Question 1

One of the main sources of comparative advantage is internal economies.

Accepted Answer

A) True 
 B)False

Question 2

The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that

Accepted Answer

A)  each country would be better off from trade if it had an absolute advantage in producing one of the goods. 
B)  each country would have a comparative advantage in the production of the good for which it had an absolute advantage. 
C)  mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods. 
D)  mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods. 
A)  each country would be better off from trade if it had an absolute advantage in producing one of the goods. 
B)  each country would have a comparative advantage in the production of the good for which it had an absolute advantage. 
C)  mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods. 
D)  mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods.

Question 3

Figure 9-1
   
Figure 9-1 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-1.Under autarky,the deadweight loss is

Accepted Answer

A)  $0. 
B)  $15. 
C)  $30. 
D)  $40. 
A)  $0. 
B)  $15. 
C)  $30. 
D)  $40.

Question 4

A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a

Accepted Answer

A)  tariff. 
B)  quota. 
C)  quantity floor. 
D)  barricade. 
A)  tariff. 
B)  quota. 
C)  quantity floor. 
D)  barricade.

Question 5

An economic principle that explains why countries produce different goods and services is

Accepted Answer

A)  absolute advantage. 
B)  trade as a percentage of GDP. 
C)  comparative advantage. 
D)  NAFTA. 
A)  absolute advantage. 
B)  trade as a percentage of GDP. 
C)  comparative advantage. 
D)  NAFTA.

Question 6

Measuring the impact of a quota or tariff on the U.S.economy is an example of ________.Stating that a quota or tariff should be eliminated is an example of ________.

Accepted Answer

A)  statistical analysis; economic analysis 
B)  positive analysis; normative analysis 
C)  econometric analysis; protectionism 
D)  trade analysis; an opinion 
A)  statistical analysis; economic analysis 
B)  positive analysis; normative analysis 
C)  econometric analysis; protectionism 
D)  trade analysis; an opinion

Question 7

Table 9-1
   
Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Linda has a comparative advantage in dog bathing. 
B)  Sandy has an absolute advantage in dog bathing. 
C)  Sandy has a comparative advantage in dog bathing. 
D)  Linda has a comparative advantage in dog grooming and dog bathing. 
A)  Linda has a comparative advantage in dog bathing. 
B)  Sandy has an absolute advantage in dog bathing. 
C)  Sandy has a comparative advantage in dog bathing. 
D)  Linda has a comparative advantage in dog grooming and dog bathing.

Question 8

In the United States,imports and exports make up more than half of GDP.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true?

Accepted Answer

A)  Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B)  Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop. 
C)  Most of the leading exporting countries are large, high-income countries. 
D)  All sectors of the U.S. economy are affected equally by international trade. 
A)  Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B)  Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop. 
C)  Most of the leading exporting countries are large, high-income countries. 
D)  All sectors of the U.S. economy are affected equally by international trade.

Question 10

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

Accepted Answer

A) True 
 B)False

Question 11

Figure 9-3
   
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by domestic producers?

Accepted Answer

A)  Domestic consumption equals 28 million pounds of which 18 million pounds are produced by domestic producers. 
B)  Domestic consumption equals 40 million pounds of which 22 million pounds are produced by domestic producers. 
C)  Domestic consumption equals 34 million pounds of which 16 million pounds are produced by domestic producers. 
D)  Domestic consumption equals 34 million pounds of which 18 million pounds are produced by domestic producers. 
A)  Domestic consumption equals 28 million pounds of which 18 million pounds are produced by domestic producers. 
B)  Domestic consumption equals 40 million pounds of which 22 million pounds are produced by domestic producers. 
C)  Domestic consumption equals 34 million pounds of which 16 million pounds are produced by domestic producers. 
D)  Domestic consumption equals 34 million pounds of which 18 million pounds are produced by domestic producers.

Question 12

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

Accepted Answer

A)  they do not want to offend their employers who want them. 
B)  politicians lobby to convince workers the restrictions will make them better off. 
C)  they believe the restrictions will protect their jobs. 
D)  they don't understand that the restrictions will threaten their jobs. 
A)  they do not want to offend their employers who want them. 
B)  politicians lobby to convince workers the restrictions will make them better off. 
C)  they believe the restrictions will protect their jobs. 
D)  they don't understand that the restrictions will threaten their jobs.

Question 13

A tariff is a tax imposed by a government on

Accepted Answer

A)  exports. 
B)  services. 
C)  imports. 
D)  luxury items. 
A)  exports. 
B)  services. 
C)  imports. 
D)  luxury items.

Question 14

Which of the following is not an example of a trade restriction?

Accepted Answer

A)  tariffs 
B)  quotas and voluntary export restraints 
C)  legislation requiring that cars sold in a country have a 50 percent domestic content 
D)  consumer preferences for goods produced domestically 
A)  tariffs 
B)  quotas and voluntary export restraints 
C)  legislation requiring that cars sold in a country have a 50 percent domestic content 
D)  consumer preferences for goods produced domestically

Question 15

In the U.S.steel market,a "Buy American" provision in the 2009 stimulus package would

Accepted Answer

A)  convert some consumer surplus to deadweight loss. 
B)  transfer some deadweight loss to producer surplus. 
C)  transfer some producer surplus to consumer surplus. 
D)  reduce the producer surplus received by foreign manufacturers. 
A)  convert some consumer surplus to deadweight loss. 
B)  transfer some deadweight loss to producer surplus. 
C)  transfer some producer surplus to consumer surplus. 
D)  reduce the producer surplus received by foreign manufacturers.

Question 16

Twenty-seven countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Accepted Answer

A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association. 
A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association.

Question 17

Which of the following statements is used to justify protectionism?

Accepted Answer

A)  Free trade leads to higher prices for imported goods. 
B)  Free trade increases employment by protecting domestic firms. 
C)  A country should not rely on other countries for goods that are critical to its national defense. 
D)  Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection. 
A)  Free trade leads to higher prices for imported goods. 
B)  Free trade increases employment by protecting domestic firms. 
C)  A country should not rely on other countries for goods that are critical to its national defense. 
D)  Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection.

Question 18

Figure 9-3
   
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

Accepted Answer

A)  C 
B)  C + B 
C)  A + B + C 
D)  A + B + C + D 
A)  C 
B)  C + B 
C)  A + B + C 
D)  A + B + C + D

Question 19

Which of the following is the best example of a tariff?

Accepted Answer

A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 20

The process of countries becoming more open to foreign trade and investment is known as

Accepted Answer

A)  autarky. 
B)  foreign exchange. 
C)  globalization. 
D)  protectionism. 
A)  autarky. 
B)  foreign exchange. 
C)  globalization. 
D)  protectionism.

One of the main sources of comparative advantage is internal economies.

The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1.Under autarky,the deadweight loss is

A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a

An economic principle that explains why countries produce different goods and services is

Measuring the impact of a quota or tariff on the U.S.economy is an example of .Stating that a quota or tariff should be eliminated is an example of .

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

In the United States,imports and exports make up more than half of GDP.

Which of the following statements is true?

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by domestic producers?

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

A tariff is a tax imposed by a government on

Which of the following is not an example of a trade restriction?

In the U.S.steel market,a "Buy American" provision in the 2009 stimulus package would

Twenty-seven countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Which of the following statements is used to justify protectionism?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

Which of the following is the best example of a tariff?

The process of countries becoming more open to foreign trade and investment is known as

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 7: Comparative Advantage and the Gains From International Trade

One of the main sources of comparative advantage is internal economies.

The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1.Under autarky,the deadweight loss is

A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a

An economic principle that explains why countries produce different goods and services is

Measuring the impact of a quota or tariff on the U.S.economy is an example of ________.Stating that a quota or tariff should be eliminated is an example of ________.

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

In the United States,imports and exports make up more than half of GDP.

Which of the following statements is true?

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by domestic producers?

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

A tariff is a tax imposed by a government on

Which of the following is not an example of a trade restriction?

In the U.S.steel market,a "Buy American" provision in the 2009 stimulus package would

Twenty-seven countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Which of the following statements is used to justify protectionism?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

Which of the following is the best example of a tariff?

The process of countries becoming more open to foreign trade and investment is known as

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Measuring the impact of a quota or tariff on the U.S.economy is an example of .Stating that a quota or tariff should be eliminated is an example of .