Question 1

The logic of why international trade increases well-being is

Accepted Answer

A) a major revision of the logic of why trade within a country increases well-being. 
B) completely different from the logic of why trade within a country increases well-being. 
C) a narrow, special case of the logic of why trade within a country increases well-being. 
D) no different from the logic of why trade within a country increases well-being. 
A) a major revision of the logic of why trade within a country increases well-being. 
B) completely different from the logic of why trade within a country increases well-being. 
C) a narrow, special case of the logic of why trade within a country increases well-being. 
D) no different from the logic of why trade within a country increases well-being.

Question 2

Trade between two nations is complicated by

Accepted Answer

A) the variability in exchange rates of the respective nation's currencies. 
B) different production techniques in the nations. 
C) the age and experience of the respective nation's diplomats. 
D) the variability in climate between the nations. 
A) the variability in exchange rates of the respective nation's currencies. 
B) different production techniques in the nations. 
C) the age and experience of the respective nation's diplomats. 
D) the variability in climate between the nations.

Question 3

If Argentina has a large amount of farmland and Great Britain has many factories,

Accepted Answer

A) the two nations have no reason to trade. 
B) Argentina will be willing to trade but Great Britain will not. 
C) Great Britain will be willing to trade but Argentina will not. 
D) the two nations will probably engage in mutually advantageous trade. 
A) the two nations have no reason to trade. 
B) Argentina will be willing to trade but Great Britain will not. 
C) Great Britain will be willing to trade but Argentina will not. 
D) the two nations will probably engage in mutually advantageous trade.

Question 4

"Dumping" means destroying goods to prevent driving down the price.

Accepted Answer

A) True 
 B)False

Question 5

The way in which a country benefits from trade is that it can

Accepted Answer

A) obtain goods at lower opportunity cost than producing them itself. 
B) exploit economies of scale in production and lower the cost of goods it produces. 
C) obtain a wider range of goods than it can produce for itself. 
D) All of the above are benefits. 
A) obtain goods at lower opportunity cost than producing them itself. 
B) exploit economies of scale in production and lower the cost of goods it produces. 
C) obtain a wider range of goods than it can produce for itself. 
D) All of the above are benefits.

Question 6

Mercantilist policy is to do everything it can to promote exports and to discourage imports.

Accepted Answer

A) True 
 B)False

Question 7

Cheap labor is the source of comparative advantages.

Accepted Answer

A) True 
 B)False

Question 8

Figure 22-6
  
-From Figure 22-6, one can infer that

Accepted Answer

A) Honduras will be willing to trade bananas for corn at a unit ratio of no less than 2 corn:1 banana. 
B) Honduras will be willing to trade bananas as long as the unit exchange ratio is greater than 1/2 corn:1 banana. 
C) Honduras has no potential to gain from trade. 
D) Honduras will be unwilling to trade at an exchange ratio. 
A) Honduras will be willing to trade bananas for corn at a unit ratio of no less than 2 corn:1 banana. 
B) Honduras will be willing to trade bananas as long as the unit exchange ratio is greater than 1/2 corn:1 banana. 
C) Honduras has no potential to gain from trade. 
D) Honduras will be unwilling to trade at an exchange ratio.

Question 9

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

Accepted Answer

A) effectively, ineffectively 
B) haphazardly, carefully 
C) equally, capriciously 
D) unfairly, fairly 
E) unequally, unequally 
A) effectively, ineffectively 
B) haphazardly, carefully 
C) equally, capriciously 
D) unfairly, fairly 
E) unequally, unequally

Question 10

Tariffs are different from quotas because they

Accepted Answer

A) increase government revenue. 
B) increase profits. 
C) increase the quantity traded. 
D) place all the burden on foreigners. 
A) increase government revenue. 
B) increase profits. 
C) increase the quantity traded. 
D) place all the burden on foreigners.

Question 11

A tariff affects imports

Accepted Answer

A) by limiting quantity and raising price to a higher level. 
B) by reducing quantity demanded so that supply falls. 
C) by increasing supply, raising price, and reducing demand. 
D) by raising price and reducing quantity demanded. 
A) by limiting quantity and raising price to a higher level. 
B) by reducing quantity demanded so that supply falls. 
C) by increasing supply, raising price, and reducing demand. 
D) by raising price and reducing quantity demanded.

Question 12

Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor.Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor.Assume that this is typical of the labor force as a whole.Which location has the absolute advantage and which has the comparative advantage, in the production of each good?
 Can these locations reap gains from trade?

Accepted Answer

From the numbers given, Vermont has the

Question 13

Figure 22-5
  
-From the graph in Figure 22-5 (curves show output per unit of labor input), one can infer that

Accepted Answer

A) in terms of TVs, computers are more expensive in China than Japan. 
B) in terms of computers, TVs are more expensive in China than Japan. 
C) China should produce more TVs and fewer computers. 
D) All of the above are correct. 
A) in terms of TVs, computers are more expensive in China than Japan. 
B) in terms of computers, TVs are more expensive in China than Japan. 
C) China should produce more TVs and fewer computers. 
D) All of the above are correct.

Question 14

Figure 22-6
  
-From the graph in Figure 22-6, the opportunity cost of a unit of bananas is

Accepted Answer

A) 4 units of corn for England; 1/2 unit of corn for Honduras. 
B) 1/4 unit of corn for England; 2 units of bananas in England. 
C) 8 units of corn in England; 3 units of corn in Honduras. 
D) 4 units of corn in England; 12 units of corn in Honduras. 
A) 4 units of corn for England; 1/2 unit of corn for Honduras. 
B) 1/4 unit of corn for England; 2 units of bananas in England. 
C) 8 units of corn in England; 3 units of corn in Honduras. 
D) 4 units of corn in England; 12 units of corn in Honduras.

Question 15

David Ricardo discovered that two countries can still gain by trading even if one country is more efficient in the production of every commodity.Ricardo's discovery is called the law of

Accepted Answer

A) comparative advantage. 
B) absolute advantage. 
C) compensating balances. 
D) increasing returns. 
A) comparative advantage. 
B) absolute advantage. 
C) compensating balances. 
D) increasing returns.

Question 16

One of the main reasons that people want to limit imports is the

Accepted Answer

A) fear that imports will decrease the income of Americans. 
B) idea that cheap foreign labor destroys American jobs. 
C) concept that if trade benefits another country, it must harm the United States. 
D) All of the above are correct. 
A) fear that imports will decrease the income of Americans. 
B) idea that cheap foreign labor destroys American jobs. 
C) concept that if trade benefits another country, it must harm the United States. 
D) All of the above are correct.

Question 17

The U.S.Constitution

Accepted Answer

A) prohibits tariffs on trade between Arkansas and New York but allows tariffs on trade between Hawaii and Alaska. 
B) prohibits tariffs on all trade. 
C) allows tariffs on trade with other countries, but not on trade between the states. 
D) allows tariffs only on goods purchased from the communist nations. 
A) prohibits tariffs on trade between Arkansas and New York but allows tariffs on trade between Hawaii and Alaska. 
B) prohibits tariffs on all trade. 
C) allows tariffs on trade with other countries, but not on trade between the states. 
D) allows tariffs only on goods purchased from the communist nations.

Question 18

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Accepted Answer

National defense arguments can be made f

Question 19

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products.How would the analysis used to explain international trade apply?

Accepted Answer

The analysis is identical.If nations and

Exam 35: International Trade and Comparative Advantage

The logic of why international trade increases well-being is

Trade between two nations is complicated by

If Argentina has a large amount of farmland and Great Britain has many factories,

"Dumping" means destroying goods to prevent driving down the price.

The way in which a country benefits from trade is that it can

Mercantilist policy is to do everything it can to promote exports and to discourage imports.

Cheap labor is the source of comparative advantages.

Figure 22-6 -From Figure 22-6, one can infer that

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

Tariffs are different from quotas because they

A tariff affects imports

Figure 22-5 -From the graph in Figure 22-5 (curves show output per unit of labor input), one can infer that

Figure 22-6 -From the graph in Figure 22-6, the opportunity cost of a unit of bananas is

David Ricardo discovered that two countries can still gain by trading even if one country is more efficient in the production of every commodity.Ricardo's discovery is called the law of

One of the main reasons that people want to limit imports is the

The U.S.Constitution

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Comparative advantage is illustrated by the slopes of production possibilities frontiers.

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products.How would the analysis used to explain international trade apply?

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

A tariff on imports affects foreign suppliers ; a quota affects foreign suppliers .