Question 1

Which of the following is not a major trading partner of the U.S.?

Accepted Answer

A)  Canada 
B)  Mexico 
C)  Russia 
D)  China 
A)  Canada 
B)  Mexico 
C)  Russia 
D)  China

Question 2

The change in the total gain to a nation from international trade is the:

Accepted Answer

A)  producer surplus. 
B)  consumer surplus. 
C)  excess of producer surplus over consumer surplus. 
D)  sum of consumer and producer surpluses. 
A)  producer surplus. 
B)  consumer surplus. 
C)  excess of producer surplus over consumer surplus. 
D)  sum of consumer and producer surpluses.

Question 3

Exhibit 28-3 Alternate Outputs from One Day's Labor Input:
United States: 12 bushels of wheat or 3 yards of textiles.
Great Britain: 3 bushels of wheat or 12 yards of textiles.
Refer to Exhibit 28-3.From the data above,the United States

Accepted Answer

A)  has an absolute advantage over Great Britain in the production of textiles. 
B)  has an absolute advantage over Great Britain in the production of wheat. 
C)  has a comparative advantage in the production of textiles 
D)  should export textiles to Great Britain. 
A)  has an absolute advantage over Great Britain in the production of textiles. 
B)  has an absolute advantage over Great Britain in the production of wheat. 
C)  has a comparative advantage in the production of textiles 
D)  should export textiles to Great Britain.

Question 4

When a country allows trade and becomes an exporter of goods,producers gain more than consumers lose.

Accepted Answer

A) True 
 B)False

Question 5

Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 16 units of food per year or 8 units of clothing.Which of the following is true?

Accepted Answer

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

Question 6

The world price of a commodity will settle at the level where

Accepted Answer

A)  supply and demand are equal within each country. 
B)  the excess demand of the importing country is just equal to the excess supply of the exporting country. 
C)  the excess demand in the exporting country is equal to the excess demand in the importing country. 
D)  there is no excess demand in the exporting country. 
A)  supply and demand are equal within each country. 
B)  the excess demand of the importing country is just equal to the excess supply of the exporting country. 
C)  the excess demand in the exporting country is equal to the excess demand in the importing country. 
D)  there is no excess demand in the exporting country.

Question 7

In Artland the opportunity cost of producing 1 ton of wheat is 2 tons of corn,while in Scienceland,the opportunity cost of producing 2 tons of wheat is 3 tons of corn.Both countries would be better off if:

Accepted Answer

A)  Scienceland sells 2 tons of wheat to Artland in return for 3 1/2 tons of corn. 
B)  Scienceland sells 2 tons of wheat to Artland in return for 5 tons of corn. 
C)  Artland sells 4 tons of wheat to Scienceland in return for 7 tons of corn. 
D)  Artland sells 4 tons of wheat to Scienceland in return for 4 tons of corn. 
A)  Scienceland sells 2 tons of wheat to Artland in return for 3 1/2 tons of corn. 
B)  Scienceland sells 2 tons of wheat to Artland in return for 5 tons of corn. 
C)  Artland sells 4 tons of wheat to Scienceland in return for 7 tons of corn. 
D)  Artland sells 4 tons of wheat to Scienceland in return for 4 tons of corn.

Question 8

Exhibit 28-6   Refer to Exhibit 28-6.The amount of government revenue from the tariff is equal to area:

Accepted Answer

A)  D + E + F 
B)  E 
C)  B + D + E + F 
D)  C + D + E + F 
A)  D + E + F 
B)  E 
C)  B + D + E + F 
D)  C + D + E + F

Question 9

The intended gains from U.S.tariffs and other trade restrictions can backfire if foreign governments retaliate by imposing additional trade restrictions on U.S.goods sold in their countries.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  government tax revenues increase 
B)  domestic production and sales by the protected industries increase 
C)  consumers' real incomes decrease 
D)  total domestic and foreign sales of those products in the United States increase 
A)  government tax revenues increase 
B)  domestic production and sales by the protected industries increase 
C)  consumers' real incomes decrease 
D)  total domestic and foreign sales of those products in the United States increase

Question 11

Exhibit 28-1 Alpha can produce either 18 tons of oranges or 9 tons of apples in a year,while Omega can produce either 16 tons of oranges or 4 tons of apples.
Refer to Exhibit 28-1.Which of the following exchange rates between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

Accepted Answer

A)  1 ton of oranges for 1/3 of a ton of oranges 
B)  1 ton of apples for 3 1/3 tons of oranges 
C)  1 ton of apples for 2 tons of oranges 
D)  1 ton of oranges for 0.4 tons of apples 
A)  1 ton of oranges for 1/3 of a ton of oranges 
B)  1 ton of apples for 3 1/3 tons of oranges 
C)  1 ton of apples for 2 tons of oranges 
D)  1 ton of oranges for 0.4 tons of apples

Question 12

What is the law of comparative advantage,and why is it important in international trade?

Accepted Answer

The law of comparative advantage states

Question 13

What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?

Accepted Answer

When countries produce according to the

Question 14

Exhibit 28-5   Refer to Exhibit 28-5.The change in consumer surplus from free trade is area:

Accepted Answer

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

Question 15

Columbia produces coffee with less labor and land than any other country; it therefore necessarily has

Accepted Answer

A)  an absolute advantage in coffee production. 
B)  a comparative advantage in coffee production. 
C)  both a comparative and absolute advantage in coffee production. 
D)  an absolute advantage and comparative disadvantage in coffee production. 
A)  an absolute advantage in coffee production. 
B)  a comparative advantage in coffee production. 
C)  both a comparative and absolute advantage in coffee production. 
D)  an absolute advantage and comparative disadvantage in coffee production.

Question 16

The inevitable cost of protecting domestic industries from foreign competition will be higher prices for domestic consumers.

Accepted Answer

A) True 
 B)False

Question 17

If a country begins allowing free international trade in a good,and as a result,it increases imports of that good.

Accepted Answer

A)  domestic producers gain more than domestic consumers lose. 
B)  domestic producers lose more than domestic consumers gain. 
C)  domestic consumers gain more than domestic producers lose. 
D)  domestic consumers lose more than the domestic producers gain. 
A)  domestic producers gain more than domestic consumers lose. 
B)  domestic producers lose more than domestic consumers gain. 
C)  domestic consumers gain more than domestic producers lose. 
D)  domestic consumers lose more than the domestic producers gain.

Question 18

A U.S.import tariff imposed on steel is likely to:

Accepted Answer

A)  increase employment in the U.S. steel industry. 
B)  increase the real incomes of steel users. 
C)  raise the total quantity of foreign and domestic steel sold in the United States. 
D)  increase employment in the economy as a whole. 
A)  increase employment in the U.S. steel industry. 
B)  increase the real incomes of steel users. 
C)  raise the total quantity of foreign and domestic steel sold in the United States. 
D)  increase employment in the economy as a whole.

Question 19

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 is called:

Accepted Answer

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

Question 20

If Japan does not have a comparative advantage in producing rice,the consequences of adopting a Japanese policy of reducing or eliminating imports of rice into their country would include:

Accepted Answer

A)  Japan will be able to consume a combination of rice and other goods' consumption beyond their domestic production possibilities curve. 
B)  the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall. 
C)  the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall. 
D)  the price of rice in Japan will fall. 
A)  Japan will be able to consume a combination of rice and other goods' consumption beyond their domestic production possibilities curve. 
B)  the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall. 
C)  the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall. 
D)  the price of rice in Japan will fall.

Exam 28: International Trade

Which of the following is not a major trading partner of the U.S.?

The change in the total gain to a nation from international trade is the:

Exhibit 28-3 Alternate Outputs from One Day's Labor Input: United States: 12 bushels of wheat or 3 yards of textiles. Great Britain: 3 bushels of wheat or 12 yards of textiles. Refer to Exhibit 28-3.From the data above,the United States

When a country allows trade and becomes an exporter of goods,producers gain more than consumers lose.

Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 16 units of food per year or 8 units of clothing.Which of the following is true?

The world price of a commodity will settle at the level where

In Artland the opportunity cost of producing 1 ton of wheat is 2 tons of corn,while in Scienceland,the opportunity cost of producing 2 tons of wheat is 3 tons of corn.Both countries would be better off if:

Exhibit 28-6 Refer to Exhibit 28-6.The amount of government revenue from the tariff is equal to area:

The intended gains from U.S.tariffs and other trade restrictions can backfire if foreign governments retaliate by imposing additional trade restrictions on U.S.goods sold in their countries.

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

What is the law of comparative advantage,and why is it important in international trade?

What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?

Exhibit 28-5 Refer to Exhibit 28-5.The change in consumer surplus from free trade is area:

Columbia produces coffee with less labor and land than any other country; it therefore necessarily has

The inevitable cost of protecting domestic industries from foreign competition will be higher prices for domestic consumers.

If a country begins allowing free international trade in a good,and as a result,it increases imports of that good.

A U.S.import tariff imposed on steel is likely to:

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 is called:

If Japan does not have a comparative advantage in producing rice,the consequences of adopting a Japanese policy of reducing or eliminating imports of rice into their country would include:

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Finance

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