lose because of the inability to compete. 
B)  all other nations can benefit because more of every commodity can be produced. 
C)  some nations will gain at the expense of other nations. 
D)  rich nations will gain at the expense of poor nations. 
A)  every other nation will lose because of the inability to compete. 
B)  all other nations can benefit because more of every commodity can be produced. 
C)  some nations will gain at the expense of other nations. 
D)  rich nations will gain at the expense of poor nations.

Question 10

A program of protection that results in preserving jobs in certain industries

Accepted Answer

A)  raises average productivity in all sectors of the economy. 
B)  does so at very high cost to consumers of the products from those industries. 
C)  is an efficient way to preserve employment, and is cheaper than other forms of maintaining full employment. 
D)  is an effective way of encouraging innovation and improvement in production. 
A)  raises average productivity in all sectors of the economy. 
B)  does so at very high cost to consumers of the products from those industries. 
C)  is an efficient way to preserve employment, and is cheaper than other forms of maintaining full employment. 
D)  is an effective way of encouraging innovation and improvement in production.

Question 11

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

Accepted Answer

Mercantilism is a doctrine that holds th

Question 12

The United States is known worldwide as being a low tariff nation.

Accepted Answer

A) True 
 B)False

Question 13

Table 18-2
  
-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 14

Generally,if a nation imposes a tariff on imports,

Accepted Answer

A)  part of the tax is paid by foreign exporters. 
B)  the entire tax is paid by foreign exporters. 
C)  none of the tax is paid by foreign exporters. 
D)  the tax has no impact on the profits of foreign exporters. 
A)  part of the tax is paid by foreign exporters. 
B)  the entire tax is paid by foreign exporters. 
C)  none of the tax is paid by foreign exporters. 
D)  the tax has no impact on the profits of foreign exporters.

Question 15

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively,it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

Accepted Answer

The United States has the lower opportun

Question 16

Figure 18-7
  
-In Figure 18-7,CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland,respectively.If both countries are given the opportunity to trade at prices indicated by CF,

Accepted Answer

A)  both will refuse trade. 
B)  both will agree to trade. 
C)  Pestoland will wish to trade, but Pastaland will not. 
D)  Pastaland will wish to trade, but Pestoland will not. 
A)  both will refuse trade. 
B)  both will agree to trade. 
C)  Pestoland will wish to trade, but Pastaland will not. 
D)  Pastaland will wish to trade, but Pestoland will not.

Question 17

The infant industry argument is valid when

Accepted Answer

A)  a new industry is suffering financial losses. 
B)  a new industry is less efficient than foreign competitors. 
C)  the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected. 
D)  the industry is not likely to be profitable in the future. 
A)  a new industry is suffering financial losses. 
B)  a new industry is less efficient than foreign competitors. 
C)  the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected. 
D)  the industry is not likely to be profitable in the future.

Question 18

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,then England has a comparative advantage in the production of cloth.

Accepted Answer

A) True 
 B)False

Question 19

Figure 18-7
  
-In Figure 18-7,it is probably t that wages are

Accepted Answer

A)  equal in Pestoland and Pastaland. 
B)  greater in Pestoland than Pastaland. 
C)  greater in Pastaland than in Pestoland. 
D)  higher in pasta production than in pesto production in both countries. 
A)  equal in Pestoland and Pastaland. 
B)  greater in Pestoland than Pastaland. 
C)  greater in Pastaland than in Pestoland. 
D)  higher in pasta production than in pesto production in both countries.

Question 20

International trade usually benefits one trading partner while making the other trading partner worse off.

Accepted Answer

A) True 
 B)False

How does the imposition of a tariff reduce the price of imports?

Figure 18-7 -In Figure 18-7,where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland,Pastaland is

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

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

One nation can gain from an exchange only at the expense of another.

When every country does what it is best at,

A program of protection that results in preserving jobs in certain industries

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

The United States is known worldwide as being a low tariff nation.

Table 18-2 -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?

Generally,if a nation imposes a tariff on imports,

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively,it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

Figure 18-7 -In Figure 18-7,CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland,respectively.If both countries are given the opportunity to trade at prices indicated by CF,

The infant industry argument is valid when

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,then England has a comparative advantage in the production of cloth.

Figure 18-7 -In Figure 18-7,it is probably t that wages are

International trade usually benefits one trading partner while making the other trading partner worse off.

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

Filters

Exam 18: International Trade and Comparative Advantage

How does the imposition of a tariff reduce the price of imports?

Figure 18-7 -In Figure 18-7,where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland,Pastaland is

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

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

One nation can gain from an exchange only at the expense of another.

When every country does what it is best at,

A program of protection that results in preserving jobs in certain industries

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

The United States is known worldwide as being a low tariff nation.

Table 18-2 -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?

Generally,if a nation imposes a tariff on imports,

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively,it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

Figure 18-7 -In Figure 18-7,CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland,respectively.If both countries are given the opportunity to trade at prices indicated by CF,

The infant industry argument is valid when

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,then England has a comparative advantage in the production of cloth.

Figure 18-7 -In Figure 18-7,it is probably t that wages are

International trade usually benefits one trading partner while making the other trading partner worse off.

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

Filters