Question 1

Specialization occurs when each individual,firm,or country ________.

Accepted Answer

A)  produces only a few specific goods and relies on trade for the other goods and services it needs 
B)  is self-sufficient and produces all goods and services it needs, without relying on imports 
C)  produces only those goods for which it has a higher opportunity cost of production than that for other nations 
D)  produces only those goods which are in demand in the global market and allow for high rates of profitability 
A)  produces only a few specific goods and relies on trade for the other goods and services it needs 
B)  is self-sufficient and produces all goods and services it needs, without relying on imports 
C)  produces only those goods for which it has a higher opportunity cost of production than that for other nations 
D)  produces only those goods which are in demand in the global market and allow for high rates of profitability

Question 2

Scenario: The following figure shows the demand curve, D, and the supply curve, S, of chairs in Barylia. Barylia is open to free trade. The world price of chairs is $3, and the government of Barylia decides to impose a $1 tariff on the import of chairs.
  
-Refer to the scenario above.How many chairs does Barylia import when the government imposes a tariff of $1 per unit?

Accepted Answer

A)  10 units 
B)  20 units 
C)  30 units 
D)  40 units 
A)  10 units 
B)  20 units 
C)  30 units 
D)  40 units

Question 3

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2.
  
-Refer to the figure above.Which of the following statements is correct?

Accepted Answer

A)  After the economy is open to free trade, it will export 6 pens. 
B)  After the economy is open to free trade, it will import 6 pens. 
C)  After the economy is open to free trade, it will export 10 pens. 
D)  After the economy is open to free trade, it will import 10 pens. 
A)  After the economy is open to free trade, it will export 6 pens. 
B)  After the economy is open to free trade, it will import 6 pens. 
C)  After the economy is open to free trade, it will export 10 pens. 
D)  After the economy is open to free trade, it will import 10 pens.

Question 4

If a nation opens up to free trade and becomes an importer of goods,which of the following is then true?

Accepted Answer

A)  The nation as a whole loses. 
B)  Sellers gain. 
C)  Buyers gain. 
D)  Buyers lose. 
A)  The nation as a whole loses. 
B)  Sellers gain. 
C)  Buyers gain. 
D)  Buyers lose.

Question 5

The following figure depicts a nonlinear production possibilities curve.
  
-Refer to the figure above.Point E represents a situation that ________.

Accepted Answer

A)  is currently unattainable and can be expected to remain so 
B)  will be attainable only if there is economic growth 
C)  results from inefficient use of resources or failure to use all available resources 
D)  has a higher opportunity cost than do points on the boundary itself 
A)  is currently unattainable and can be expected to remain so 
B)  will be attainable only if there is economic growth 
C)  results from inefficient use of resources or failure to use all available resources 
D)  has a higher opportunity cost than do points on the boundary itself

Question 6

Trade between two nations ________.

Accepted Answer

A)  results in the maximization of total production 
B)  reduces global production 
C)  leads to a maximization of production in one nation and a minimization of production in the other 
D)  is inefficient compared to a situation where both nations do not engage in international trade 
A)  results in the maximization of total production 
B)  reduces global production 
C)  leads to a maximization of production in one nation and a minimization of production in the other 
D)  is inefficient compared to a situation where both nations do not engage in international trade

Question 7

Scenario: The domestic supply and demand of a good in the United States is shown in the figure below. Suppose the world price of this good is $4. Suppose the United States is considering levying a $2 tariff per unit on imports of this good.
  
-Refer to the scenario above.Before the tariff is imposed,the consumer surplus in the United States was ________; after the tariff,the consumer surplus becomes ________.

Accepted Answer

A)  $360; $160 
B)  $160; $640 
C)  $640; $490 
D)  $490; $360 
A)  $360; $160 
B)  $160; $640 
C)  $640; $490 
D)  $490; $360

Question 8

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2.
  
-Refer to the figure above.What is the domestic production of pens in Lithasia after the economy opens up to free trade?

Accepted Answer

A)  6 units 
B)  12 units 
C)  16 units 
D)  22 units 
A)  6 units 
B)  12 units 
C)  16 units 
D)  22 units

Question 9

What are the effects of a tariff on a good on various groups and on the total surplus in the country that imposes the tariff?

Accepted Answer

The imposition of a tariff increases the

Question 10

Scenario: With her available resources, Wendy can produce 20 greeting cards or 10 earrings. Sarah, with the resources she has, can produce 5 greeting cards or 15 earrings.
-Refer to the scenario above.What is Wendy's opportunity cost of producing one earring?

Accepted Answer

A)  0.33 greeting cards 
B)  0.50 greeting cards 
C)  1 greeting card 
D)  2 greeting cards 
A)  0.33 greeting cards 
B)  0.50 greeting cards 
C)  1 greeting card 
D)  2 greeting cards

Question 11

Scenario: A machine that can be used to print both notebooks and magazines is available for use for a fixed period of time. If it is used only to print notebooks, 30 notebooks can be printed. If it is used only to print magazines, 15 magazines can be printed.
-Refer to the scenario above.What is the opportunity cost of printing 1 magazine?

Accepted Answer

A)  1 notebook 
B)  2 notebooks 
C)  15 notebooks 
D)  30 notebooks 
A)  1 notebook 
B)  2 notebooks 
C)  15 notebooks 
D)  30 notebooks

Question 12

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2.
  
-Refer to the figure above.What is the producer surplus after Lithasia opens up to free trade?

Accepted Answer

A)  $2 
B)  $3 
C)  $6 
D)  $9 
A)  $2 
B)  $3 
C)  $6 
D)  $9

Question 13

Which of the following statements is true of the gains to trade?

Accepted Answer

A)  The gains to trade expand as trading partners become more alike. 
B)  The gains to trade shrink as trading partners become more alike. 
C)  The trading nations can enjoy gains to trade even when none of the nations have a comparative advantage in the production of any good. 
D)  The gains to trade are equal for all trading partners. 
A)  The gains to trade expand as trading partners become more alike. 
B)  The gains to trade shrink as trading partners become more alike. 
C)  The trading nations can enjoy gains to trade even when none of the nations have a comparative advantage in the production of any good. 
D)  The gains to trade are equal for all trading partners.

Question 14

Scenario: Meryl and Steve are two classmates who form a study group. The graph below shows the production possibilities curves for each of them.
  
-Refer to the scenario above.________ has absolute advantage in doing Econ homework assignments,and ________ has absolute advantage in writing lab reports.

Accepted Answer

A)  Meryl; Meryl 
B)  Steve; Steve 
C)  Steve; Meryl 
D)  Meryl; Steve 
A)  Meryl; Meryl 
B)  Steve; Steve 
C)  Steve; Meryl 
D)  Meryl; Steve

Question 15

A production possibilities curve is plotted for a nation producing chairs and tables.Which of the following will cause a parallel shift in this curve?

Accepted Answer

A)  An intensive training program that increases the productivity of workers engaged in the production of tables 
B)  An intensive training program that increases the productivity of workers engaged in the production of chairs 
C)  An increase in the price of both chairs and tables 
D)  An increase in the availability of raw materials required for the production of both chairs and tables 
A)  An intensive training program that increases the productivity of workers engaged in the production of tables 
B)  An intensive training program that increases the productivity of workers engaged in the production of chairs 
C)  An increase in the price of both chairs and tables 
D)  An increase in the availability of raw materials required for the production of both chairs and tables

Question 16

Free trade refers to the ability of ________.

Accepted Answer

A)  developing countries to make payments for the import of goods at the end of every year 
B)  all countries to trade without hindrance or encouragement from the government 
C)  developed countries to set the world prices of most goods and services 
D)  developed countries to provide financial aid to the developing nations 
A)  developing countries to make payments for the import of goods at the end of every year 
B)  all countries to trade without hindrance or encouragement from the government 
C)  developed countries to set the world prices of most goods and services 
D)  developed countries to provide financial aid to the developing nations

Question 17

Scenario: Yasmin and Zeek are lawyers working at V, W, and X LLP. Yasmin works 48 hours a week, and Zeek also works 48 hours a week. They handle two types of cases, intellectual property (IP) cases and corporate fraud (CF) cases. It takes Yasmin 6 hours to handle each IP case and 4 hours to handle each CF case. Zeek can finish an IP case in 3 hours and a CF case in 6 hours.
-Refer to the scenario above.If Zeek spent all his time on IP cases,how many IP cases can he finish?

Accepted Answer

A)  16 
B)  12 
C)  8 
D)  4 
A)  16 
B)  12 
C)  8 
D)  4

Question 18

The following table shows the value of exports and imports of four countries in 1990.
  
-Refer to the table above.Which of the following statements is true?

Accepted Answer

A)  Country A is a net importer. 
B)  Country B is not a net importer. 
C)  Country C is a net importer. 
D)  Country D is a net importer. 
A)  Country A is a net importer. 
B)  Country B is not a net importer. 
C)  Country C is a net importer. 
D)  Country D is a net importer.

Question 19

The following figure depicts the production possibilities curve when Ann and Bob engage in trade. With all her resources, Ann can either produce two computer programs or one Web site. With all his resources, Bob can either produce one computer program or three Web sites.
  
-Refer to the figure above.The flatter portion of this curve has a slope equal to ________.

Accepted Answer

A)  Ann's PPC 
B)  Bob's PPC 
C)  Ann's minus Bob's PPC 
D)  Ann's plus Bob's PPC 
A)  Ann's PPC 
B)  Bob's PPC 
C)  Ann's minus Bob's PPC 
D)  Ann's plus Bob's PPC

Question 20

Scenario: Jack takes 3 hours to complete a painting and 6 hours to create a sculpture. He has 30 hours of time to spend on both activities.
-Refer to the scenario above.If Jack has to decide between the number of paintings and sculptures he wants to make in the given time,which of the following will best represent his options?

Accepted Answer

A)  A budget constraint 
B)  An indifference curve 
C)  A production possibilities curve 
D)  A supply curve 
A)  A budget constraint 
B)  An indifference curve 
C)  A production possibilities curve 
D)  A supply curve

Specialization occurs when each individual,firm,or country ________.

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.Which of the following statements is correct?

If a nation opens up to free trade and becomes an importer of goods,which of the following is then true?

The following figure depicts a nonlinear production possibilities curve. -Refer to the figure above.Point E represents a situation that ________.

Trade between two nations ________.

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.What is the domestic production of pens in Lithasia after the economy opens up to free trade?

What are the effects of a tariff on a good on various groups and on the total surplus in the country that imposes the tariff?

Scenario: With her available resources, Wendy can produce 20 greeting cards or 10 earrings. Sarah, with the resources she has, can produce 5 greeting cards or 15 earrings. -Refer to the scenario above.What is Wendy's opportunity cost of producing one earring?

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.What is the producer surplus after Lithasia opens up to free trade?

Which of the following statements is true of the gains to trade?

Scenario: Meryl and Steve are two classmates who form a study group. The graph below shows the production possibilities curves for each of them. -Refer to the scenario above. has absolute advantage in doing Econ homework assignments,and has absolute advantage in writing lab reports.

A production possibilities curve is plotted for a nation producing chairs and tables.Which of the following will cause a parallel shift in this curve?

Free trade refers to the ability of ________.

The following table shows the value of exports and imports of four countries in 1990. -Refer to the table above.Which of the following statements is true?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 8: Trade

Specialization occurs when each individual,firm,or country ________.

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.Which of the following statements is correct?

If a nation opens up to free trade and becomes an importer of goods,which of the following is then true?

The following figure depicts a nonlinear production possibilities curve. -Refer to the figure above.Point E represents a situation that ________.

Trade between two nations ________.

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.What is the domestic production of pens in Lithasia after the economy opens up to free trade?

What are the effects of a tariff on a good on various groups and on the total surplus in the country that imposes the tariff?

Scenario: With her available resources, Wendy can produce 20 greeting cards or 10 earrings. Sarah, with the resources she has, can produce 5 greeting cards or 15 earrings. -Refer to the scenario above.What is Wendy's opportunity cost of producing one earring?

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.What is the producer surplus after Lithasia opens up to free trade?

Which of the following statements is true of the gains to trade?

A production possibilities curve is plotted for a nation producing chairs and tables.Which of the following will cause a parallel shift in this curve?

Free trade refers to the ability of ________.

The following table shows the value of exports and imports of four countries in 1990. -Refer to the table above.Which of the following statements is true?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters