Question 1

The United States is known worldwide as being a low tariff nation.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following might lead a nation to engage in international trade?

Accepted Answer

A) Differences in natural endowments such as climate 
B) Differences in skills of labor force 
C) Differences in endowments of natural resources 
D) All of the above are correct. 
A) Differences in natural endowments such as climate 
B) Differences in skills of labor force 
C) Differences in endowments of natural resources 
D) All of the above are correct. D

Question 3

Absolute advantage states that a country has an advantage over another if it can produce a good with fewer resources.

Accepted Answer

A) True 
 B)False  True

Question 4

Using graphs to illustrate the concepts, absolute advantage

Accepted Answer

A) is shown with differences in slope of a production possibilities curve; comparative advantage is shown with a lower curve. 
B) requires a very steep curve; comparative advantage requires a curve with a shallow slope. 
C) on one good requires that the slope of the production possibilities curve be steeper for that good. 
D) is shown with a higher production possibilities curve; comparative advantage is shown with differences in slope of the curves. 
A) is shown with differences in slope of a production possibilities curve; comparative advantage is shown with a lower curve. 
B) requires a very steep curve; comparative advantage requires a curve with a shallow slope. 
C) on one good requires that the slope of the production possibilities curve be steeper for that good. 
D) is shown with a higher production possibilities curve; comparative advantage is shown with differences in slope of the curves.

Question 5

The effect of a tariff or a quota is to

Accepted Answer

A) raise the price of a commodity in the exporting country above the price in an importing country. 
B) raise the price of a commodity in an importing country above the price in the exporting country. 
C) lower the price of the commodity in all countries. 
D) raise the price of the commodity in all countries. 
A) raise the price of a commodity in the exporting country above the price in an importing country. 
B) raise the price of a commodity in an importing country above the price in the exporting country. 
C) lower the price of the commodity in all countries. 
D) raise the price of the commodity in all countries.

Question 6

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

Accepted Answer

A) True 
 B)False

Question 7

-Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries, what are the equilibrium price and quantity in the United States?

Accepted Answer

A) P = $100, Q = 100 
B) P = $200, Q = 85 
C) P = $300, Q = 70 
D) P = $500, Q = 50 
A) P = $100, Q = 100 
B) P = $200, Q = 85 
C) P = $300, Q = 70 
D) P = $500, Q = 50

Question 8

In discussing trade, it is ____ that matters rather than ____.

Accepted Answer

A) absolute advantage: elastic advantage 
B) comparative advantage; absolute advantage 
C) entire advantage; comparative advantage 
D) elastic advantage; entire advantage 
E) declarative advantage; absolute advantage 
A) absolute advantage: elastic advantage 
B) comparative advantage; absolute advantage 
C) entire advantage; comparative advantage 
D) elastic advantage; entire advantage 
E) declarative advantage; absolute advantage

Question 9

Strategic trade policy relies on threats of protectionism to protect free trade.

Accepted Answer

A) True 
 B)False

Question 10

How extensively does the United States use quotas?

Accepted Answer

A) Very little; there are few quotas on imports. 
B) Selectively; there are more quotas than most people realize. 
C) Widely; quotas are extensive and cover a wide range of goods. 
D) Widely; although the United States prefers to use tariffs, which cover a wide range of goods. 
A) Very little; there are few quotas on imports. 
B) Selectively; there are more quotas than most people realize. 
C) Widely; quotas are extensive and cover a wide range of goods. 
D) Widely; although the United States prefers to use tariffs, which cover a wide range of goods.

Question 11

A voluntary exchange of products means that

Accepted Answer

A) if one nation gains from a swap, the other nation must necessarily lose. 
B) each country must do its best to act to the disadvantage of its trading partners. 
C) both parties must gain (or expect to gain) from the transaction. 
D) both parties must lose owing to the transaction costs involved. 
A) if one nation gains from a swap, the other nation must necessarily lose. 
B) each country must do its best to act to the disadvantage of its trading partners. 
C) both parties must gain (or expect to gain) from the transaction. 
D) both parties must lose owing to the transaction costs involved.

Question 12

An import quota will ordinarily raise the price of the good in the importing country.

Accepted Answer

A) True 
 B)False

Question 13

The effect of opening trade between countries is

Accepted Answer

A) living standards rise in the country with efficient, high-pay workers. 
B) both countries can exploit comparative advantage and increase productivity. 
C) total world production increases as both countries specialize in specific goods. 
D) All of the above are correct. 
A) living standards rise in the country with efficient, high-pay workers. 
B) both countries can exploit comparative advantage and increase productivity. 
C) total world production increases as both countries specialize in specific goods. 
D) All of the above are correct.

Question 14

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

Accepted Answer

A) lower the standard of living in both countries. 
B) raise the standard of living in both countries. 
C) make some workers less efficient. 
D) lead to an inappropriate allocation of resources. 
A) lower the standard of living in both countries. 
B) raise the standard of living in both countries. 
C) make some workers less efficient. 
D) lead to an inappropriate allocation of resources.

Question 15

American producers often complain about dumping.What is dumping, and should it be prohibited?

Accepted Answer

Dumping refers to selling exports at a p

Question 16

How can tariffs lead to a situation in which all parties to a trade lose?

Accepted Answer

In effect, a tariff amounts to governmen

Question 17

Table 22-1  
-From Table 22-1, the opportunity cost of one bushel of wheat in Great Britain is

Accepted Answer

A) 1/4 yard of textiles. 
B) 3 yards of textiles. 
C) 12 yards of textiles. 
D) 4 yards of textiles. 
A) 1/4 yard of textiles. 
B) 3 yards of textiles. 
C) 12 yards of textiles. 
D) 4 yards of textiles.

Question 18

If the production possibilities curves of two countries have the same slope,

Accepted Answer

A) neither has a comparative advantage, and there are no gains from trade. 
B) although there is no comparative advantage, there are potential gains if there are differences in absolute advantage. 
C) neither has an absolute advantage, and there cannot be gains from trade. 
D) both have an absolute advantage, and can gain from trade. 
A) neither has a comparative advantage, and there are no gains from trade. 
B) although there is no comparative advantage, there are potential gains if there are differences in absolute advantage. 
C) neither has an absolute advantage, and there cannot be gains from trade. 
D) both have an absolute advantage, and can gain from trade.

Question 19

An upward spiral of protectionism is a possible outcome of strategic trade policy.

Accepted Answer

A) True 
 B)False

Question 20

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

Accepted Answer

Low-paid workers may also be low-product

Exam 35: International Trade and Comparative Advantage

The United States is known worldwide as being a low tariff nation.

Which of the following might lead a nation to engage in international trade?

Absolute advantage states that a country has an advantage over another if it can produce a good with fewer resources.

Using graphs to illustrate the concepts, absolute advantage

The effect of a tariff or a quota is to

Specialization is the concept of devoting resources to the production of only a small number of goods and services.

-Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries, what are the equilibrium price and quantity in the United States?

In discussing trade, it is ____ that matters rather than ____.

Strategic trade policy relies on threats of protectionism to protect free trade.

How extensively does the United States use quotas?

A voluntary exchange of products means that

An import quota will ordinarily raise the price of the good in the importing country.

The effect of opening trade between countries is

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

American producers often complain about dumping.What is dumping, and should it be prohibited?

How can tariffs lead to a situation in which all parties to a trade lose?

Table 22-1 -From Table 22-1, the opportunity cost of one bushel of wheat in Great Britain is

If the production possibilities curves of two countries have the same slope,

An upward spiral of protectionism is a possible outcome of strategic trade policy.

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Filters

In discussing trade, it is that matters rather than .