Question 1

Which of the following best describes a nation that does NOT have an absolute advantage in producing anything?

Accepted Answer

A) It will benefit if it refuses to trade. 
B) It can have no comparative advantage either. 
C) It will export raw materials and import finished products. 
D) It will have a comparative advantage in the activity in which its disadvantage is the least. 
A) It will benefit if it refuses to trade. 
B) It can have no comparative advantage either. 
C) It will export raw materials and import finished products. 
D) It will have a comparative advantage in the activity in which its disadvantage is the least.

Question 2

Which of the following is NOT a short-run impact of increasing tariffs on the Canadian industries they seek to protect?

Accepted Answer

A) government tax revenues increase 
B) prices of the goods produced by protected industries increase 
C) consumers' real incomes increase 
D) domestic production and sales by the protected industries increase 
A) government tax revenues increase 
B) prices of the goods produced by protected industries increase 
C) consumers' real incomes increase 
D) domestic production and sales by the protected industries increase

Question 3

In Artland,the opportunity cost of producing 1 tonne of wheat is 2 tonnes of corn,while in Scienceland,the opportunity cost of producing 2 tonnes of wheat is 3 tonnes of corn.What action would leave both countries better off?

Accepted Answer

A) Artland sells 4 tonnes of wheat to Scienceland in return for 7 tonnes of corn. 
B) Artland sells 4 tonnes of wheat to Scienceland in return for 10 tonnes of corn. 
C) Scienceland sells 4 tonnes of wheat to Artland in return for 4 tonnes of corn. 
D) Scienceland sells 4 tonnes of wheat to Artland in return for 7 tonnes of corn. 
A) Artland sells 4 tonnes of wheat to Scienceland in return for 7 tonnes of corn. 
B) Artland sells 4 tonnes of wheat to Scienceland in return for 10 tonnes of corn. 
C) Scienceland sells 4 tonnes of wheat to Artland in return for 4 tonnes of corn. 
D) Scienceland sells 4 tonnes of wheat to Artland in return for 7 tonnes of corn.

Question 4

Figure 14-1
  
-Refer to Figure 14-1.After a tariff is imposed,what is the value of imports?

Accepted Answer

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

Question 5

Suppose an exporter has an upward-sloping supply curve.If a change in import demands in other countries leads it to a decrease in exports,other things equal,what would we expect to occur to prices?

Accepted Answer

A) The world price of the commodity will tend to be lower than before the change. 
B) The domestic price of the commodity will rise. 
C) The domestic price of the commodity will tend to be higher, but the world price will not change. 
D) The domestic price of the commodity will be higher than the price in foreign countries, if transportation costs are positive. 
A) The world price of the commodity will tend to be lower than before the change. 
B) The domestic price of the commodity will rise. 
C) The domestic price of the commodity will tend to be higher, but the world price will not change. 
D) The domestic price of the commodity will be higher than the price in foreign countries, if transportation costs are positive.

Question 6

Which of the following is NOT a short-run impact of imposing quotas on the Canadian industries they seek to protect?

Accepted Answer

A) prices of the goods produced by protected industries increase 
B) consumers' real incomes decrease 
C) domestic production and sales by the protected industries increase 
D) government tax revenues increase 
A) prices of the goods produced by protected industries increase 
B) consumers' real incomes decrease 
C) domestic production and sales by the protected industries increase 
D) government tax revenues increase

Question 7

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

Accepted Answer

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

Question 8

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.If the exchange rate between apples and oranges in international markets is 1 tonne of apples per 3 tonnes of oranges,how will this affect trade between Karl and Adam?

Accepted Answer

A) Karl and Adam will trade apples and oranges with one another. 
B) Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges. 
C) Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples. 
D) Karl and Adam will not engage in international trade. 
A) Karl and Adam will trade apples and oranges with one another. 
B) Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges. 
C) Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples. 
D) Karl and Adam will not engage in international trade.

Question 9

What impact would a new Canadian import quota on imported steel likely have?

Accepted Answer

A) It would increase Canadian production of steel. 
B) It would reduce the cost of production to steel-using Canadian firms. 
C) It would generate tax revenue to the government. 
D) It would increase the production of steel-using Canadian firms. 
A) It would increase Canadian production of steel. 
B) It would reduce the cost of production to steel-using Canadian firms. 
C) It would generate tax revenue to the government. 
D) It would increase the production of steel-using Canadian firms.

Question 10

What is the difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit called?

Accepted Answer

A) the gain in producer surplus 
B) the total gains from trading that unit 
C) excess demand 
D) the gain in consumer surplus 
A) the gain in producer surplus 
B) the total gains from trading that unit 
C) excess demand 
D) the gain in consumer surplus

Question 11

It is possible for some individuals to lose from reducing international trade barriers.

Accepted Answer

A) True 
 B)False

Question 12

What are the effects of a tariff,and who benefits and who loses when tariffs are imposed? What are the effects of a quota,and who benefits and who loses when quotas are imposed?

Accepted Answer

A tariff raises the domestic price of th

Question 13

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 24 units of food per person per year or 12 units of clothing per person per year.Which of the following statements is the most accurate?

Accepted Answer

A) Iceland has both a comparative and absolute advantage in producing food. 
B) Iceland has comparative advantage, but not an absolute advantage, in producing food. 
C) Lavaland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing. 
D) Lavaland has both a comparative and an absolute disadvantage in producing clothing. 
A) Iceland has both a comparative and absolute advantage in producing food. 
B) Iceland has comparative advantage, but not an absolute advantage, in producing food. 
C) Lavaland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing. 
D) Lavaland has both a comparative and an absolute disadvantage in producing clothing.

Question 14

Suppose that in the absence of trade,the Canadian price for bicycles was higher than the world price for bicycles.Would allowing international trade mean that Canada would import or export bicycles? Who in Canada would benefit and who would lose with a free trade policy,and would the gains be greater than the losses?

Accepted Answer

Canada would import bicycles as consumer

Question 15

In order for mutually beneficial trade to occur,at what level must the exchange rate between the goods involved be set at?

Accepted Answer

A) at a level where each country can export a good at a price below the opportunity cost of producing the good in the domestic market 
B) at a level where each country can import a good at a price below the opportunity cost of producing the good in the domestic market 
C) at a level where the exchange ratio is exactly equal to the opportunity cost of producing the good in each country 
D) at a level where each country will specialize in the production of those goods in which it has an absolute advantage 
A) at a level where each country can export a good at a price below the opportunity cost of producing the good in the domestic market 
B) at a level where each country can import a good at a price below the opportunity cost of producing the good in the domestic market 
C) at a level where the exchange ratio is exactly equal to the opportunity cost of producing the good in each country 
D) at a level where each country will specialize in the production of those goods in which it has an absolute advantage

Question 16

Figure 14-1
  
-Refer to Figure 14-1.How much does the imposition of a tariff decrease domestic consumer surplus by?

Accepted Answer

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

Question 17

Generally,restrictions limiting imports will also help domestic producers who are exporters.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is NOT a result we would expect from a tariff on leather shoes?

Accepted Answer

A) Domestic producers would sell fewer shoes at the higher prices. 
B) The price of leather shoes in Canada would increase. 
C) The amount of shoes imported into Canada would decline. 
D) Fewer pairs of shoes would be sold in Canada. 
A) Domestic producers would sell fewer shoes at the higher prices. 
B) The price of leather shoes in Canada would increase. 
C) The amount of shoes imported into Canada would decline. 
D) Fewer pairs of shoes would be sold in Canada.

Question 19

The opportunity cost of producing a pair of pants in Canada is 5 kilograms of wheat,while in China it is 2 kilograms of wheat.What is the result?

Accepted Answer

A) There can be mutual gains from trade to the two countries if Canada exports pants to China in exchange for wheat. 
B) China has a comparative advantage over Canada in the production of wheat. 
C) Canada has a comparative advantage over China in the production of pants. 
D) There can be mutual gains from trade to the two countries if Canada exports wheat to China in exchange for pants. 
A) There can be mutual gains from trade to the two countries if Canada exports pants to China in exchange for wheat. 
B) China has a comparative advantage over Canada in the production of wheat. 
C) Canada has a comparative advantage over China in the production of pants. 
D) There can be mutual gains from trade to the two countries if Canada exports wheat to China in exchange for pants.

Question 20

Suppose that Canada can make 15 cars or 20 bottles of wine with one year's worth of labour.France can make 10 cars or 18 bottles of wine with one year's worth of labour.What can we conclude from these numbers?

Accepted Answer

A) France has a comparative advantage in the production of cars. 
B) Canada has an absolute advantage in the production of cars. 
C) Canada has a comparative advantage in the production of wine. 
D) France has an absolute advantage in the production of wine. 
A) France has a comparative advantage in the production of cars. 
B) Canada has an absolute advantage in the production of cars. 
C) Canada has a comparative advantage in the production of wine. 
D) France has an absolute advantage in the production of wine.

Which of the following best describes a nation that does NOT have an absolute advantage in producing anything?

Which of the following is NOT a short-run impact of increasing tariffs on the Canadian industries they seek to protect?

In Artland,the opportunity cost of producing 1 tonne of wheat is 2 tonnes of corn,while in Scienceland,the opportunity cost of producing 2 tonnes of wheat is 3 tonnes of corn.What action would leave both countries better off?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the value of imports?

Suppose an exporter has an upward-sloping supply curve.If a change in import demands in other countries leads it to a decrease in exports,other things equal,what would we expect to occur to prices?

Which of the following is NOT a short-run impact of imposing quotas on the Canadian industries they seek to protect?

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

What impact would a new Canadian import quota on imported steel likely have?

What is the difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit called?

It is possible for some individuals to lose from reducing international trade barriers.

What are the effects of a tariff,and who benefits and who loses when tariffs are imposed? What are the effects of a quota,and who benefits and who loses when quotas are imposed?

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 24 units of food per person per year or 12 units of clothing per person per year.Which of the following statements is the most accurate?

In order for mutually beneficial trade to occur,at what level must the exchange rate between the goods involved be set at?

Figure 14-1 -Refer to Figure 14-1.How much does the imposition of a tariff decrease domestic consumer surplus by?

Generally,restrictions limiting imports will also help domestic producers who are exporters.

Which of the following is NOT a result we would expect from a tariff on leather shoes?

The opportunity cost of producing a pair of pants in Canada is 5 kilograms of wheat,while in China it is 2 kilograms of wheat.What is the result?

Suppose that Canada can make 15 cars or 20 bottles of wine with one year's worth of labour.France can make 10 cars or 18 bottles of wine with one year's worth of labour.What can we conclude from these numbers?

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

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Exam 14: International Trade

Which of the following best describes a nation that does NOT have an absolute advantage in producing anything?

Which of the following is NOT a short-run impact of increasing tariffs on the Canadian industries they seek to protect?

In Artland,the opportunity cost of producing 1 tonne of wheat is 2 tonnes of corn,while in Scienceland,the opportunity cost of producing 2 tonnes of wheat is 3 tonnes of corn.What action would leave both countries better off?

Figure 14-1 -Refer to Figure 14-1.After a tariff is imposed,what is the value of imports?

Suppose an exporter has an upward-sloping supply curve.If a change in import demands in other countries leads it to a decrease in exports,other things equal,what would we expect to occur to prices?

Which of the following is NOT a short-run impact of imposing quotas on the Canadian industries they seek to protect?

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

What impact would a new Canadian import quota on imported steel likely have?

What is the difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit called?

It is possible for some individuals to lose from reducing international trade barriers.

What are the effects of a tariff,and who benefits and who loses when tariffs are imposed? What are the effects of a quota,and who benefits and who loses when quotas are imposed?

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 24 units of food per person per year or 12 units of clothing per person per year.Which of the following statements is the most accurate?

In order for mutually beneficial trade to occur,at what level must the exchange rate between the goods involved be set at?

Figure 14-1 -Refer to Figure 14-1.How much does the imposition of a tariff decrease domestic consumer surplus by?

Generally,restrictions limiting imports will also help domestic producers who are exporters.

Which of the following is NOT a result we would expect from a tariff on leather shoes?

The opportunity cost of producing a pair of pants in Canada is 5 kilograms of wheat,while in China it is 2 kilograms of wheat.What is the result?

Suppose that Canada can make 15 cars or 20 bottles of wine with one year's worth of labour.France can make 10 cars or 18 bottles of wine with one year's worth of labour.What can we conclude from these numbers?

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