Question 1

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

Accepted Answer

A) True 
 B)False

Question 2

The data in the table below assumes that with the same quantity of resources,both Australia and Philippines produces food and computers.Australia can make 1,000 computers or 2,000 units of food in a day,and the Philippines can make 200 computers or 1,200 units of food in a day. Table 20.2  
- According to Table 20.2,what is the opportunity cost of 1 unit of food in Australia?

Accepted Answer

A) Half a unit of computer 
B) 6 computers 
C) 2 computers 
D) One-sixth of a unit of computers 
E) 1 computer 
A) Half a unit of computer 
B) 6 computers 
C) 2 computers 
D) One-sixth of a unit of computers 
E) 1 computer

Question 3

If the export supply curve of tomatoes and the import demand curve of tomatoes of Luxembourg intersect at the international price level of tomatoes,then Luxembourg will suspend trading tomatoes in the international market.

Accepted Answer

A) True 
 B)False

Question 4

The first panel in the following figure shows the domestic demand (D) and supply (S) curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market. Figure 20.1  
- Refer to Figure 20.1.If the price of coffee in the international market is $14:

Accepted Answer

A) there will be an excess demand of 10 pounds in Columbia's domestic market. 
B) Columbia's domestic market for coffee will be in equilibrium. 
C) there will be an excess demand for Columbian coffee in the international market. 
D) the international market for coffee will be in equilibrium. 
E) Columbia will export 4 pounds of coffee. 
A) there will be an excess demand of 10 pounds in Columbia's domestic market. 
B) Columbia's domestic market for coffee will be in equilibrium. 
C) there will be an excess demand for Columbian coffee in the international market. 
D) the international market for coffee will be in equilibrium. 
E) Columbia will export 4 pounds of coffee.

Question 5

The higher the world price above the domestic no-trade equilibrium,the lesser the quantity of a good exported by a country.

Accepted Answer

A) True 
 B)False

Question 6

If Japan has a comparative advantage over Canada in the production of computers,which of the following must be true?

Accepted Answer

A) Supply of unskilled labor in Japan is higher than that in Canada. 
B) Japan incurs a lower input cost in the production of computers. 
C) Japan incurs a higher input cost in the production of computers. 
D) Japan has a lower opportunity cost in the production of computers. 
E) Japan has a higher opportunity cost in the production of computers. 
A) Supply of unskilled labor in Japan is higher than that in Canada. 
B) Japan incurs a lower input cost in the production of computers. 
C) Japan incurs a higher input cost in the production of computers. 
D) Japan has a lower opportunity cost in the production of computers. 
E) Japan has a higher opportunity cost in the production of computers.

Question 7

If Bolivia can produce 6 calculators or 3 televisions in a day,and Argentina can produce 4 calculators or 12 televisions in a day,then Bolivia would be willing to trade 1 calculator for 1 television with Argentina.

Accepted Answer

A) True 
 B)False

Question 8

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

Accepted Answer

A) True 
 B)False

Question 9

Scenario 20.1 Suppose labor productivity differences are the only determinants of comparative advantage,and Brazil and Chile both produce only coffee and sugar.In Chile,either 5 units of coffee or 2 units of sugar can be produced in one day.In Brazil,a day of labor produces either 2 units of coffee or 1 unit of sugar.
-Refer to Scenario 20.1.Which of the following statements is true?

Accepted Answer

A) Brazil has an absolute advantage in producing only coffee. 
B) Brazil has an absolute advantage in producing only sugar. 
C) Chile has an absolute advantage in the production of both coffee and sugar. 
D) Chile has an absolute advantage in producing only coffee. 
E) Brazil has an absolute advantage in the production of both coffee and sugar. 
A) Brazil has an absolute advantage in producing only coffee. 
B) Brazil has an absolute advantage in producing only sugar. 
C) Chile has an absolute advantage in the production of both coffee and sugar. 
D) Chile has an absolute advantage in producing only coffee. 
E) Brazil has an absolute advantage in the production of both coffee and sugar.

Question 10

The following table shows that in one day poultry farmers in Arkansas can produce 3 cartons of eggs,while poultry farmers in Idaho can produce 2 cartons of eggs.It takes Arkansas potato farmers one day to produce 30 tons of potatoes,while Idaho potato farmers produce 10 tons of potatoes in that same time. Table 20.4  
- According to Table 20.4,the limits to the terms of trade in potatoes are 1 ton of potatoes in exchange for:

Accepted Answer

A) between 5 and 10 cartons of eggs. 
B) between 1 and 10 cartons of eggs. 
C) between one-tenth and one-fifth of a carton of eggs. 
D) between one-fourth and half a carton of eggs. 
E) between 2 and 10 cartons of eggs. 
A) between 5 and 10 cartons of eggs. 
B) between 1 and 10 cartons of eggs. 
C) between one-tenth and one-fifth of a carton of eggs. 
D) between one-fourth and half a carton of eggs. 
E) between 2 and 10 cartons of eggs.

Question 11

We benefit from trade if we are able to obtain a good from a foreign country:

Accepted Answer

A) that has a very low domestic demand. 
B) the production of which requires a steady supply of unskilled labor. 
C) by giving up less of other goods than we would have to give up to obtain the good at home. 
D) by giving up more of other goods than we would have to give up to obtain the good at home. 
E) that has a substantial number of substitutes in the domestic market. 
A) that has a very low domestic demand. 
B) the production of which requires a steady supply of unskilled labor. 
C) by giving up less of other goods than we would have to give up to obtain the good at home. 
D) by giving up more of other goods than we would have to give up to obtain the good at home. 
E) that has a substantial number of substitutes in the domestic market.

Question 12

The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.

Accepted Answer

A) True 
 B)False

Question 13

The figure given below shows the import demand and export supply curves of corn of the U.S.and Mexico. Figure 20.2  
- Refer to Figure 20.2.The no-trade equilibrium price of corn in the U.S.is:

Accepted Answer

A) $2. 
B) $4. 
C) $6. 
D) $8. 
E) $10. 
A) $2. 
B) $4. 
C) $6. 
D) $8. 
E) $10.

Question 14

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

Accepted Answer

A) True 
 B)False

Question 15

Developing countries can be expected to have a comparative advantage in industries requiring a relatively large amount of skilled labor.

Accepted Answer

A) True 
 B)False

Question 16

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

Accepted Answer

A) the differences in labor productivity in the U.S.and other countries. 
B) the differences in factor endowments in the U.S.and its trading partners. 
C) the world price of Budweiser beer is lower than Heineken beer. 
D) the fact that production of Budweiser beer in the U.S.is inadequate compared to its demand. 
E) the preference for foreign brands of beer by a part of the U.S.population. 
A) the differences in labor productivity in the U.S.and other countries. 
B) the differences in factor endowments in the U.S.and its trading partners. 
C) the world price of Budweiser beer is lower than Heineken beer. 
D) the fact that production of Budweiser beer in the U.S.is inadequate compared to its demand. 
E) the preference for foreign brands of beer by a part of the U.S.population.

Question 17

If the world price is above the domestic "no-trade" equilibrium price,then with international trade,the shortage caused in the domestic market can be met by foreign imports.

Accepted Answer

A) True 
 B)False

Question 18

If the world price is below the domestic "no-trade" equilibrium price,then with international trade:

Accepted Answer

A) the domestic shortage can be eliminated by rationing. 
B) the domestic surplus can be consumed at home. 
C) the domestic surplus can be exported to the rest of the world. 
D) the domestic quantity demanded is equal to that supplied by the world. 
E) the domestic shortage can be met by foreign imports. 
A) the domestic shortage can be eliminated by rationing. 
B) the domestic surplus can be consumed at home. 
C) the domestic surplus can be exported to the rest of the world. 
D) the domestic quantity demanded is equal to that supplied by the world. 
E) the domestic shortage can be met by foreign imports.

Question 19

A country with a strong bargaining power is likely to direct the terms of trade in its favor.

Accepted Answer

A) True 
 B)False

Question 20

The limits of the terms of trade are determined by the:

Accepted Answer

A) distribution costs in each country. 
B) stock of foreign exchange in each country. 
C) average total costs of producing the commodities in each country. 
D) opportunity costs in each country. 
E) currency exchange rate between the trading partners. 
A) distribution costs in each country. 
B) stock of foreign exchange in each country. 
C) average total costs of producing the commodities in each country. 
D) opportunity costs in each country. 
E) currency exchange rate between the trading partners.

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

If the export supply curve of tomatoes and the import demand curve of tomatoes of Luxembourg intersect at the international price level of tomatoes,then Luxembourg will suspend trading tomatoes in the international market.

The higher the world price above the domestic no-trade equilibrium,the lesser the quantity of a good exported by a country.

If Japan has a comparative advantage over Canada in the production of computers,which of the following must be true?

If Bolivia can produce 6 calculators or 3 televisions in a day,and Argentina can produce 4 calculators or 12 televisions in a day,then Bolivia would be willing to trade 1 calculator for 1 television with Argentina.

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

We benefit from trade if we are able to obtain a good from a foreign country:

The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.

The figure given below shows the import demand and export supply curves of corn of the U.S.and Mexico. Figure 20.2 - Refer to Figure 20.2.The no-trade equilibrium price of corn in the U.S.is:

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

Developing countries can be expected to have a comparative advantage in industries requiring a relatively large amount of skilled labor.

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

If the world price is above the domestic "no-trade" equilibrium price,then with international trade,the shortage caused in the domestic market can be met by foreign imports.

If the world price is below the domestic "no-trade" equilibrium price,then with international trade:

A country with a strong bargaining power is likely to direct the terms of trade in its favor.

The limits of the terms of trade are determined by the:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 20: World Trade Equilibrium

It seems self evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

If the export supply curve of tomatoes and the import demand curve of tomatoes of Luxembourg intersect at the international price level of tomatoes,then Luxembourg will suspend trading tomatoes in the international market.

The higher the world price above the domestic no-trade equilibrium,the lesser the quantity of a good exported by a country.

If Japan has a comparative advantage over Canada in the production of computers,which of the following must be true?

If Bolivia can produce 6 calculators or 3 televisions in a day,and Argentina can produce 4 calculators or 12 televisions in a day,then Bolivia would be willing to trade 1 calculator for 1 television with Argentina.

We benefit from trade if we are able to obtain a good from a foreign country by giving up more of other goods than we would have to give up to obtain the good at home.

We benefit from trade if we are able to obtain a good from a foreign country:

The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.

The figure given below shows the import demand and export supply curves of corn of the U.S.and Mexico. Figure 20.2 - Refer to Figure 20.2.The no-trade equilibrium price of corn in the U.S.is:

A sudden appreciation in the exchange rate of a country deteriorates the terms of trade of the country.

Developing countries can be expected to have a comparative advantage in industries requiring a relatively large amount of skilled labor.

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

If the world price is above the domestic "no-trade" equilibrium price,then with international trade,the shortage caused in the domestic market can be met by foreign imports.

If the world price is below the domestic "no-trade" equilibrium price,then with international trade:

A country with a strong bargaining power is likely to direct the terms of trade in its favor.

The limits of the terms of trade are determined by the:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters