Question 1

If a nation has "cheap" labor,

Accepted Answer

A)  it can still benefit from trade. 
B)  it is unlikely to have a comparative advantage in the production of goods that are highly capital intensive. 
C)  it cannot have a comparative advantage in everything. 
D)  all of the above are true. 
A)  it can still benefit from trade. 
B)  it is unlikely to have a comparative advantage in the production of goods that are highly capital intensive. 
C)  it cannot have a comparative advantage in everything. 
D)  all of the above are true.

Question 2

In Samoa the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam the opportunity cost of producing 1 coconut is 5 pineapples.In this situation:

Accepted Answer

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

Question 3

Major U.S.exporters would be likely to oppose the sort of protectionist policies favored by domestic producers that compete with imports.

Accepted Answer

A) True 
 B)False

Question 4

According to international trade theory,a country should:

Accepted Answer

A)  import goods in which it has an absolute advantage. 
B)  specialize in the production of the good in which it has an absolute disadvantage. 
C)  export goods when it has either a comparative or absolute disadvantage in producing them. 
D)  specialize in the production of the good in which they have a comparative advantage. 
A)  import goods in which it has an absolute advantage. 
B)  specialize in the production of the good in which it has an absolute disadvantage. 
C)  export goods when it has either a comparative or absolute disadvantage in producing them. 
D)  specialize in the production of the good in which they have a comparative advantage.

Question 5

Exhibit 28-6   Refer to Exhibit 28-6.After the tariff,this country

Accepted Answer

A)  exports Q1 to Q4 
B)  exports Q2 to Q3 
C)  imports Q1 to Q4 
D)  imports Q2 to Q3 
A)  exports Q1 to Q4 
B)  exports Q2 to Q3 
C)  imports Q1 to Q4 
D)  imports Q2 to Q3

Question 6

A nation can gain from international trade when the relative domestic prices of the nation differs 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 7

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 year or 12 units of clothing.Which of the following is true?

Accepted Answer

A)  Iceland has both a comparative and absolute 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)  None of the above are true. 
A)  Iceland has both a comparative and absolute 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)  None of the above are true.

Question 8

Raising an existing tariff on grapes from Chile will:

Accepted Answer

A)  increase U.S. imports of Chilean grapes. 
B)  increase U.S. consumption of domestically produced grapes. 
C)  increase total U.S. consumption of grapes. 
D)  do all of the above. 
A)  increase U.S. imports of Chilean grapes. 
B)  increase U.S. consumption of domestically produced grapes. 
C)  increase total U.S. consumption of grapes. 
D)  do all of the above.

Question 9

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 apples for 3 tons of oranges 
B)  3 tons of apples for 3 tons of oranges 
C)  2 tons of apples for 3 tons of oranges 
D)  1 ton of oranges for 0.2 tons of apples 
A)  1 ton of apples for 3 tons of oranges 
B)  3 tons of apples for 3 tons of oranges 
C)  2 tons of apples for 3 tons of oranges 
D)  1 ton of oranges for 0.2 tons of apples

Question 10

A country has an absolute advantage over another if it can produce a good with fewer resources.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 28-6   Refer to Exhibit 28-6.After the tariff,domestic consumers

Accepted Answer

A)  gain area B of consumer surplus 
B)  gain area C + D + E + F of consumer surplus 
C)  lose are C + D + E + F of consumer surplus 
D)  lose are C of consumer surplus 
A)  gain area B of consumer surplus 
B)  gain area C + D + E + F of consumer surplus 
C)  lose are C + D + E + F of consumer surplus 
D)  lose are C of consumer surplus

Question 12

Exhibit 28-5   Refer to Exhibit 28-5.This country should:

Accepted Answer

A)  export shoes, Q1 to Q3 
B)  export shoes, Q1 to Q2 
C)  import shoes, Q1 to Q2 
D)  import shoes, Q1 to Q3 
A)  export shoes, Q1 to Q3 
B)  export shoes, Q1 to Q2 
C)  import shoes, Q1 to Q2 
D)  import shoes, Q1 to Q3

Question 13

An import quota or tariff on French wine that raises the prices for wine will probably

Accepted Answer

A)  hurt domestic wineries, which will lose business as a result of the higher prices. 
B)  hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. 
C)  hurt both domestic wine drinkers and domestic wineries but this will be more than offset by a reduction in driving fatalities. 
D)  hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices. 
A)  hurt domestic wineries, which will lose business as a result of the higher prices. 
B)  hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. 
C)  hurt both domestic wine drinkers and domestic wineries but this will be more than offset by a reduction in driving fatalities. 
D)  hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.

Question 14

At one time,it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible.More money would flow into a country than out of a country.Is this really a sound economic strategy? What is the relationship between exports and imports?

Accepted Answer

This is a bad strategy.When few goods ar

Question 15

Imposing a quota on metal softball bats shipped into the United States would likely:

Accepted Answer

A)  increase the price of the bats but decrease the total quantity of bats purchased in the United States. 
B)  increase the price of the bats and the total quantity of bats purchased in the United States. 
C)  leave the price of the bats unchanged but decrease the quantity purchased in the United States. 
D)  leave both the price of bats and the quantity purchased in the United States unchanged. 
A)  increase the price of the bats but decrease the total quantity of bats purchased in the United States. 
B)  increase the price of the bats and the total quantity of bats purchased in the United States. 
C)  leave the price of the bats unchanged but decrease the quantity purchased in the United States. 
D)  leave both the price of bats and the quantity purchased in the United States unchanged.

Question 16

Compared to the no-trade situation,when a country exports a good:

Accepted Answer

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

Question 17

If an import tariff is reduced,the domestic quantity demanded is ____ and the quantity supplied domestically is ____,____ the quantity of goods imported.

Accepted Answer

A)  greater; lower; reducing. 
B)  lower; greater, reducing. 
C)  greater; lower; increasing. 
D)  lower; greater; increasing. 
A)  greater; lower; reducing. 
B)  lower; greater, reducing. 
C)  greater; lower; increasing. 
D)  lower; greater; increasing.

Question 18

"Tariffs are necessary for reasons of national security." Discuss the validity of this statement.

Accepted Answer

It is argued that tariffs are a means of

Question 19

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 20

When a country allows trade and becomes an importer of goods everyone benefits.

Accepted Answer

A) True 
 B)False

Exam 28: International Trade

If a nation has "cheap" labor,

In Samoa the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam the opportunity cost of producing 1 coconut is 5 pineapples.In this situation:

Major U.S.exporters would be likely to oppose the sort of protectionist policies favored by domestic producers that compete with imports.

According to international trade theory,a country should:

Exhibit 28-6 Refer to Exhibit 28-6.After the tariff,this country

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

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 year or 12 units of clothing.Which of the following is true?

Raising an existing tariff on grapes from Chile will:

A country has an absolute advantage over another if it can produce a good with fewer resources.

Exhibit 28-6 Refer to Exhibit 28-6.After the tariff,domestic consumers

Exhibit 28-5 Refer to Exhibit 28-5.This country should:

An import quota or tariff on French wine that raises the prices for wine will probably

At one time,it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible.More money would flow into a country than out of a country.Is this really a sound economic strategy? What is the relationship between exports and imports?

Imposing a quota on metal softball bats shipped into the United States would likely:

Compared to the no-trade situation,when a country exports a good:

If an import tariff is reduced,the domestic quantity demanded is ____ and the quantity supplied domestically is ____,____ the quantity of goods imported.

"Tariffs are necessary for reasons of national security." Discuss the validity of this statement.

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?

When a country allows trade and becomes an importer of goods everyone benefits.

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

Filters

If an import tariff is reduced,the domestic quantity demanded is and the quantity supplied domestically is , the quantity of goods imported.