Question 1

Figure 14-1
  
-Refer to Figure 14-1.In the absence of a tariff,what is the value of imports equal to?

Accepted Answer

A) e + i 
B) h + i + j 
C) d + e + f + h + i + j 
D) i 
A) e + i 
B) h + i + j 
C) d + e + f + h + i + j 
D) i

Question 2

Who would most likely benefit from a reduction in the tariff on imported steel?

Accepted Answer

A) the domestic consumers of steel 
B) workers in the steel industry 
C) foreign producers, at the expense of domestic consumers 
D) the domestic producers of steel 
A) the domestic consumers of steel 
B) workers in the steel industry 
C) foreign producers, at the expense of domestic consumers 
D) the domestic producers of steel

Question 3

Figure 14-1
  
-Refer to Figure 14-1.After a tariff is imposed,what is the government's tariff revenue?

Accepted Answer

A) d + e + f 
B) b + d + e + f 
C) e 
D) d + h + f + j 
A) d + e + f 
B) b + d + e + f 
C) e 
D) d + h + f + j

Question 4

Relative to a no-international-trade initial situation,if Canada imported wine,what would happen to the Canadian domestic price and output of wine?

Accepted Answer

A) The price would fall but domestic output would rise. 
B) The price would fall and domestic output would fall. 
C) The price would rise and domestic output would rise. 
D) The price would rise but domestic output would fall. 
A) The price would fall but domestic output would rise. 
B) The price would fall and domestic output would fall. 
C) The price would rise and domestic output would rise. 
D) The price would rise but domestic output would fall.

Question 5

Why does the infant industry argument for protectionism suggest that an industry must be protected in the early stages of its development?

Accepted Answer

A) so that it will not be subjected to a takeover from a foreign competitor 
B) so that there will be adequate supplies of crucial resources in case they are needed for national defence 
C) so that firms will be protected from subsidized foreign competition. 
D) so that domestic producers can attain the economies of scale to allow them to compete in world markets. 
A) so that it will not be subjected to a takeover from a foreign competitor 
B) so that there will be adequate supplies of crucial resources in case they are needed for national defence 
C) so that firms will be protected from subsidized foreign competition. 
D) so that domestic producers can attain the economies of scale to allow them to compete in world markets.

Question 6

Trade restrictions will stop foreign imports,which will increase Canadian employment and protect Canadian jobs.Most economists realize this argument is wrong.Can you explain why?

Accepted Answer

Trade restrictions will stop foreign imp

Question 7

Suppose that Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical workweek,while Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical workweek.What can we conclude from these numbers?

Accepted Answer

A) Canada has a comparative advantage in the production of hockey sticks. 
B) Canada has an absolute advantage in the production of maple syrup. 
C) Germany has a comparative advantage in the production of hockey sticks. 
D) Germany has an absolute advantage in the production of maple syrup. 
A) Canada has a comparative advantage in the production of hockey sticks. 
B) Canada has an absolute advantage in the production of maple syrup. 
C) Germany has a comparative advantage in the production of hockey sticks. 
D) Germany has an absolute advantage in the production of maple syrup.

Question 8

If opening up international trade resulted in Canada importing ballpoint pens,what would tend to happen to the Canadian price of ballpoint pens?

Accepted Answer

A) It is impossible to predict the impact. 
B) The domestic price will remain constant. 
C) The domestic price will fall. 
D) The domestic price will rise. 
A) It is impossible to predict the impact. 
B) The domestic price will remain constant. 
C) The domestic price will fall. 
D) The domestic price will rise.

Question 9

A nation can gain from international trade when the relative domestic prices of the nation differ from that in other countries and it imports goods for which it is a high opportunity cost producer.

Accepted Answer

A) True 
 B)False

Question 10

Table 14-1
Alternate Outputs from One Day's Labour Input:
Canada: 12 bushels of wheat or 3 yards of textiles
Great Britain: 3 bushels of wheat or 12 yards of textiles
-Refer to Table 14-1.What is the opportunity cost of one bushel of wheat in Great Britain?

Accepted Answer

A) 1 yard of textiles 
B) 3 yards of textiles 
C) 4 yards of textiles 
D) 12 yards of textiles 
A) 1 yard of textiles 
B) 3 yards of textiles 
C) 4 yards of textiles 
D) 12 yards of textiles

Question 11

Why do tariffs result in a decrease in consumer surplus?

Accepted Answer

A) The price and the quantity consumed of the protected good increases. 
B) The price of the protected good increases and quantity consumed decreases. 
C) The price and the quantity consumed of the protected good decreases. 
D) The price of the protected good decreases and quantity consumed increases. 
A) The price and the quantity consumed of the protected good increases. 
B) The price of the protected good increases and quantity consumed decreases. 
C) The price and the quantity consumed of the protected good decreases. 
D) The price of the protected good decreases and quantity consumed increases.

Question 12

Figure 14-1
  
-Refer to Figure 14-1.After a tariff is imposed,what is the domestic consumer surplus?

Accepted Answer

A) d + e + f 
B) a + b 
C) a + c 
D) b + d + e + f 
A) d + e + f 
B) a + b 
C) a + c 
D) b + d + e + f

Question 13

Which of the following is NOT a regional trade agreement?

Accepted Answer

A) NAFTA 
B) the Canada-Honduras free trade agreement 
C) the WTO 
D) the EU 
A) NAFTA 
B) the Canada-Honduras free trade agreement 
C) the WTO 
D) the EU

Question 14

Suppose Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year.What country has the comparative advantage in producing wheat and the absolute advantage in producing potatoes?

Accepted Answer

A) Ireland has comparative advantage in wheat production, while Canada has absolute advantage in potato production. 
B) Canada has both comparative advantage in wheat production and absolute advantage in potato production. 
C) Ireland has both comparative advantage in wheat production and absolute advantage in potato production. 
D) Canada has comparative advantage in wheat production, while Ireland has absolute advantage in potato production. 
A) Ireland has comparative advantage in wheat production, while Canada has absolute advantage in potato production. 
B) Canada has both comparative advantage in wheat production and absolute advantage in potato production. 
C) Ireland has both comparative advantage in wheat production and absolute advantage in potato production. 
D) Canada has comparative advantage in wheat production, while Ireland has absolute advantage in potato production.

Question 15

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Accepted Answer

A) The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations. 
B) The domestic price of automobiles would fall. 
C) The number of unemployed workers in the domestic automobile industry would rise. 
D) The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise. 
A) The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations. 
B) The domestic price of automobiles would fall. 
C) The number of unemployed workers in the domestic automobile industry would rise. 
D) The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.

Question 16

Can a nation gain from trade if it has a comparative disadvantage in the production of some commodity?

Accepted Answer

A) It cannot gain from international trade in the commodity. 
B) It can gain from international trade in that commodity only if it has an absolute advantage in that commodity. 
C) It can still gain from international trade in that commodity by getting it at a lower opportunity cost than if it produced it domestically. 
D) It cannot gain from international trade unless it has an absolute advantage in every other commodity. 
A) It cannot gain from international trade in the commodity. 
B) It can gain from international trade in that commodity only if it has an absolute advantage in that commodity. 
C) It can still gain from international trade in that commodity by getting it at a lower opportunity cost than if it produced it domestically. 
D) It cannot gain from international trade unless it has an absolute advantage in every other commodity.

Question 17

Mexico is a member of NAFTA.

Accepted Answer

A) True 
 B)False

Question 18

If Samoa could produce either 3 coconuts or 12 pineapples per worker,while Guam could produce either 5 coconuts or 20 pineapples per worker,what can we conclude in this situation?

Accepted Answer

A) Both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples. 
B) Mutually beneficial trade cannot occur. 
C) If trade occurs, both countries will be able to consume beyond their original production possibilities frontiers. 
D) Guam will be better off if it exports coconuts and imports pineapples. 
A) Both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples. 
B) Mutually beneficial trade cannot occur. 
C) If trade occurs, both countries will be able to consume beyond their original production possibilities frontiers. 
D) Guam will be better off if it exports coconuts and imports pineapples.

Question 19

Japan and China can both produce guns and rice.What type of advantage will the country with the lowest opportunity cost of guns (in terms of rice)have?

Accepted Answer

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

Question 20

Compared to the no-trade situation,what occurs when a country exports a good?

Accepted Answer

A) Domestic consumers gain, domestic producers lose, and the losses outweigh the gains. 
B) Domestic consumers gain, domestic producers lose, and the gains outweigh the losses. 
C) Domestic consumers lose, domestic producers gain, and the gains outweigh the losses. 
D) Domestic consumers gain and domestic producers lose an equal amount. 
A) Domestic consumers gain, domestic producers lose, and the losses outweigh the gains. 
B) Domestic consumers gain, domestic producers lose, and the gains outweigh the losses. 
C) Domestic consumers lose, domestic producers gain, and the gains outweigh the losses. 
D) Domestic consumers gain and domestic producers lose an equal amount.

Figure 14-1 -Refer to Figure 14-1.In the absence of a tariff,what is the value of imports equal to?

Who would most likely benefit from a reduction in the tariff on imported steel?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the government's tariff revenue?

Relative to a no-international-trade initial situation,if Canada imported wine,what would happen to the Canadian domestic price and output of wine?

Why does the infant industry argument for protectionism suggest that an industry must be protected in the early stages of its development?

Trade restrictions will stop foreign imports,which will increase Canadian employment and protect Canadian jobs.Most economists realize this argument is wrong.Can you explain why?

Suppose that Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical workweek,while Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical workweek.What can we conclude from these numbers?

If opening up international trade resulted in Canada importing ballpoint pens,what would tend to happen to the Canadian price of ballpoint pens?

A nation can gain from international trade when the relative domestic prices of the nation differ from that in other countries and it imports goods for which it is a high opportunity cost producer.

Table 14-1 Alternate Outputs from One Day's Labour Input: Canada: 12 bushels of wheat or 3 yards of textiles Great Britain: 3 bushels of wheat or 12 yards of textiles -Refer to Table 14-1.What is the opportunity cost of one bushel of wheat in Great Britain?

Why do tariffs result in a decrease in consumer surplus?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the domestic consumer surplus?

Which of the following is NOT a regional trade agreement?

Suppose Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year.What country has the comparative advantage in producing wheat and the absolute advantage in producing potatoes?

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Can a nation gain from trade if it has a comparative disadvantage in the production of some commodity?

Mexico is a member of NAFTA.

If Samoa could produce either 3 coconuts or 12 pineapples per worker,while Guam could produce either 5 coconuts or 20 pineapples per worker,what can we conclude in this situation?

Japan and China can both produce guns and rice.What type of advantage will the country with the lowest opportunity cost of guns (in terms of rice)have?

Compared to the no-trade situation,what occurs when a country exports a good?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Finance

Filters

Exam 14: International Trade

Figure 14-1 -Refer to Figure 14-1.In the absence of a tariff,what is the value of imports equal to?

Who would most likely benefit from a reduction in the tariff on imported steel?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the government's tariff revenue?

Relative to a no-international-trade initial situation,if Canada imported wine,what would happen to the Canadian domestic price and output of wine?

Why does the infant industry argument for protectionism suggest that an industry must be protected in the early stages of its development?

Trade restrictions will stop foreign imports,which will increase Canadian employment and protect Canadian jobs.Most economists realize this argument is wrong.Can you explain why?

Suppose that Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical workweek,while Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical workweek.What can we conclude from these numbers?

If opening up international trade resulted in Canada importing ballpoint pens,what would tend to happen to the Canadian price of ballpoint pens?

A nation can gain from international trade when the relative domestic prices of the nation differ from that in other countries and it imports goods for which it is a high opportunity cost producer.

Table 14-1 Alternate Outputs from One Day's Labour Input: Canada: 12 bushels of wheat or 3 yards of textiles Great Britain: 3 bushels of wheat or 12 yards of textiles -Refer to Table 14-1.What is the opportunity cost of one bushel of wheat in Great Britain?

Why do tariffs result in a decrease in consumer surplus?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the domestic consumer surplus?

Which of the following is NOT a regional trade agreement?

Suppose Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year.What country has the comparative advantage in producing wheat and the absolute advantage in producing potatoes?

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Can a nation gain from trade if it has a comparative disadvantage in the production of some commodity?

Mexico is a member of NAFTA.

If Samoa could produce either 3 coconuts or 12 pineapples per worker,while Guam could produce either 5 coconuts or 20 pineapples per worker,what can we conclude in this situation?

Japan and China can both produce guns and rice.What type of advantage will the country with the lowest opportunity cost of guns (in terms of rice)have?

Compared to the no-trade situation,what occurs when a country exports a good?

The Role and Method of Economics

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Finance

Filters