Question 1

If the world price is below the domestic "no-trade" equilibrium price, then with international trade:

Accepted Answer

A)  the domestic shortage can be eliminated by rationing. 
B)  the domestic surplus can be consumed at home. 
C)  the domestic surplus can be exported to the rest of the world. 
D)  the domestic quantity demanded is equal to that supplied by the world. 
E)  the domestic shortage can be met by foreign imports. 
A)  the domestic shortage can be eliminated by rationing. 
B)  the domestic surplus can be consumed at home. 
C)  the domestic surplus can be exported to the rest of the world. 
D)  the domestic quantity demanded is equal to that supplied by the world. 
E)  the domestic shortage can be met by foreign imports. E

Question 2

International equilibrium occurs if the quantity of imports demanded by one country is equal to the quantity of exports supplied by the other country.

Accepted Answer

A) True 
 B)False  True

Question 3

Refer to Scenario 20.1. What is the opportunity cost of producing coffee in Chile?

Accepted Answer

A)  Half a pound of sugar 
B)  Two-fifth of a pound of sugar 
C)  2 pounds of sugar 
D)  One-third of a pound of sugar 
E)  4 pounds of sugar 
A)  Half a pound of sugar 
B)  Two-fifth of a pound of sugar 
C)  2 pounds of sugar 
D)  One-third of a pound of sugar 
E)  4 pounds of sugar B

Question 4

Refer to Scenario 20.1. Which of the following statements is true?

Accepted Answer

A)  Brazil has a comparative advantage in producing coffee. 
B)  Brazil has a comparative advantage in producing both coffee and sugar. 
C)  Chile has a comparative advantage in producing both coffee and sugar. 
D)  Neither Chile nor Brazil has a comparative advantage in producing coffee. 
E)  Brazil has a comparative advantage in producing sugar. 
A)  Brazil has a comparative advantage in producing coffee. 
B)  Brazil has a comparative advantage in producing both coffee and sugar. 
C)  Chile has a comparative advantage in producing both coffee and sugar. 
D)  Neither Chile nor Brazil has a comparative advantage in producing coffee. 
E)  Brazil has a comparative advantage in producing sugar.

Question 5

According to the Heckscher-Ohlin model:

Accepted Answer

A)  a relatively labor scarce country produces labor intensive goods. 
B)  the labor productivity varies across different countries. 
C)  the technological advancement varies across countries. 
D)  the taste and preference patterns of the consumers are not similar across the countries. 
E)  a capital abundant country exports sophisticated, manufactured products. 
A)  a relatively labor scarce country produces labor intensive goods. 
B)  the labor productivity varies across different countries. 
C)  the technological advancement varies across countries. 
D)  the taste and preference patterns of the consumers are not similar across the countries. 
E)  a capital abundant country exports sophisticated, manufactured products.

Question 6

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.?
  
-According to Table 20.5, the international equilibrium price of computers is:

Accepted Answer

A)  $2,000. 
B)  $1,600. 
C)  $1,800. 
D)  $1,400. 
E)  $1,200. 
A)  $2,000. 
B)  $1,600. 
C)  $1,800. 
D)  $1,400. 
E)  $1,200.

Question 7

The table below shows units of wheat and cloth produced by each worker per day in both the countries.?Table 20.1
  
-According to Table 20.1, the opportunity cost of producing wheat in India equals:

Accepted Answer

A)  half a unit of cloth. 
B)  one-third of a unit of cloth. 
C)  2 units of cloth. 
D)  4 units of cloth. 
E)  one-fourth of a unit of cloth. 
A)  half a unit of cloth. 
B)  one-third of a unit of cloth. 
C)  2 units of cloth. 
D)  4 units of cloth. 
E)  one-fourth of a unit of cloth.

Question 8

Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible.

Accepted Answer

A) True 
 B)False

Question 9

The figure given below shows the import demand and export supply curves of corn of the U.S. and Mexico.?Figure 20.2
  
-Refer to Figure 20.2. The no-trade equilibrium price of a bushel of corn in Mexico is:

Accepted Answer

A)  $2. 
B)  $4. 
C)  $6. 
D)  $8. 
E)  $10. 
A)  $2. 
B)  $4. 
C)  $6. 
D)  $8. 
E)  $10.

Question 10

We know that industrial countries tend to trade with other industrial countries. This pattern counters the:

Accepted Answer

A)  preference theory of comparative advantage. 
B)  factor abundance theory of comparative advantage. 
C)  concept of intraindustry trade. 
D)  product life cycle theory of comparative advantage. 
E)  human skills theory of comparative advantage. 
A)  preference theory of comparative advantage. 
B)  factor abundance theory of comparative advantage. 
C)  concept of intraindustry trade. 
D)  product life cycle theory of comparative advantage. 
E)  human skills theory of comparative advantage.

Question 11

Though the countries can benefit by completely specializing in the production of the good in which they have comparative advantage, in real world however, they do not completely specialize.

Accepted Answer

A) True 
 B)False

Question 12

International trade permits greater consumption than would be possible from the domestic production alone.

Accepted Answer

A) True 
 B)False

Question 13

The higher the world price above the domestic no-trade equilibrium, the lesser the quantity of a good exported by a country.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 20.2?Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and produce only corn and cocoa. In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day. In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa.
-Refer to Scenario 20.2. Ghana will be willing to trade cocoa for Egyptian corn if in the international market, 1 pound of cocoa can be exchanged for:

Accepted Answer

A)  more than one-eighth of a bushel of corn. 
B)  less than one-sixth of a bushel of corn. 
C)  more than one-fourth of a bushel of corn. 
D)  less than one-fifth of a bushel of corn. 
E)  more than one-tenth of a bushel of corn. 
A)  more than one-eighth of a bushel of corn. 
B)  less than one-sixth of a bushel of corn. 
C)  more than one-fourth of a bushel of corn. 
D)  less than one-fifth of a bushel of corn. 
E)  more than one-tenth of a bushel of corn.

Question 15

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market.?Figure 20.1
  
-Refer to Figure 20.1. The autarky equilibrium price of coffee in Columbia is:

Accepted Answer

A)  $16. 
B)  $8. 
C)  $10. 
D)  $12. 
E)  $14. 
A)  $16. 
B)  $8. 
C)  $10. 
D)  $12. 
E)  $14.

Question 16

The terms of trade is defined as:

Accepted Answer

A)  the quantity of inputs sacrificed to produce each unit of a good. 
B)  the quantity of one good that is exchanged for a quantity of another good. 
C)  the ratio of the total cost of production of individual traders. 
D)  the marginal cost of producing one good as a percentage of the marginal cost of another good. 
E)  the ratio of total exports of a nation to its total production. 
A)  the quantity of inputs sacrificed to produce each unit of a good. 
B)  the quantity of one good that is exchanged for a quantity of another good. 
C)  the ratio of the total cost of production of individual traders. 
D)  the marginal cost of producing one good as a percentage of the marginal cost of another good. 
E)  the ratio of total exports of a nation to its total production.

Question 17

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following lists gives world exports in the order of their value, from highest to lowest?

Accepted Answer

A)  Aircraft, motor vehicle parts, crude petroleum 
B)  Aircraft, crude petroleum, motor vehicle parts 
C)  Crude petroleum, office and telecom equipments, automotive parts 
D)  Motor vehicle parts, aircraft, crude petroleum 
E)  Motor vehicle parts, crude petroleum, aircraft 
A)  Aircraft, motor vehicle parts, crude petroleum 
B)  Aircraft, crude petroleum, motor vehicle parts 
C)  Crude petroleum, office and telecom equipments, automotive parts 
D)  Motor vehicle parts, aircraft, crude petroleum 
E)  Motor vehicle parts, crude petroleum, aircraft

Question 19

The international equilibrium price is the point at which:

Accepted Answer

A)  the domestic supply curve of one country intersects the domestic demand curve of another. 
B)  the domestic demand and supply curves of a country intersects each other. 
C)  the export supply curve of one country intersects the import demand curve of another. 
D)  the domestic demand of the trading partners become identical. 
E)  the domestic supply of the trading partners become identical. 
A)  the domestic supply curve of one country intersects the domestic demand curve of another. 
B)  the domestic demand and supply curves of a country intersects each other. 
C)  the export supply curve of one country intersects the import demand curve of another. 
D)  the domestic demand of the trading partners become identical. 
E)  the domestic supply of the trading partners become identical.

Question 20

If the world price of a good is equal to its no-trade equilibrium price, the country will import more of the good from other nations.

Accepted Answer

A) True 
 B)False

If the world price is below the domestic "no-trade" equilibrium price, then with international trade:

International equilibrium occurs if the quantity of imports demanded by one country is equal to the quantity of exports supplied by the other country.

Refer to Scenario 20.1. What is the opportunity cost of producing coffee in Chile?

Refer to Scenario 20.1. Which of the following statements is true?

According to the Heckscher-Ohlin model:

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.? -According to Table 20.5, the international equilibrium price of computers is:

The table below shows units of wheat and cloth produced by each worker per day in both the countries.?Table 20.1 -According to Table 20.1, the opportunity cost of producing wheat in India equals:

Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible.

The figure given below shows the import demand and export supply curves of corn of the U.S. and Mexico.?Figure 20.2 -Refer to Figure 20.2. The no-trade equilibrium price of a bushel of corn in Mexico is:

We know that industrial countries tend to trade with other industrial countries. This pattern counters the:

Though the countries can benefit by completely specializing in the production of the good in which they have comparative advantage, in real world however, they do not completely specialize.

International trade permits greater consumption than would be possible from the domestic production alone.

The higher the world price above the domestic no-trade equilibrium, the lesser the quantity of a good exported by a country.

The terms of trade is defined as:

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

Which of the following lists gives world exports in the order of their value, from highest to lowest?

The international equilibrium price is the point at which:

If the world price of a good is equal to its no-trade equilibrium price, the country will import more of the good from other nations.

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters

Exam 19: World Trade Equilibrium

If the world price is below the domestic "no-trade" equilibrium price, then with international trade:

International equilibrium occurs if the quantity of imports demanded by one country is equal to the quantity of exports supplied by the other country.

Refer to Scenario 20.1. What is the opportunity cost of producing coffee in Chile?

Refer to Scenario 20.1. Which of the following statements is true?

According to the Heckscher-Ohlin model:

The table below shows the quantity demanded (in thousands) and quantity supplied (in thousands) of computers in the U.S. and Canada at different prices.? -According to Table 20.5, the international equilibrium price of computers is:

The table below shows units of wheat and cloth produced by each worker per day in both the countries.?Table 20.1 -According to Table 20.1, the opportunity cost of producing wheat in India equals:

Any terms of trade within the limits set by domestic opportunity costs will be mutually harmful, because each country tries to push the other as close to the limits of the terms of trade as possible.

The figure given below shows the import demand and export supply curves of corn of the U.S. and Mexico.?Figure 20.2 -Refer to Figure 20.2. The no-trade equilibrium price of a bushel of corn in Mexico is:

We know that industrial countries tend to trade with other industrial countries. This pattern counters the:

Though the countries can benefit by completely specializing in the production of the good in which they have comparative advantage, in real world however, they do not completely specialize.

International trade permits greater consumption than would be possible from the domestic production alone.

The higher the world price above the domestic no-trade equilibrium, the lesser the quantity of a good exported by a country.

The terms of trade is defined as:

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

Which of the following lists gives world exports in the order of their value, from highest to lowest?

The international equilibrium price is the point at which:

If the world price of a good is equal to its no-trade equilibrium price, the country will import more of the good from other nations.

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters