Question 1

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

Accepted Answer

A)  the differences in labor productivity in the U.S. and other countries. 
B)  the differences in factor endowments in the U.S. and its trading partners. 
C)  the world price of Budweiser beer is lower than Heineken beer. 
D)  the fact that production of Budweiser beer in the U.S. is inadequate compared to its demand. 
E)  the preference for foreign brands of beer by a part of the U.S. population. 
A)  the differences in labor productivity in the U.S. and other countries. 
B)  the differences in factor endowments in the U.S. and its trading partners. 
C)  the world price of Budweiser beer is lower than Heineken beer. 
D)  the fact that production of Budweiser beer in the U.S. is inadequate compared to its demand. 
E)  the preference for foreign brands of beer by a part of the U.S. population.

Question 2

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. Egypt will be willing to trade corn for cocoa if in the international market 1 bushel of corn can be exchanged for:

Accepted Answer

A)  more than 1 pound of cocoa. 
B)  less than 1 pound of cocoa. 
C)  more than 1.5 pounds of cocoa. 
D)  less than two-third of a pound of cocoa. 
E)  more than half a pound of cocoa. 
A)  more than 1 pound of cocoa. 
B)  less than 1 pound of cocoa. 
C)  more than 1.5 pounds of cocoa. 
D)  less than two-third of a pound of cocoa. 
E)  more than half a pound of cocoa.

Question 3

If Japan has a comparative advantage over Canada in the production of computers, which of the following must be true?

Accepted Answer

A)  Supply of unskilled labor in Japan is higher than that in Canada. 
B)  Japan incurs a lower input cost in the production of computers. 
C)  Japan incurs a higher input cost in the production of computers. 
D)  Japan has a lower opportunity cost in the production of computers. 
E)  Japan has a higher opportunity cost in the production of computers. 
A)  Supply of unskilled labor in Japan is higher than that in Canada. 
B)  Japan incurs a lower input cost in the production of computers. 
C)  Japan incurs a higher input cost in the production of computers. 
D)  Japan has a lower opportunity cost in the production of computers. 
E)  Japan has a higher opportunity cost in the production of computers.

Question 4

According to the Ricardian model, the source of comparative advantage is:

Accepted Answer

A)  differences in labor productivity in the different countries. 
B)  differences in foreign trade policies followed by the governments of the various countries. 
C)  differences in resource endowments of the economies. 
D)  differences in the fields of research and development in the countries. 
E)  differences in the taste and preferences of the consumers in the different countries. 
A)  differences in labor productivity in the different countries. 
B)  differences in foreign trade policies followed by the governments of the various countries. 
C)  differences in resource endowments of the economies. 
D)  differences in the fields of research and development in the countries. 
E)  differences in the taste and preferences of the consumers in the different countries.

Question 5

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea.?Table 20.3
  
-Refer to Table 20.3. What is the least amount Japan is willing to accept for 1 calculator?

Accepted Answer

A)  1 pound of rice 
B)  5 pounds of rice 
C)  2 pounds of rice 
D)  2.5 pounds of rice 
E)  Half a pound of rice 
A)  1 pound of rice 
B)  5 pounds of rice 
C)  2 pounds of rice 
D)  2.5 pounds of rice 
E)  Half a pound of rice

Question 6

"Most textiles worn by American consumers are produced in Asian and South American countries where the opportunity costs of production are lower." This observation refers to the:

Accepted Answer

A)  law of supply. 
B)  income elasticity of demand. 
C)  principle of beneficial tariffs. 
D)  principle of comparative advantage. 
E)  law of decreasing returns to scale. 
A)  law of supply. 
B)  income elasticity of demand. 
C)  principle of beneficial tariffs. 
D)  principle of comparative advantage. 
E)  law of decreasing returns to scale.

Question 7

Workers in industrial countries earn much higher wages than workers in developing countries because:

Accepted Answer

A)  the industrial countries are labor rich and capital poor economies. 
B)  the industrial countries lack a steady supply of unskilled laborers. 
C)  the industrial countries produce labor intensive goods. 
D)  the marginal productivity of labor is low in the industrial economies. 
E)  the marginal productivity of labor is high in the industrial economies. 
A)  the industrial countries are labor rich and capital poor economies. 
B)  the industrial countries lack a steady supply of unskilled laborers. 
C)  the industrial countries produce labor intensive goods. 
D)  the marginal productivity of labor is low in the industrial economies. 
E)  the marginal productivity of labor is high in the industrial economies.

Question 8

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. If the price of coffee in the international market is $14:

Accepted Answer

A)  there will be an excess demand of 10 pounds in Columbia's domestic market. 
B)  Columbia's domestic market for coffee will be in equilibrium. 
C)  there will be an excess demand for Columbian coffee in the international market. 
D)  the international market for coffee will be in equilibrium. 
E)  Columbia will export 4 pounds of coffee. 
A)  there will be an excess demand of 10 pounds in Columbia's domestic market. 
B)  Columbia's domestic market for coffee will be in equilibrium. 
C)  there will be an excess demand for Columbian coffee in the international market. 
D)  the international market for coffee will be in equilibrium. 
E)  Columbia will export 4 pounds of coffee.

Question 9

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 the U.S. equals:

Accepted Answer

A)  half a unit of cloth. 
B)  one-third of a unit of cloth. 
C)  one-fourth of a unit of cloth. 
D)  4 units of cloth. 
E)  8 units of cloth 
A)  half a unit of cloth. 
B)  one-third of a unit of cloth. 
C)  one-fourth of a unit of cloth. 
D)  4 units of cloth. 
E)  8 units of cloth

Question 10

The standard interpretation of the Ricardian model is that differences in factor endowments between countries account for differences in labor productivity.

Accepted Answer

A) True 
 B)False

Question 11

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. If the price of Columbian coffee falls to $6 in the international market:

Accepted Answer

A)  there will be an excess supply of 8 pounds of Columbian coffee in the international market. 
B)  the Columbian domestic market for coffee will be in equilibrium. 
C)  the international market for coffee will be in equilibrium. 
D)  there will be an excess demand of 4 pounds for coffee in Columbia's domestic market. 
E)  there will be an excess supply of coffee in Columbia's domestic market. 
A)  there will be an excess supply of 8 pounds of Columbian coffee in the international market. 
B)  the Columbian domestic market for coffee will be in equilibrium. 
C)  the international market for coffee will be in equilibrium. 
D)  there will be an excess demand of 4 pounds for coffee in Columbia's domestic market. 
E)  there will be an excess supply of coffee in Columbia's domestic market.

Question 12

Which of the following countries receives the largest share of U.S. exports?

Accepted Answer

A)  Mexico 
B)  Germany 
C)  Japan 
D)  Canada 
E)  United Kingdom 
A)  Mexico 
B)  Germany 
C)  Japan 
D)  Canada 
E)  United Kingdom

Question 13

A country with a strong bargaining power is likely to direct the terms of trade in its favor.

Accepted Answer

A) True 
 B)False

Question 14

Between two countries, comparative advantage is found by comparing the:

Accepted Answer

A)  relative costs of production in each country. 
B)  absolute costs of production in each country after accounting for inflation. 
C)  labor hours required to produce a bundle of products in each country. 
D)  level of interest rates in each country. 
E)  shipping and transportation costs of each country. 
A)  relative costs of production in each country. 
B)  absolute costs of production in each country after accounting for inflation. 
C)  labor hours required to produce a bundle of products in each country. 
D)  level of interest rates in each country. 
E)  shipping and transportation costs of each country.

Question 15

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.
-Based on Scenario 20.2, which of the following terms of trade would benefit both countries?

Accepted Answer

A)  1 pound of cocoa is equal to 0.10 bushels of corn 
B)  1 pound of cocoa is equal to 2 bushels of corn 
C)  1 pound of cocoa is equal to 1 bushels of corn 
D)  1 pound of cocoa is equal to 0.5 bushels of corn 
E)  1 pound of cocoa is equal to 1.5 bushels of corn 
A)  1 pound of cocoa is equal to 0.10 bushels of corn 
B)  1 pound of cocoa is equal to 2 bushels of corn 
C)  1 pound of cocoa is equal to 1 bushels of corn 
D)  1 pound of cocoa is equal to 0.5 bushels of corn 
E)  1 pound of cocoa is equal to 1.5 bushels of corn

Question 16

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

Accepted Answer

A)  the consumption patterns in the industrial countries are highly heterogeneous. 
B)  the trade policies of the industrial nations are more favorable than the developing countries. 
C)  the industrial countries tend to have a higher population than the developing countries. 
D)  the industrial countries are capital intensive countries. 
E)  the consumption patterns in the industrial countries are more or less similar. 
A)  the consumption patterns in the industrial countries are highly heterogeneous. 
B)  the trade policies of the industrial nations are more favorable than the developing countries. 
C)  the industrial countries tend to have a higher population than the developing countries. 
D)  the industrial countries are capital intensive countries. 
E)  the consumption patterns in the industrial countries are more or less similar.

Question 17

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

Accepted Answer

A) True 
 B)False

Question 18

Countries tend to export different goods and services because of:

Accepted Answer

A)  differences in their comparative advantages. 
B)  differences in tastes and technological needs. 
C)  differences in income. 
D)  similarities in resource endowment. 
E)  differences in the exchange rates. 
A)  differences in their comparative advantages. 
B)  differences in tastes and technological needs. 
C)  differences in income. 
D)  similarities in resource endowment. 
E)  differences in the exchange rates.

Question 19

The following table shows that in one day poultry farmers in Arkansas can produce 3 cartons of eggs, while poultry farmers in Idaho can produce 2 cartons of eggs. It takes Arkansas potato farmers one day to produce 30 tons of potatoes, while Idaho potato farmers produce 10 tons of potatoes in that same time.?Table 20.4
  
-According to Table 20.4, what is the opportunity cost of 1 crate of eggs in Idaho?

Accepted Answer

A)  2 tons of potatoes 
B)  One-fifth of a ton of potatoes 
C)  10 tons of potatoes 
D)  5 tons of potatoes 
E)  One-tenth of a ton of potatoes 
A)  2 tons of potatoes 
B)  One-fifth of a ton of potatoes 
C)  10 tons of potatoes 
D)  5 tons of potatoes 
E)  One-tenth of a ton of potatoes

Question 20

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 equilibrium quantity of computers traded in the world market is:

Accepted Answer

A)  20,000 computers. 
B)  30,000 computers. 
C)  10,000 computers. 
D)  15,000 computers. 
E)  40,000 computers. 
A)  20,000 computers. 
B)  30,000 computers. 
C)  10,000 computers. 
D)  15,000 computers. 
E)  40,000 computers.

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

If Japan has a comparative advantage over Canada in the production of computers, which of the following must be true?

According to the Ricardian model, the source of comparative advantage is:

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea.?Table 20.3 -Refer to Table 20.3. What is the least amount Japan is willing to accept for 1 calculator?

"Most textiles worn by American consumers are produced in Asian and South American countries where the opportunity costs of production are lower." This observation refers to the:

Workers in industrial countries earn much higher wages than workers in developing countries because:

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 the U.S. equals:

The standard interpretation of the Ricardian model is that differences in factor endowments between countries account for differences in labor productivity.

Which of the following countries receives the largest share of U.S. exports?

A country with a strong bargaining power is likely to direct the terms of trade in its favor.

Between two countries, comparative advantage is found by comparing the:

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

Countries tend to export different goods and services because of:

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 equilibrium quantity of computers traded in the world market is:

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

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Exam 19: World Trade Equilibrium

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

If Japan has a comparative advantage over Canada in the production of computers, which of the following must be true?

According to the Ricardian model, the source of comparative advantage is:

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea.?Table 20.3 -Refer to Table 20.3. What is the least amount Japan is willing to accept for 1 calculator?

"Most textiles worn by American consumers are produced in Asian and South American countries where the opportunity costs of production are lower." This observation refers to the:

Workers in industrial countries earn much higher wages than workers in developing countries because:

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 the U.S. equals:

The standard interpretation of the Ricardian model is that differences in factor endowments between countries account for differences in labor productivity.

Which of the following countries receives the largest share of U.S. exports?

A country with a strong bargaining power is likely to direct the terms of trade in its favor.

Between two countries, comparative advantage is found by comparing the:

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

Countries tend to export different goods and services because of:

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 equilibrium quantity of computers traded in the world market is:

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