Question 1

A nation's producers can compete effectively with imports from other nations if _____

Accepted Answer

A)  they have an abundance of unskilled workers. 
B)  the relative price of exports to imports is high. 
C)  the labor cost per unit of output is low. 
D)  they have a high opportunity cost of production. 
E)  they have an absolute advantage in the production of all goods. 
A)  they have an abundance of unskilled workers. 
B)  the relative price of exports to imports is high. 
C)  the labor cost per unit of output is low. 
D)  they have a high opportunity cost of production. 
E)  they have an absolute advantage in the production of all goods.

Question 2

Exhibit 17.3
  
-Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is shown by area _____

Accepted Answer

A)  a. 
B)  b. 
C)  c. 
D)  f. 
E)  e. 
A)  a. 
B)  b. 
C)  c. 
D)  f. 
E)  e.

Question 3

If quota rights accrue to foreigners, then _____

Accepted Answer

A)  the domestic economy is better off with a quota than with a tariff. 
B)  the domestic economy is worse off with a quota than with a tariff. 
C)  consumer surplus and economic welfare increase. 
D)  production costs decrease. 
E)  part of the decrease in consumer surplus is redistributed to the domestic government. 
A)  the domestic economy is better off with a quota than with a tariff. 
B)  the domestic economy is worse off with a quota than with a tariff. 
C)  consumer surplus and economic welfare increase. 
D)  production costs decrease. 
E)  part of the decrease in consumer surplus is redistributed to the domestic government.

Question 4

Which of the following is a type of trade restriction?

Accepted Answer

A)  diseconomies of scale 
B)  autarky 
C)  diminishing marginal returns 
D)  health, safety, or technical standards 
E)  increasing the opportunity cost of production 
A)  diseconomies of scale 
B)  autarky 
C)  diminishing marginal returns 
D)  health, safety, or technical standards 
E)  increasing the opportunity cost of production

Question 5

In a two-country, two-commodity framework, when one country has an absolute advantage in the production of both commodities, _____

Accepted Answer

A)  autarky is always preferred to trade. 
B)  differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains. 
C)  the country with the lowest opportunity cost of production is the least competitive in international markets. 
D)  the countries gain from mutual trade as long as tastes differ across countries. 
E)  the countries gain from specialization and exchange as long as they are the same size. 
A)  autarky is always preferred to trade. 
B)  differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains. 
C)  the country with the lowest opportunity cost of production is the least competitive in international markets. 
D)  the countries gain from mutual trade as long as tastes differ across countries. 
E)  the countries gain from specialization and exchange as long as they are the same size.

Question 6

Suppose there is a policy debate over imposing trade restrictions on imported semiconductors in the United States. A congresswoman argues that it is necessary to impose trade restrictions, such as tariffs, on the semiconductor industry to protect workers in the domestic semiconductor industry. The congresswoman claims that without trade protection, there will be layoffs, causing many U.S. workers in the semiconductor industry to be unemployed. She is basing her preference for trade restrictions on the _____

Accepted Answer

A)  infant industry argument. 
B)  declining industries argument. 
C)  national defense argument. 
D)  jobs and income argument. 
E)  antidumping argument. 
A)  infant industry argument. 
B)  declining industries argument. 
C)  national defense argument. 
D)  jobs and income argument. 
E)  antidumping argument.

Question 7

Exhibit 17.3
  
-Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the number of baseballs imported is _____

Accepted Answer

A)  4,000. 
B)  6,000. 
C)  8,000. 
D)  10,000. 
E)  12,000. 
A)  4,000. 
B)  6,000. 
C)  8,000. 
D)  10,000. 
E)  12,000.

Question 8

Exhibit 17.6
  
-Refer to Exhibit 17.6, which shows the demand for and the domestic supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the gain of the foreign exporters with quota rights is represented by area(s) _____

Accepted Answer

A)  h. 
B)  i. 
C)  g. 
D)  a and b. 
E)  c and d. 
A)  h. 
B)  i. 
C)  g. 
D)  a and b. 
E)  c and d.

Question 9

Which of the following is a type of trade restriction?

Accepted Answer

A)  diseconomies of scale 
B)  autarky 
C)  diminishing marginal returns 
D)  domestic content requirements 
E)  increasing the opportunity cost of production 
A)  diseconomies of scale 
B)  autarky 
C)  diminishing marginal returns 
D)  domestic content requirements 
E)  increasing the opportunity cost of production

Question 10

For each pair of jeans Casina produces, it gives up the opportunity to make 50 pounds of chocolate truffle. Marina can produce one pair of jeans for every 100 pounds of chocolate truffle it produces. Suppose the data is converted into production possibilities frontiers (PPFs), with constant opportunity costs for both countries. While the pounds of chocolate truffle produced are measured on the vertical axis, the pairs of jeans produced are measured along the horizontal axis. Identify the correct statement in this case.

Accepted Answer

A)  The slope of Marina's production possibilities frontier is equal to −50. 
B)  The slope of Marina's production possibilities frontier is flatter than Casina's. 
C)  The slope of Marina's production possibilities frontier is equal to −0.02. 
D)  The slope of Marina's production possibilities frontier is steeper than Casina's. 
E)  The slope of Casina's production possibilities frontier is equal to −0.01. 
A)  The slope of Marina's production possibilities frontier is equal to −50. 
B)  The slope of Marina's production possibilities frontier is flatter than Casina's. 
C)  The slope of Marina's production possibilities frontier is equal to −0.02. 
D)  The slope of Marina's production possibilities frontier is steeper than Casina's. 
E)  The slope of Casina's production possibilities frontier is equal to −0.01.

Question 11

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year. Which of the following would be true?

Accepted Answer

A)  The domestic price of the imported good will rise higher with the tariff than with the quota. 
B)  Consumers in the importing country will be worse off with the quota than with the tariff. 
C)  Domestic producers that compete with the imports will be better off with the tariff than with the quota. 
D)  The tariff will increase the revenue of the government of the importing country, while the quota will increase the profits of the foreign exporting firms with quota rights. 
E)  Tariffs raise the price of a good but quotas do not. 
A)  The domestic price of the imported good will rise higher with the tariff than with the quota. 
B)  Consumers in the importing country will be worse off with the quota than with the tariff. 
C)  Domestic producers that compete with the imports will be better off with the tariff than with the quota. 
D)  The tariff will increase the revenue of the government of the importing country, while the quota will increase the profits of the foreign exporting firms with quota rights. 
E)  Tariffs raise the price of a good but quotas do not.

Question 12

Table 17.1
 $$\begin{array}{l}
\text { Table } 17.1\
\begin{array} { | c | c | c | c | } 
\hline{ \text { Cambria } } & & { \text { Bodoni } } \
\hline \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } & \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } \
\hline 20 & 0 & 100 & 0 \
\hline 18 & 80 & 90 & 100 \
\hline 16 & 160 & 80 & 200 \
\hline 14 & 240 & 70 & 300 \
\hline 12 & 320 & 60 & 400 \
\hline 10 & 400 & 50 & 500 \
\hline 8 & 480 & 40 & 600 \
\hline 6 & 560 & 30 & 700 \
\hline 4 & 640 & 20 & 800 \
\hline 2 & 720 & 10 & 900 \
\hline 0 & 800 & 0 & 1,000 \
\hline
\end{array}
\end{array}$$
-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of a ton of rice in Bodoni is _____

Accepted Answer

A)  20 T-shirts. 
B)  3 T-shirts. 
C)  4 T-shirts. 
D)  10 T-shirts. 
E)  2 T-shirts. 
A)  20 T-shirts. 
B)  3 T-shirts. 
C)  4 T-shirts. 
D)  10 T-shirts. 
E)  2 T-shirts.

Question 13

A legal limit on the amount of a commodity that can be imported is known as _____

Accepted Answer

A)  an ad valorem tariff. 
B)  an import quota. 
C)  an import concession. 
D)  import substitution. 
E)  a specific tariff. 
A)  an ad valorem tariff. 
B)  an import quota. 
C)  an import concession. 
D)  import substitution. 
E)  a specific tariff.

Question 14

Exhibit 17.6
  
-Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by area(s) _____

Accepted Answer

A)  b and f. 
B)  i. 
C)  e and h. 
D)  f, g, and h. 
E)  a, b, c, d, and e. 
A)  b and f. 
B)  i. 
C)  e and h. 
D)  f, g, and h. 
E)  a, b, c, d, and e.

Question 15

The sale abroad at prices below cost to unload excess inventories is known as _____

Accepted Answer

A)  cream skimming. 
B)  import substitution. 
C)  monopoly pricing. 
D)  sporadic dumping. 
E)  arbitrage. 
A)  cream skimming. 
B)  import substitution. 
C)  monopoly pricing. 
D)  sporadic dumping. 
E)  arbitrage.

Question 16

The American Tire Company has been experiencing a steady loss of market over the past 40 years due to imports of lower-priced tires. Which of the following arguments would American Tire most likely present to Congress when it lobbies for trade restrictions?

Accepted Answer

A)  the infant industry argument 
B)  the declining industry argument 
C)  the national defense argument 
D)  the antidumping argument 
E)  the jobs and income argument 
A)  the infant industry argument 
B)  the declining industry argument 
C)  the national defense argument 
D)  the antidumping argument 
E)  the jobs and income argument

Question 17

Exhibit 17.b
  
-Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, importers would supply ____

Accepted Answer

A)  Q. 
B)  Q'. 
C)  Q". 
D)  0.5 x (Q'-Q). 
E)  0.5 x (Q"-Q'). 
A)  Q. 
B)  Q'. 
C)  Q". 
D)  0.5 x (Q'-Q). 
E)  0.5 x (Q"-Q').

Question 18

Table 17.2
  
-Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $1 and there are no trade restrictions, the Netherlands will _____

Accepted Answer

A)  produce 7,000, consume 10,000, and export 3,000 tulips. 
B)  produce 10,000 and consume 10,000 tulips. 
C)  produce 9,000, consume 6,000, and export 6,000 tulips. 
D)  import all of the tulips that it consumes. 
E)  consume all of the tulips that it produces. 
A)  produce 7,000, consume 10,000, and export 3,000 tulips. 
B)  produce 10,000 and consume 10,000 tulips. 
C)  produce 9,000, consume 6,000, and export 6,000 tulips. 
D)  import all of the tulips that it consumes. 
E)  consume all of the tulips that it produces.

Question 19

Exports account for _____ of the gross domestic product (GDP) in Canada and the United Kingdom.

Accepted Answer

A)  one-sixth 
B)  one-third 
C)  one-quarter 
D)  half 
E)  two-thirds 
A)  one-sixth 
B)  one-third 
C)  one-quarter 
D)  half 
E)  two-thirds

Question 20

Table 17.1
  
-Refer to Table 17.1, which shows the per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni should produce rice and trade its rice for Cambria's T-shirts.

Accepted Answer

A) True 
 B)False

A nation's producers can compete effectively with imports from other nations if _____

Exhibit 17.3 -Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is shown by area _____

If quota rights accrue to foreigners, then _____

Which of the following is a type of trade restriction?

In a two-country, two-commodity framework, when one country has an absolute advantage in the production of both commodities, _____

Exhibit 17.3 -Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the number of baseballs imported is _____

Which of the following is a type of trade restriction?

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year. Which of the following would be true?

A legal limit on the amount of a commodity that can be imported is known as _____

Exhibit 17.6 -Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by area(s) _____

The sale abroad at prices below cost to unload excess inventories is known as _____

The American Tire Company has been experiencing a steady loss of market over the past 40 years due to imports of lower-priced tires. Which of the following arguments would American Tire most likely present to Congress when it lobbies for trade restrictions?

Exhibit 17.b -Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, importers would supply ____

Table 17.2 -Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $1 and there are no trade restrictions, the Netherlands will _____

Exports account for _____ of the gross domestic product (GDP) in Canada and the United Kingdom.

Table 17.1 -Refer to Table 17.1, which shows the per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni should produce rice and trade its rice for Cambria's T-shirts.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Finance.

Economic Development.

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Exam 17: International Trade.

A nation's producers can compete effectively with imports from other nations if _____

Exhibit 17.3 -Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is shown by area _____

If quota rights accrue to foreigners, then _____

Which of the following is a type of trade restriction?

In a two-country, two-commodity framework, when one country has an absolute advantage in the production of both commodities, _____

Exhibit 17.3 -Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the number of baseballs imported is _____

Which of the following is a type of trade restriction?

Suppose the government of an importing country is considering imposing either a tariff that would result in imports falling to 1 million units per year or an import quota of 1 million units per year. Which of the following would be true?

A legal limit on the amount of a commodity that can be imported is known as _____

Exhibit 17.6 -Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by area(s) _____

The sale abroad at prices below cost to unload excess inventories is known as _____

The American Tire Company has been experiencing a steady loss of market over the past 40 years due to imports of lower-priced tires. Which of the following arguments would American Tire most likely present to Congress when it lobbies for trade restrictions?

Exhibit 17.b -Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, importers would supply ____

Table 17.2 -Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $1 and there are no trade restrictions, the Netherlands will _____

Exports account for _____ of the gross domestic product (GDP) in Canada and the United Kingdom.

Table 17.1 -Refer to Table 17.1, which shows the per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni should produce rice and trade its rice for Cambria's T-shirts.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Finance.

Economic Development.

Filters