Question 1

The product life cycle theory of comparative advantage predicts that a new product will be first produced and exported by:

Accepted Answer

A)  the nation that first demanded the new product. 
B)  the first firm to successfully copy the technology. 
C)  the nation in which it was invented. 
D)  the countries with the most stable economies and the fewest restrictions on foreign trade. 
E)  the company with the most extensive network of international distributors for the product. 
A)  the nation that first demanded the new product. 
B)  the first firm to successfully copy the technology. 
C)  the nation in which it was invented. 
D)  the countries with the most stable economies and the fewest restrictions on foreign trade. 
E)  the company with the most extensive network of international distributors for the product.

Question 2

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, the limits to the terms of trade in potatoes are 1 ton of potatoes in exchange for:

Accepted Answer

A)  between 5 and 10 cartons of eggs. 
B)  between 1 and 10 cartons of eggs. 
C)  between one-tenth and one-fifth of a carton of eggs. 
D)  between one-fourth and half a carton of eggs. 
E)  between 2 and 10 cartons of eggs. 
A)  between 5 and 10 cartons of eggs. 
B)  between 1 and 10 cartons of eggs. 
C)  between one-tenth and one-fifth of a carton of eggs. 
D)  between one-fourth and half a carton of eggs. 
E)  between 2 and 10 cartons of eggs.

Question 3

Refer to Scenario 20.1. Calculate the opportunity cost of producing sugar in Brazil.

Accepted Answer

A)  Half a pound of coffee 
B)  4 pounds of coffee 
C)  1 pound of coffee 
D)  2 pounds of coffee 
E)  One and a half pounds of coffee 
A)  Half a pound of coffee 
B)  4 pounds of coffee 
C)  1 pound of coffee 
D)  2 pounds of coffee 
E)  One and a half pounds of coffee

Question 4

Countries import goods in which they have:

Accepted Answer

A)  an absolute advantage. 
B)  a comparative advantage. 
C)  a reputation for good product quality. 
D)  a comparative disadvantage. 
E)  a surplus domestic production. 
A)  an absolute advantage. 
B)  a comparative advantage. 
C)  a reputation for good product quality. 
D)  a comparative disadvantage. 
E)  a surplus domestic production.

Question 5

The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good.

Accepted Answer

A) True 
 B)False

Question 6

A country can benefit by indulging in international trade when:

Accepted Answer

A)  it produces a good in which it has absolute disadvantage. 
B)  it produces a good in which its trading partner has an absolute advantage. 
C)  it produces a good in which it has comparative advantage. 
D)  it produces all the goods which are supported by its resources. 
E)  it produces nothing and merely depends on foreign imports. 
A)  it produces a good in which it has absolute disadvantage. 
B)  it produces a good in which its trading partner has an absolute advantage. 
C)  it produces a good in which it has comparative advantage. 
D)  it produces all the goods which are supported by its resources. 
E)  it produces nothing and merely depends on foreign imports.

Question 7

The original comparative advantage model that used the relative abundance of factors of production to explain comparative advantage assumed that countries:

Accepted Answer

A)  employed all four factors of production; land, labor, capital, and entrepreneurship. 
B)  employed only two factors of production; labor and capital. 
C)  employed only two factors of production; land and entrepreneurial ability. 
D)  worked with a fixed capital stock. 
E)  were free to vary their employment of only one factor of production; labor. 
A)  employed all four factors of production; land, labor, capital, and entrepreneurship. 
B)  employed only two factors of production; labor and capital. 
C)  employed only two factors of production; land and entrepreneurial ability. 
D)  worked with a fixed capital stock. 
E)  were free to vary their employment of only one factor of production; labor.

Question 8

Scenario 20.1?Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar.
-Refer to Scenario 20.1. Which of the following statements is true?

Accepted Answer

A)  Brazil has an absolute advantage in producing only coffee. 
B)  Brazil has an absolute advantage in producing only sugar. 
C)  Chile has an absolute advantage in the production of both coffee and sugar. 
D)  Chile has an absolute advantage in producing only coffee. 
E)  Brazil has an absolute advantage in the production of both coffee and sugar. 
A)  Brazil has an absolute advantage in producing only coffee. 
B)  Brazil has an absolute advantage in producing only sugar. 
C)  Chile has an absolute advantage in the production of both coffee and sugar. 
D)  Chile has an absolute advantage in producing only coffee. 
E)  Brazil has an absolute advantage in the production of both coffee and sugar.

Question 9

The theory that explains the shift of color TV sets production from the United States to Japan and Taiwan is called the _____ theory.

Accepted Answer

A)  productivity difference 
B)  factor abundance 
C)  product life cycle 
D)  preference 
E)  human skills 
A)  productivity difference 
B)  factor abundance 
C)  product life cycle 
D)  preference 
E)  human skills

Question 10

The data in the table below assumes that with the same quantity of resources, both Australia and Philippines produces food and computers. Australia can make 1,000 computers or 2,000 units of food in a day, and the Philippines can make 200 computers or 1,200 units of food in a day.?Table 20.2
  
-According to Table 20.2, what is the opportunity cost of 1 computer in the Philippines?

Accepted Answer

A)  6 units of food 
B)  Three-fifths of a unit of food 
C)  One-sixth of a unit of food 
D)  2 units of food 
E)  1 unit of food 
A)  6 units of food 
B)  Three-fifths of a unit of food 
C)  One-sixth of a unit of food 
D)  2 units of food 
E)  1 unit of food

Question 11

The theory of comparative advantage is based on:

Accepted Answer

A)  absolute opportunity costs. 
B)  relative opportunity costs. 
C)  total costs of production. 
D)  total costs, including transportation costs. 
E)  a comparison of marginal cost with average variable costs. 
A)  absolute opportunity costs. 
B)  relative opportunity costs. 
C)  total costs of production. 
D)  total costs, including transportation costs. 
E)  a comparison of marginal cost with average variable costs.

Question 12

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 corn in the U.S. is:

Accepted Answer

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

Question 13

The principle of comparative advantage states that a country should specialize in the production of those goods that have the highest opportunity costs.

Accepted Answer

A) True 
 B)False

Question 14

The export supply curve shows a country's:

Accepted Answer

A)  domestic surplus at various prices below the "no-trade" equilibrium price. 
B)  domestic shortage at various prices below the "no-trade" equilibrium price. 
C)  domestic supply at the "no-trade" equilibrium price. 
D)  domestic surplus at various prices above the "no-trade" equilibrium price. 
E)  domestic shortage at various prices above the "no-trade" equilibrium price. 
A)  domestic surplus at various prices below the "no-trade" equilibrium price. 
B)  domestic shortage at various prices below the "no-trade" equilibrium price. 
C)  domestic supply at the "no-trade" equilibrium price. 
D)  domestic surplus at various prices above the "no-trade" equilibrium price. 
E)  domestic shortage at various prices above the "no-trade" equilibrium price.

Question 15

The export supply and import demand curves measure the domestic shortage and surplus, respectively, at different world prices.

Accepted Answer

A) True 
 B)False

Question 16

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 in the international market is $10, Columbia will export _____ pound(s) of coffee.

Accepted Answer

A)  two 
B)  zero 
C)  six 
D)  eight 
E)  ten 
A)  two 
B)  zero 
C)  six 
D)  eight 
E)  ten

Question 17

No country can have an absolute advantage in the production of more than one good.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following counties are largely dependent on trade with the United States?

Accepted Answer

A)  China and Japan 
B)  U.K. and Germany 
C)  Canada and Mexico 
D)  France and Belgium 
E)  Canada and U.K 
A)  China and Japan 
B)  U.K. and Germany 
C)  Canada and Mexico 
D)  France and Belgium 
E)  Canada and U.K

Question 19

The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.

Accepted Answer

A) True 
 B)False

Question 20

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, the limits to the terms of trade in eggs are 1 carton of eggs in exchange for:

Accepted Answer

A)  between 5 and 10 tons of potatoes. 
B)  between 2 tons and 10 tons of potatoes. 
C)  between 10 tons and 30 tons of potatoes. 
D)  between one-fifth and one-tenth of a ton of potatoes. 
E)  between 1 and 10 tons of potatoes. 
A)  between 5 and 10 tons of potatoes. 
B)  between 2 tons and 10 tons of potatoes. 
C)  between 10 tons and 30 tons of potatoes. 
D)  between one-fifth and one-tenth of a ton of potatoes. 
E)  between 1 and 10 tons of potatoes.

The product life cycle theory of comparative advantage predicts that a new product will be first produced and exported by:

Refer to Scenario 20.1. Calculate the opportunity cost of producing sugar in Brazil.

Countries import goods in which they have:

The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good.

A country can benefit by indulging in international trade when:

The original comparative advantage model that used the relative abundance of factors of production to explain comparative advantage assumed that countries:

The theory that explains the shift of color TV sets production from the United States to Japan and Taiwan is called the _____ theory.

The theory of comparative advantage is based on:

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 corn in the U.S. is:

The principle of comparative advantage states that a country should specialize in the production of those goods that have the highest opportunity costs.

The export supply curve shows a country's:

The export supply and import demand curves measure the domestic shortage and surplus, respectively, at different world prices.

No country can have an absolute advantage in the production of more than one good.

Which of the following counties are largely dependent on trade with the United States?

The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.

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 product life cycle theory of comparative advantage predicts that a new product will be first produced and exported by:

Refer to Scenario 20.1. Calculate the opportunity cost of producing sugar in Brazil.

Countries import goods in which they have:

The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good.

A country can benefit by indulging in international trade when:

The original comparative advantage model that used the relative abundance of factors of production to explain comparative advantage assumed that countries:

The theory that explains the shift of color TV sets production from the United States to Japan and Taiwan is called the _____ theory.

The theory of comparative advantage is based on:

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 corn in the U.S. is:

The principle of comparative advantage states that a country should specialize in the production of those goods that have the highest opportunity costs.

The export supply curve shows a country's:

The export supply and import demand curves measure the domestic shortage and surplus, respectively, at different world prices.

No country can have an absolute advantage in the production of more than one good.

Which of the following counties are largely dependent on trade with the United States?

The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.

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