Question 1

Free trade refers to trade between countries

Accepted Answer

A) that is without shipping costs. 
B) that is licensed by both governments. 
C) that is without restrictions. 
D) of products which are free to low-income consumers. 
A) that is without shipping costs. 
B) that is licensed by both governments. 
C) that is without restrictions. 
D) of products which are free to low-income consumers.

Question 2

Today,________ of Goodyear's tire sales are in the North America.

Accepted Answer

A) only 11 percent 
B) less than 40 percent 
C) 65 percent 
D) more than 80 percent 
A) only 11 percent 
B) less than 40 percent 
C) 65 percent 
D) more than 80 percent

Question 3

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.One reasons for this is

Accepted Answer

A) comparative advantage works better in theory than in practice. 
B) some countries have more resources than other countries. 
C) tastes for many traded goods are similar in many countries because of globalization. 
D) production of most goods involves increasing opportunity costs. 
A) comparative advantage works better in theory than in practice. 
B) some countries have more resources than other countries. 
C) tastes for many traded goods are similar in many countries because of globalization. 
D) production of most goods involves increasing opportunity costs.

Question 4

Which of the following is the best example of a tariff?

Accepted Answer

A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 5

A quota

Accepted Answer

A) makes domestic consumers better off. 
B) makes both domestic producers and consumers better off. 
C) makes everyone worse off. 
D) makes domestic producers better off. 
A) makes domestic consumers better off. 
B) makes both domestic producers and consumers better off. 
C) makes everyone worse off. 
D) makes domestic producers better off.

Question 6

Table 19-12
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Swards } & \text { Beltr } & & \text { Svards } & \text { Beltr } \
\hline \text { Estoria } & 100 & 50 && 200 & 0 \
\hline \text { Morocco } & 50 & 40 && 0 & 120 \
\hline
\end{array}$$ 
Estonia and Morocco can produce both swords and belts.Table 19-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.Prior to trade,what was the opportunity cost to produce 1 belt in Estonia?

Accepted Answer

A) 1/2 of a sword 
B) 4/5 of a sword 
C) 1.25 swords 
D) 2 swords 
A) 1/2 of a sword 
B) 4/5 of a sword 
C) 1.25 swords 
D) 2 swords

Question 7

Absolute advantage is

Accepted Answer

A) the ability to produce more of a good or service than competitors when using the same amount of resources. 
B) the ability to produce higher quality goods compared to one's competitors. 
C) the ability to produce a good or service at a higher opportunity cost than one's competitors. 
D) the ability to produce more of a good or service than competitors that have more resources. 
A) the ability to produce more of a good or service than competitors when using the same amount of resources. 
B) the ability to produce higher quality goods compared to one's competitors. 
C) the ability to produce a good or service at a higher opportunity cost than one's competitors. 
D) the ability to produce more of a good or service than competitors that have more resources.

Question 8

Table 19-3
 $$\begin{array} { | l | l | l | } 
\hline & \text { Candles } & \text { Sapp } \
\hline \text { Bryce } & 150 & 450 \
\hline \text { Tiraa } & 200 & 450 \
\hline
\end{array}$$ 
Bryce and Tina are artisans who produce homemade candles and soap.Table 19-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 19-3.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Bryce has an absolute advantage in making candles and soap. 
B) Tina has an absolute advantage in making candles and soap. 
C) Neither Bryce nor Tina has an absolute advantage in making candles. 
D) Neither Bryce nor Tina has an absolute advantage in making soap. 
A) Bryce has an absolute advantage in making candles and soap. 
B) Tina has an absolute advantage in making candles and soap. 
C) Neither Bryce nor Tina has an absolute advantage in making candles. 
D) Neither Bryce nor Tina has an absolute advantage in making soap.

Question 9

Table 19-12
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Swards } & \text { Beltr } & & \text { Svards } & \text { Beltr } \
\hline \text { Estoria } & 100 & 50 && 200 & 0 \
\hline \text { Morocco } & 50 & 40 && 0 & 120 \
\hline
\end{array}$$ 
Estonia and Morocco can produce both swords and belts.Table 19-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.Prior to trade,what was the opportunity cost to produce 1 sword in Estonia?

Accepted Answer

A) 1/2 of a belt 
B) 4/5 of a belt 
C) 1.25 belts 
D) 2 belts 
A) 1/2 of a belt 
B) 4/5 of a belt 
C) 1.25 belts 
D) 2 belts

Question 10

How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar.)

Accepted Answer

A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined. 
B) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined. 
C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase. 
D) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase. 
A) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded cannot be determined. 
B) The equilibrium exchange rate will decrease, and the equilibrium quantity of dollars traded cannot be determined. 
C) The equilibrium exchange rate cannot be determined, and the equilibrium quantity of dollars traded will increase. 
D) The equilibrium exchange rate will increase, and the equilibrium quantity of dollars traded will increase.

Question 11

Table 19-12
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Swards } & \text { Beltr } & & \text { Svards } & \text { Beltr } \
\hline \text { Estoria } & 100 & 50 && 200 & 0 \
\hline \text { Morocco } & 50 & 40 && 0 & 120 \
\hline
\end{array}$$ 
Estonia and Morocco can produce both swords and belts.Table 19-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded,how many belts will Estonia consume?

Accepted Answer

A) 50 
B) 70 
C) 90 
D) 120 
A) 50 
B) 70 
C) 90 
D) 120

Question 12

Table 19-1
 $$\begin{array} { | l | c | c | } 
\hline & \text { Bathing } & \text { Grooming } \
\hline \text { Linda } & 60 & 20 \
\hline \text { Sandy } & 50 & 25 \
\hline
\end{array}$$ 
Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 19-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 19-1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B) Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C) Sandy has an absolute advantage in dog bathing and dog grooming. 
D) Linda has an absolute advantage in dog bathing and dog grooming. 
A) Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B) Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C) Sandy has an absolute advantage in dog bathing and dog grooming. 
D) Linda has an absolute advantage in dog bathing and dog grooming.

Question 13

Figure 19-2
   
Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff.
-Refer to Figure 19-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Accepted Answer

A) B + D + E + F. 
B) D + E + F. 
C) C + D + E + F. 
D) B. 
A) B + D + E + F. 
B) D + E + F. 
C) C + D + E + F. 
D) B.

Question 14

Figure 19-4
   
Figure 19-4 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 19-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Accepted Answer

A) Q₀ 
B) Q₁ 
C) Q₂ 
D) Q₂ - Q₀ 
A) Q₀ 
B) Q₁ 
C) Q₂ 
D) Q₂ - Q₀

Question 15

Dalton,Georgia,a town with a population less than 35,000,has developed into a leading producer of carpets,despite its small size.Some government officials argue that the success achieved by firms in Dalton in developing a comparative advantage in carpet making because of external economies can be used to justify trade barriers as a means to protect an "infant industry." After an infant industry gains experience it can compete in international markets and the trade barriers can be removed.What objections do economists make to this argument in favor of trade barriers?

Accepted Answer

Many economists believe that this is the

Question 16

Figure 19-10
  
-Refer to Figure 19-10.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

Accepted Answer

A) D to A. 
B) D to C. 
C) C to B. 
D) B to A. 
A) D to A. 
B) D to C. 
C) C to B. 
D) B to A.

Question 17

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Accepted Answer

A) Demand for dollars will increase, and supply of dollars will decrease. 
B) Demand for dollars will increase, and supply of dollars will increase. 
C) Demand for dollars will decrease, and supply of dollars will increase. 
D) Demand for dollars will decrease, and supply of dollars will decrease. 
A) Demand for dollars will increase, and supply of dollars will decrease. 
B) Demand for dollars will increase, and supply of dollars will increase. 
C) Demand for dollars will decrease, and supply of dollars will increase. 
D) Demand for dollars will decrease, and supply of dollars will decrease.

Question 18

Figure 19-3
   
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 19-3 illustrates the impact of the quota.
-Refer to Figure 19-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase?

Accepted Answer

A) 10 million 
B) 28 million 
C) 34 million 
D) 40 million 
A) 10 million 
B) 28 million 
C) 34 million 
D) 40 million

Question 19

The ratio at which a country can trade its exports for imports from other countries is called

Accepted Answer

A) a trade barrier. 
B) the terms of trade. 
C) autarky. 
D) a free trade agreement. 
A) a trade barrier. 
B) the terms of trade. 
C) autarky. 
D) a free trade agreement.

Question 20

Figure 19-1
   
Figure 19-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 19-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $18.What is the value of consumer surplus?

Accepted Answer

A) $0 
B) $270 
C) $305 
D) $320. 
A) $0 
B) $270 
C) $305 
D) $320.

Free trade refers to trade between countries

Today,________ of Goodyear's tire sales are in the North America.

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.One reasons for this is

Which of the following is the best example of a tariff?

A quota

Absolute advantage is

How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar.)

Table 19-1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 19-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 19-1.Select the statement that accurately interprets the data in the table.

Figure 19-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Figure 19-4 Figure 19-4 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Figure 19-10 -Refer to Figure 19-10.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Figure 19-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 19-3 illustrates the impact of the quota. -Refer to Figure 19-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase?

The ratio at which a country can trade its exports for imports from other countries is called

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $18.What is the value of consumer surplus?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Exam 19: Comparative Advantage, international Trade, and Exchange Rates

Free trade refers to trade between countries

Today,________ of Goodyear's tire sales are in the North America.

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.One reasons for this is

Which of the following is the best example of a tariff?

A quota

Absolute advantage is

How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar.)

Table 19-1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 19-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 19-1.Select the statement that accurately interprets the data in the table.

Figure 19-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Figure 19-4 Figure 19-4 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Figure 19-10 -Refer to Figure 19-10.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

Figure 19-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 19-3 illustrates the impact of the quota. -Refer to Figure 19-3.If there was no quota,how many pounds of peanuts would domestic consumers purchase?

The ratio at which a country can trade its exports for imports from other countries is called

Figure 19-1 Figure 19-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 19-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $18.What is the value of consumer surplus?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters