Question 1

When other nations Orient "dump" products on the U.S.market, they

Accepted Answer

A) sell at prices that do not cover costs of production. 
B) sell at prices lower than prices charged to their own domestic customers. 
C) expect the United States to help pay any industrialists' losses. 
D) All of the above are true. 
A) sell at prices that do not cover costs of production. 
B) sell at prices lower than prices charged to their own domestic customers. 
C) expect the United States to help pay any industrialists' losses. 
D) All of the above are true.

Question 2

The world price of a commodity will settle at the level where

Accepted Answer

A) supply and demand are equal within each country. 
B) the excess demand of the importing country is equal to the excess supply of the exporting country. 
C) the excess demand in the exporting country is equal to the excess demand in the importing country. 
D) there is no excess demand in the exporting country. 
A) supply and demand are equal within each country. 
B) the excess demand of the importing country is equal to the excess supply of the exporting country. 
C) the excess demand in the exporting country is equal to the excess demand in the importing country. 
D) there is no excess demand in the exporting country.

Question 3

Figure 22-7
  
-In Figure 22-7, CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland, respectively.If both countries are given the opportunity to trade at prices indicated by CF,

Accepted Answer

A) both will refuse trade. 
B) both will agree to trade. 
C) Pestoland will wish to trade, but Pastaland will not. 
D) Pastaland will wish to trade, but Pestoland will not. 
A) both will refuse trade. 
B) both will agree to trade. 
C) Pestoland will wish to trade, but Pastaland will not. 
D) Pastaland will wish to trade, but Pestoland will not.

Question 4

Voluntary exchange is based on the principle that all parties must gain from trade.

Accepted Answer

A) True 
 B)False

Question 5

Wages in most other countries have increased as a percentage of U.S.wages in the past 33 years.

Accepted Answer

A) True 
 B)False

Question 6

A common fallacy that is used to oppose trade is the idea that

Accepted Answer

A) the only gains from trade go to the rich, so the poor must lose. 
B) "you get what you pay for." 
C) "if it's not broken, don't fix it." 
D) one country's gain must be another's loss. 
E) what is true for one is true for all. 
A) the only gains from trade go to the rich, so the poor must lose. 
B) "you get what you pay for." 
C) "if it's not broken, don't fix it." 
D) one country's gain must be another's loss. 
E) what is true for one is true for all.

Question 7

In the long run, foreign labor remains cheap when and if

Accepted Answer

A) it becomes highly efficient and competes successfully internationally. 
B) countries erect barriers to trade between poor countries. 
C) productivity increases more rapidly in poor countries than in rich countries. 
D) it remains inefficient compared to other countries' labor. 
A) it becomes highly efficient and competes successfully internationally. 
B) countries erect barriers to trade between poor countries. 
C) productivity increases more rapidly in poor countries than in rich countries. 
D) it remains inefficient compared to other countries' labor.

Question 8

If Brazil voluntarily ships coffee to the United States in return for airplanes,

Accepted Answer

A) Brazil will benefit, but the United States will lose. 
B) one of the two nations will benefit and the other nation will lose since the trade does not increase the physical quantities of coffee and airplanes available. 
C) both Brazil and the United States will benefit since the trade allows each nation to acquire items. 
D) both Brazil and the United States will lose since there is no increase in the production of coffee or airplanes and the trade will involve certain transaction costs. 
A) Brazil will benefit, but the United States will lose. 
B) one of the two nations will benefit and the other nation will lose since the trade does not increase the physical quantities of coffee and airplanes available. 
C) both Brazil and the United States will benefit since the trade allows each nation to acquire items. 
D) both Brazil and the United States will lose since there is no increase in the production of coffee or airplanes and the trade will involve certain transaction costs.

Question 9

The Trade Adjustment Assistance program is intended to help

Accepted Answer

A) businesses that seek to expand exports into protected foreign markets. 
B) local governments that are harmed when businesses fail as imports increase. 
C) protected industries obtain improved technology in order to increase productivity. 
D) workers and businesses that lose markets because of increases in imports. 
A) businesses that seek to expand exports into protected foreign markets. 
B) local governments that are harmed when businesses fail as imports increase. 
C) protected industries obtain improved technology in order to increase productivity. 
D) workers and businesses that lose markets because of increases in imports.

Question 10

If Japan imposes a quota on imports of rice, the effect will be

Accepted Answer

A) less rice and higher price in Japan, lower rice prices in exporting countries. 
B) more rice and higher price in Japan, higher rice prices in exporting countries. 
C) less rice and lower price in Japan, higher rice prices in exporting countries. 
D) more rice and lower price in Japan, lower rice prices in exporting countries. 
E) less rice and higher price in Japan, higher rice prices in exporting countries. 
A) less rice and higher price in Japan, lower rice prices in exporting countries. 
B) more rice and higher price in Japan, higher rice prices in exporting countries. 
C) less rice and lower price in Japan, higher rice prices in exporting countries. 
D) more rice and lower price in Japan, lower rice prices in exporting countries. 
E) less rice and higher price in Japan, higher rice prices in exporting countries.

Question 11

Why is comparative advantage rather than absolute advantage the basis for trade?

Accepted Answer

The concept of comparative advantage emp

Question 12

Even though international trade is more complicated, supply and demand are still at the center of the price determination mechanism.

Accepted Answer

A) True 
 B)False

Question 13

A country can gain by importing a good that it can make itself if

Accepted Answer

A) this enables the country to make another good in which it is extremely efficient. 
B) it has an absolute disadvantage in the good. 
C) this permits the country to establish comparative advantage in the good. 
D) All of the above are correct. 
A) this enables the country to make another good in which it is extremely efficient. 
B) it has an absolute disadvantage in the good. 
C) this permits the country to establish comparative advantage in the good. 
D) All of the above are correct.

Question 14

Tariffs and quotas are effective in protecting industry

Accepted Answer

A) but at very high cost per job saved. 
B) and at very low cost per job saved. 
C) but have not saved any jobs in the industries. 
D) and do not distort the economy in the process. 
A) but at very high cost per job saved. 
B) and at very low cost per job saved. 
C) but have not saved any jobs in the industries. 
D) and do not distort the economy in the process.

Question 15

If two countries have production possibilities curves with different slopes, there is no possibility for gains from trade.

Accepted Answer

A) True 
 B)False

Question 16

What is strategic trade policy?
 What are the pros and cons of such a policy by a nation in its dealings with other nations?

Accepted Answer

Strategic trade policy assumes that pure

Question 17

If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will

Accepted Answer

A) fall. 
B) rise. 
C) exceed the price in foreign countries. 
D) be below the price in foreign countries. 
A) fall. 
B) rise. 
C) exceed the price in foreign countries. 
D) be below the price in foreign countries.

Question 18

Table 22-1  
-From Table 22-1, the United States

Accepted Answer

A) has an absolute advantage over Great Britain in the production of textiles. 
B) has an absolute advantage over Great Britain in the production of wheat. 
C) has a comparative advantage in the production of textiles. 
D) should export textiles to Great Britain. 
A) has an absolute advantage over Great Britain in the production of textiles. 
B) has an absolute advantage over Great Britain in the production of wheat. 
C) has a comparative advantage in the production of textiles. 
D) should export textiles to Great Britain.

Question 19

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice) will

Accepted Answer

A) import guns. 
B) have a comparative advantage in guns. 
C) have an absolute advantage in guns. 
D) have a comparative advantage in rice. 
A) import guns. 
B) have a comparative advantage in guns. 
C) have an absolute advantage in guns. 
D) have a comparative advantage in rice.

Question 20

Colombia produces coffee with less labor and land than any other country; it therefore surely has

Accepted Answer

A) an absolute advantage in coffee production. 
B) a comparative advantage in coffee production. 
C) absolute efficiency in coffee production. 
D) a comparatively absolute advantage in coffee production. 
A) an absolute advantage in coffee production. 
B) a comparative advantage in coffee production. 
C) absolute efficiency in coffee production. 
D) a comparatively absolute advantage in coffee production.

Exam 35: International Trade and Comparative Advantage

When other nations Orient "dump" products on the U.S.market, they

The world price of a commodity will settle at the level where

Figure 22-7 -In Figure 22-7, CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland, respectively.If both countries are given the opportunity to trade at prices indicated by CF,

Voluntary exchange is based on the principle that all parties must gain from trade.

Wages in most other countries have increased as a percentage of U.S.wages in the past 33 years.

A common fallacy that is used to oppose trade is the idea that

In the long run, foreign labor remains cheap when and if

If Brazil voluntarily ships coffee to the United States in return for airplanes,

The Trade Adjustment Assistance program is intended to help

If Japan imposes a quota on imports of rice, the effect will be

Why is comparative advantage rather than absolute advantage the basis for trade?

Even though international trade is more complicated, supply and demand are still at the center of the price determination mechanism.

A country can gain by importing a good that it can make itself if

Tariffs and quotas are effective in protecting industry

If two countries have production possibilities curves with different slopes, there is no possibility for gains from trade.

What is strategic trade policy? What are the pros and cons of such a policy by a nation in its dealings with other nations?

If the supply curve of a commodity is upward sloping, and the producing country begins to export more in a pure free trade system, the domestic price of the commodity will

Table 22-1 -From Table 22-1, the United States

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice) will

Colombia produces coffee with less labor and land than any other country; it therefore surely has

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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