Question 1

A tariff is

Accepted Answer

A) a tax on imports. 
B) a tax on exports. 
C) a payment by the government to an exporter. 
D) a legal limit on the amount of a good that may be imported. 
A) a tax on imports. 
B) a tax on exports. 
C) a payment by the government to an exporter. 
D) a legal limit on the amount of a good that may be imported.

Question 2

A quota is

Accepted Answer

A) a tax on exported items. 
B) a tax on imported items. 
C) a limit on the amount of imports. 
D) a subsidy to export. 
A) a tax on exported items. 
B) a tax on imported items. 
C) a limit on the amount of imports. 
D) a subsidy to export.

Question 3

____ is a doctrine that holds that exports are good for a country, whereas imports are harmful.

Accepted Answer

A) Supply-side economics 
B) Mercantilism 
C) Free trade 
D) Monetarism 
A) Supply-side economics 
B) Mercantilism 
C) Free trade 
D) Monetarism

Question 4

An import quota on a product normally does all of the following except

Accepted Answer

A) reduces the volume of that product traded. 
B) raises the price in the importing country. 
C) increases the price everywhere. 
D) reduces the price in the exporting country. 
A) reduces the volume of that product traded. 
B) raises the price in the importing country. 
C) increases the price everywhere. 
D) reduces the price in the exporting country.

Question 5

If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?

Accepted Answer

A) It will increase. 
B) It will decrease. 
C) It will be unchanged in both countries. 
D) It will rise in one country and fall in the other, but the total is unchanged. 
E) Uncertain; economic theory has no answer to this question. 
A) It will increase. 
B) It will decrease. 
C) It will be unchanged in both countries. 
D) It will rise in one country and fall in the other, but the total is unchanged. 
E) Uncertain; economic theory has no answer to this question.

Question 6

Economists believe that trade is necessary for prosperity because

Accepted Answer

A) every country lacks some vital resources that it can get only by trade. 
B) each country's climate makes it a relatively efficient producer of some goods, and an inefficient producer of other goods. 
C) specialization permits large outputs and can produce economies of scale. 
D) All of the above are correct. 
A) every country lacks some vital resources that it can get only by trade. 
B) each country's climate makes it a relatively efficient producer of some goods, and an inefficient producer of other goods. 
C) specialization permits large outputs and can produce economies of scale. 
D) All of the above are correct.

Question 7

Which of the following observations is true of the principle of comparative advantage?

Accepted Answer

A) It arises from the absolute cost advantage. 
B) It helps determine most efficient patterns of production. 
C) It was advanced by Adam Smith. 
D) It means producing a good using smaller quantities of resources than others. 
A) It arises from the absolute cost advantage. 
B) It helps determine most efficient patterns of production. 
C) It was advanced by Adam Smith. 
D) It means producing a good using smaller quantities of resources than others.

Question 8

A country has an absolute advantage over another in the production of widgets if it can produce

Accepted Answer

A) widgets using smaller quantities of resources than can the other country. 
B) more widgets than can the other country. 
C) widgets more efficiently than can the other country. 
D) widgets at a lower opportunity cost than can the other country. 
A) widgets using smaller quantities of resources than can the other country. 
B) more widgets than can the other country. 
C) widgets more efficiently than can the other country. 
D) widgets at a lower opportunity cost than can the other country.

Question 9

An example of a quota that protects an American industry is the quota on

Accepted Answer

A) tourists entering the country. 
B) sugar imports. 
C) sales of oil products to foreign countries. 
D) purchases of military hardware to foreign dictators. 
E) All of the above are examples of protective quotas. 
A) tourists entering the country. 
B) sugar imports. 
C) sales of oil products to foreign countries. 
D) purchases of military hardware to foreign dictators. 
E) All of the above are examples of protective quotas.

Question 10

-Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If Japan and the United States trade with each other, which country will export television sets and how many?

Accepted Answer

A) Japan will export 20,000 television sets to the United States. 
B) Japan will export 30,000 television sets to the United States. 
C) The United States will export 20,000 television sets to Japan. 
D) The United States will export 40,000 television sets to Japan. 
A) Japan will export 20,000 television sets to the United States. 
B) Japan will export 30,000 television sets to the United States. 
C) The United States will export 20,000 television sets to Japan. 
D) The United States will export 40,000 television sets to Japan.

Question 11

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

Accepted Answer

A) A - Maximum; B - Zero 
B) A- Maximum, B - Maximum 
C) A - Zero, B - Maximum 
D) A - Zero, B - Minimum 
A) A - Maximum; B - Zero 
B) A- Maximum, B - Maximum 
C) A - Zero, B - Maximum 
D) A - Zero, B - Minimum

Question 12

Baumol and Blinder offer some reasons why countries trade with each other.List three of the reasons, and give an example of each to illustrate the reason.

Accepted Answer

The three reasons are:Consider

Question 13

A quota reduces quantity sold by operating through the demand side of the market.

Accepted Answer

A) True 
 B)False

Question 14

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine, then England has a comparative advantage in the production of cloth.

Accepted Answer

A) True 
 B)False

Question 15

Figure 22-9
  
-In Figure 22-9, Pestoland at price OA

Accepted Answer

A) is importing MN pasta from Pastaland. 
B) is exporting MN pasta to Pastaland. 
C) is exporting XY pasta to Pastaland. 
D) is exporting OZ pasta to Pastaland. 
A) is importing MN pasta from Pastaland. 
B) is exporting MN pasta to Pastaland. 
C) is exporting XY pasta to Pastaland. 
D) is exporting OZ pasta to Pastaland.

Question 16

Figure 22-2
  
-In Figure 22-2, if the United States and Mexico are negotiating to trade wheat for petroleum,

Accepted Answer

A) the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B) Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C) the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D) if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not. 
A) the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B) Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C) the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D) if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not.

Question 17

Some nations that seek to produce all of their own needs face the problem that

Accepted Answer

A) people don't want a wide variety of choices when buying. 
B) some industries are too small to be efficient. 
C) other countries may want to buy from them. 
D) All of the above are true. 
A) people don't want a wide variety of choices when buying. 
B) some industries are too small to be efficient. 
C) other countries may want to buy from them. 
D) All of the above are true.

Question 18

"The United States has more oil in Alaska than there is oil in Kuwait.Therefore, the United States should stop importing oil." Evaluate this statement using economic analysis.

Accepted Answer

While the statement is based on absolute

Question 19

A program of protection that results in preserving jobs in certain industries

Accepted Answer

A) maintains full employment at lower cost than any other program or policy. 
B) lowers average pay in the protected industries. 
C) improves living standards for the average person in that country. 
D) often does so at a cost that is much higher than the average income of persons in those industries. 
A) maintains full employment at lower cost than any other program or policy. 
B) lowers average pay in the protected industries. 
C) improves living standards for the average person in that country. 
D) often does so at a cost that is much higher than the average income of persons in those industries.

Question 20

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

Accepted Answer

A) True 
 B)False

Exam 35: International Trade and Comparative Advantage

A tariff is

A quota is

____ is a doctrine that holds that exports are good for a country, whereas imports are harmful.

An import quota on a product normally does all of the following except

If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?

Economists believe that trade is necessary for prosperity because

Which of the following observations is true of the principle of comparative advantage?

A country has an absolute advantage over another in the production of widgets if it can produce

An example of a quota that protects an American industry is the quota on

-Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If Japan and the United States trade with each other, which country will export television sets and how many?

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

Baumol and Blinder offer some reasons why countries trade with each other.List three of the reasons, and give an example of each to illustrate the reason.

A quota reduces quantity sold by operating through the demand side of the market.

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine, then England has a comparative advantage in the production of cloth.

Figure 22-9 -In Figure 22-9, Pestoland at price OA

Figure 22-2 -In Figure 22-2, if the United States and Mexico are negotiating to trade wheat for petroleum,

Some nations that seek to produce all of their own needs face the problem that

"The United States has more oil in Alaska than there is oil in Kuwait.Therefore, the United States should stop importing oil." Evaluate this statement using economic analysis.

A program of protection that results in preserving jobs in certain industries

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

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

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