Question 1

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

Accepted Answer

A) elasticity of demand. 
B) elasticity of supply. 
C) how important the good is. 
D) income elasticity. 
E) cross elasticity of demand with domestic products. 
A) elasticity of demand. 
B) elasticity of supply. 
C) how important the good is. 
D) income elasticity. 
E) cross elasticity of demand with domestic products.

Question 2

What is an export subsidy?
 Discuss some of the recent examples where such subsidies were controversial.

Accepted Answer

An export subsidy is a government paymen

Question 3

Figure 22-9
  
-In Figure 22-9, at price OC

Accepted Answer

A) quantity supplied of pasta exceeds quantity demanded so price will fall. 
B) quantity demanded for pasta exceeds quantity supplied so price will rise. 
C) exports of pasta equal XY. 
D) imports of pasta equal XY. 
A) quantity supplied of pasta exceeds quantity demanded so price will fall. 
B) quantity demanded for pasta exceeds quantity supplied so price will rise. 
C) exports of pasta equal XY. 
D) imports of pasta equal XY.

Question 4

Generally, if a nation imposes a tariff on imports,

Accepted Answer

A) part of the tax is paid by foreign exporters. 
B) the entire tax is paid by foreign exporters. 
C) none of the tax is paid by foreign exporters. 
D) the tax has no impact on the profits of foreign exporters. 
A) part of the tax is paid by foreign exporters. 
B) the entire tax is paid by foreign exporters. 
C) none of the tax is paid by foreign exporters. 
D) the tax has no impact on the profits of foreign exporters.

Question 5

If all countries produce the goods for which they have comparative advantages, all countries benefit with the increased production of goods with no additional resources being used.

Accepted Answer

A) True 
 B)False

Question 6

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Accepted Answer

A) it has no validity on non-economic grounds. 
B) it is unrelated to the United States' ability to wage war. 
C) other nations will retaliate with tariffs against U.S.producers of war material. 
D) industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf. 
A) it has no validity on non-economic grounds. 
B) it is unrelated to the United States' ability to wage war. 
C) other nations will retaliate with tariffs against U.S.producers of war material. 
D) industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf.

Question 7

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

A) No, because protection has no place in industrial development. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused. 
A) No, because protection has no place in industrial development. 
B) No, protection is always improper. 
C) Uncertain, economic theory has no answer to this question. 
D) Yes, although it can be overstated and abused.

Question 8

Figure 22-8
  
-Figure 22-8 has four sets of production possibility curves for two hypothetical countries.In which case will there be no advantage to trade between the two countries?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 9

A country's comparative advantage can be illustrated by the graph of the production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 10

Foreign competition will always put a domestic industry at a disadvantage.This leads to massive trade adjustment assistance on the part of each country.

Accepted Answer

A) True 
 B)False

Question 11

Quebec is capable of producing 10,000 pallets of wood shingles or 8,000 barrels of maple syrup.Vermont is capable of producing 12,000 pallets of wood shingles or 12,000 barrels of maple syrup.
a.Graph these production possibilities curves.Indicate from the slope, which has the absolute advantage, which the comparative advantage, and whether there are gains from trade.
b.Assume that Vermont and Quebec each specializes in the good in which they have a comparative advantage.Suppose that Vermont and Quebec decide to trade 5,000 pallets of shingles for 5,000 barrels of syrup.Indicate this on the graph.How does this affect the well being of the two societies? Explain.

Accepted Answer

Figure 22-11 @#IMG-DLM& 
a.See Figure 22-11.Quebec

Question 12

An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.

Accepted Answer

A) True 
 B)False

Question 13

A country that must inhibit imports should give preference to

Accepted Answer

A) quotas over tariffs because quotas are less likely to distort trade patterns between nations. 
B) tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. 
C) export subsidies over quotas or tariffs because export subsidies can protect a nation's domestic producers. 
D) an embargo wherever possible because an embargo can serve as a political weapon in addition to being a "trade stopper." 
A) quotas over tariffs because quotas are less likely to distort trade patterns between nations. 
B) tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. 
C) export subsidies over quotas or tariffs because export subsidies can protect a nation's domestic producers. 
D) an embargo wherever possible because an embargo can serve as a political weapon in addition to being a "trade stopper."

Question 14

What is mercantilism?
 What are the draw backs of this doctrine?

Accepted Answer

Mercantilism is a doctrine that holds th

Question 15

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week.From these numbers, we can conclude

Accepted Answer

A) Captain Canada has a comparative advantage in the production of hockey sticks. 
B) Captain Germany has a comparative advantage in the production of maple syrup. 
C) Captain Canada has an absolute advantage in the production of hockey sticks. 
D) All of the above conclusions are correct. 
A) Captain Canada has a comparative advantage in the production of hockey sticks. 
B) Captain Germany has a comparative advantage in the production of maple syrup. 
C) Captain Canada has an absolute advantage in the production of hockey sticks. 
D) All of the above conclusions are correct.

Question 17

-The data in Table 22-3 indicate that the United States has

Accepted Answer

A) an absolute advantage in both goods, and a comparative advantage in cotton. 
B) an absolute advantage in both goods, and a comparative advantage in wheat. 
C) only a comparative advantage in wheat. 
D) only a comparative advantage in cotton. 
A) an absolute advantage in both goods, and a comparative advantage in cotton. 
B) an absolute advantage in both goods, and a comparative advantage in wheat. 
C) only a comparative advantage in wheat. 
D) only a comparative advantage in cotton.

Question 18

Comparing international trade with trade among the different states of the United States shows that

Accepted Answer

A) the logic of international trade is quite different from that of intranational trade. 
B) the basic reasons for trade are equally applicable within a country or among countries. 
C) there is no need to study international trade as a special subject. 
D) All of the above are correct. 
A) the logic of international trade is quite different from that of intranational trade. 
B) the basic reasons for trade are equally applicable within a country or among countries. 
C) there is no need to study international trade as a special subject. 
D) All of the above are correct.

Question 19

From 1975 to 2008, which of the following countries experienced greater wage increases than the U.S.?

Accepted Answer

A) Japan 
B) South Korea 
C) Taiwan 
D) all of the above 
A) Japan 
B) South Korea 
C) Taiwan 
D) all of the above

Question 20

At least two demand curves are present in an international equilibrium model.

Accepted Answer

A) True 
 B)False

Exam 35: International Trade and Comparative Advantage

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

What is an export subsidy? Discuss some of the recent examples where such subsidies were controversial.

Figure 22-9 -In Figure 22-9, at price OC

Generally, if a nation imposes a tariff on imports,

If all countries produce the goods for which they have comparative advantages, all countries benefit with the increased production of goods with no additional resources being used.

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Is the call for protection on the basis of "infant industry" valid?

Figure 22-8 -Figure 22-8 has four sets of production possibility curves for two hypothetical countries.In which case will there be no advantage to trade between the two countries?

A country's comparative advantage can be illustrated by the graph of the production possibilities frontier.

Foreign competition will always put a domestic industry at a disadvantage.This leads to massive trade adjustment assistance on the part of each country.

An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.

A country that must inhibit imports should give preference to

What is mercantilism? What are the draw backs of this doctrine?

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week.From these numbers, we can conclude

-The data in Table 22-3 indicate that the United States has

Comparing international trade with trade among the different states of the United States shows that

From 1975 to 2008, which of the following countries experienced greater wage increases than the U.S.?

At least two demand curves are present in an international equilibrium model.

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