Question 1

When every country does what it is best at,

Accepted Answer

A) every other nation will lose because of the inability to compete. 
B) all other nations can benefit because more of every commodity can be produced. 
C) some nations will gain at the expense of other nations. 
D) rich nations will gain at the expense of poor nations. 
A) every other nation will lose because of the inability to compete. 
B) all other nations can benefit because more of every commodity can be produced. 
C) some nations will gain at the expense of other nations. 
D) rich nations will gain at the expense of poor nations.

Question 2

"Protection" is designed to help

Accepted Answer

A) firms whose relative inefficiency does not permit successful competition with imports. 
B) workers who have very high productivity, and cannot survive against low-paid foreign workers. 
C) government that needs revenue from tariffs and quotas to cover government spending. 
D) firms that are highly efficient, and cannot survive against low-price foreign imports. 
A) firms whose relative inefficiency does not permit successful competition with imports. 
B) workers who have very high productivity, and cannot survive against low-paid foreign workers. 
C) government that needs revenue from tariffs and quotas to cover government spending. 
D) firms that are highly efficient, and cannot survive against low-price foreign imports.

Question 3

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

Accepted Answer

A) increase in Japanese cars goes into the revenue of U.S.automakers. 
B) increase in Japanese cars goes into the revenue of Japanese automakers. 
C) increase in Japanese cars goes into the revenue of the U.S.government. 
D) decrease in Japanese cars comes out of the revenue of U.S.automakers. 
E) decrease in Japanese cars comes out of the revenue of the U.S.government. 
A) increase in Japanese cars goes into the revenue of U.S.automakers. 
B) increase in Japanese cars goes into the revenue of Japanese automakers. 
C) increase in Japanese cars goes into the revenue of the U.S.government. 
D) decrease in Japanese cars comes out of the revenue of U.S.automakers. 
E) decrease in Japanese cars comes out of the revenue of the U.S.government.

Question 4

The U.S.Constitution prevents tariffs on trade between the individual states.

Accepted Answer

A) True 
 B)False

Question 5

A quota brings a more serious misallocation of resources than a tariff.

Accepted Answer

A) True 
 B)False

Question 6

The estimated cost of automobile jobs saved due to limitations on foreign autos is $105,000 per job.Why is there a cost to saving jobs through protectionism?

Accepted Answer

When foreign cars are limited, consumers

Question 7

As a result of pure free trade in a commodity the

Accepted Answer

A) price of the commodity must be the same in all countries. 
B) total quantity imported will exceed the total quantity exported. 
C) price of the commodity will be higher in the producing country. 
D) price of the commodity will be lower in the producing country. 
A) price of the commodity must be the same in all countries. 
B) total quantity imported will exceed the total quantity exported. 
C) price of the commodity will be higher in the producing country. 
D) price of the commodity will be lower in the producing country.

Question 8

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Accepted Answer

A) True 
 B)False

Question 9

If every country uses tariffs, everyone is likely to lose.

Accepted Answer

A) True 
 B)False

Question 10

Trade between nations usually means that

Accepted Answer

A) one country is richer than another. 
B) one country becomes richer while the other becomes poorer. 
C) both trading nations show some gains. 
D) one trading country is trying to "beggar its neighbor." 
A) one country is richer than another. 
B) one country becomes richer while the other becomes poorer. 
C) both trading nations show some gains. 
D) one trading country is trying to "beggar its neighbor."

Question 11

Ideally, a free trade policy should be accompanied by

Accepted Answer

A) a public education program to make the benefits known. 
B) open borders and amnesty for all undocumented workers. 
C) programs to ensure no one loses a job as a result of foreign competition. 
D) programs to assist workers who lose their jobs to foreign competition. 
A) a public education program to make the benefits known. 
B) open borders and amnesty for all undocumented workers. 
C) programs to ensure no one loses a job as a result of foreign competition. 
D) programs to assist workers who lose their jobs to foreign competition.

Question 12

A country has a comparative advantage over another in the production of gadgets if it can produce

Accepted Answer

A) more gadgets than can the other country. 
B) more gadgets than can any other country. 
C) gadgets more efficiently than it can produce any other good. 
D) gadgets at lower opportunity cost than can the other country. 
A) more gadgets than can the other country. 
B) more gadgets than can any other country. 
C) gadgets more efficiently than it can produce any other good. 
D) gadgets at lower opportunity cost than can the other country.

Question 13

Is the call for protection on the basis of national defense valid?

Accepted Answer

A) No, because protection has no place in national defense. 
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 national defense. 
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 14

-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 Japan?

Accepted Answer

A) P = $100, Q = 100 
B) P = $200, Q = 85 
C) P = $300, Q = 70 
D) P = $400, Q = 60 
A) P = $100, Q = 100 
B) P = $200, Q = 85 
C) P = $300, Q = 70 
D) P = $400, Q = 60

Question 15

Trade occurs only when a country has an absolute advantage and not just a comparative advantage over another country.

Accepted Answer

A) True 
 B)False

Question 16

Economists say that voluntary exchange makes both parties better off.What is the explanation that they offer to back up this conclusion?

Accepted Answer

This analysis was developed in Chapter 1

Question 17

Workers in high-wage countries cannot improve their real income when they trade with low-wage countries.

Accepted Answer

A) True 
 B)False

Question 18

Figure 22-7
  
-In Figure 22-7, where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland, Pastaland is

Accepted Answer

A) better at producing pasta and pesto than Pestoland. 
B) better at producing pasta, but relatively inefficient in producing pesto. 
C) relatively better at producing pasta than pesto. 
D) relatively better at producing pesto than pasta. 
A) better at producing pasta and pesto than Pestoland. 
B) better at producing pasta, but relatively inefficient in producing pesto. 
C) relatively better at producing pasta than pesto. 
D) relatively better at producing pesto than pasta.

Question 19

-Using the data from Table 22-2, suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Accepted Answer

A) 16 wine, 8 cloth. 
B) 16 wine, 16 cloth. 
C) 12 wine, 12 cloth. 
D) 8 wine, 16 cloth. 
A) 16 wine, 8 cloth. 
B) 16 wine, 16 cloth. 
C) 12 wine, 12 cloth. 
D) 8 wine, 16 cloth.

Question 20

One nation can gain from an exchange only at the expense of another.

Accepted Answer

A) True 
 B)False

Exam 35: International Trade and Comparative Advantage

When every country does what it is best at,

"Protection" is designed to help

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

The U.S.Constitution prevents tariffs on trade between the individual states.

A quota brings a more serious misallocation of resources than a tariff.

The estimated cost of automobile jobs saved due to limitations on foreign autos is $105,000 per job.Why is there a cost to saving jobs through protectionism?

As a result of pure free trade in a commodity the

Both tariffs and quotas will restrict supplies coming into the country from abroad.

If every country uses tariffs, everyone is likely to lose.

Trade between nations usually means that

Ideally, a free trade policy should be accompanied by

A country has a comparative advantage over another in the production of gadgets if it can produce

Is the call for protection on the basis of national defense valid?

-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 Japan?

Trade occurs only when a country has an absolute advantage and not just a comparative advantage over another country.

Economists say that voluntary exchange makes both parties better off.What is the explanation that they offer to back up this conclusion?

Workers in high-wage countries cannot improve their real income when they trade with low-wage countries.

Figure 22-7 -In Figure 22-7, where AB represents the production possibilities of Pestoland and CD the production possibilities of Pastaland, Pastaland is

-Using the data from Table 22-2, suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

One nation can gain from an exchange only at the expense of another.

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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