Question 1

The idea behind comparative advantage reflects the possibility that one party

Accepted Answer

A)  may be able to produce something relatively more efficiently than another. 
B)  may be able to produce something at a lower opportunity cost than another. 
C)  may be able to produce something more cheaply than another. 
D)  all of the above 
A)  may be able to produce something relatively more efficiently than another. 
B)  may be able to produce something at a lower opportunity cost than another. 
C)  may be able to produce something more cheaply than another. 
D)  all of the above

Question 2

If discussing trade,it is ____ which matters,rather than ____.

Accepted Answer

A)  absolute advantage; comparative advantage 
B)  comparative advantage; absolute advantage 
C)  resource cost; comparative advantage 
D)  the total amount of the good producible; comparative advantage 
A)  absolute advantage; comparative advantage 
B)  comparative advantage; absolute advantage 
C)  resource cost; comparative advantage 
D)  the total amount of the good producible; comparative advantage

Question 3

When a country allows trade and becomes an exporter of goods both domestic consumers and domestic producers benefit.

Accepted Answer

A) True 
 B)False

Question 4

A new U.S.tariff on Mexican avocados would be likely to:

Accepted Answer

A)  raise the price of avocados to U.S. consumers. 
B)  increase U.S. consumption of domestically produced avocados. 
C)  increase total U.S. consumption of avocados. 
D)  do both a. and b. 
A)  raise the price of avocados to U.S. consumers. 
B)  increase U.S. consumption of domestically produced avocados. 
C)  increase total U.S. consumption of avocados. 
D)  do both a. and b.

Question 5

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

Accepted Answer

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

Question 6

The supply and demand mechanism will bring an international market into equilibrium

Accepted Answer

A)  at a price below the domestic price in an exporting country. 
B)  where domestic supplies are less than domestic demand in an exporting country. 
C)  with an exporting nation's price higher than the importing nation's price. 
D)  when the quantity of exports supplied by the exporters beyond their domestic consumption is equal to the quantity of imports demanded by the importers. 
A)  at a price below the domestic price in an exporting country. 
B)  where domestic supplies are less than domestic demand in an exporting country. 
C)  with an exporting nation's price higher than the importing nation's price. 
D)  when the quantity of exports supplied by the exporters beyond their domestic consumption is equal to the quantity of imports demanded by the importers.

Question 7

If two countries produce both wheat and sugar and one country has the comparative advantage in producing wheat than the other country must have the absolute advantage producing sugar.

Accepted Answer

A) True 
 B)False

Question 8

Some nations that seek to produce all of their own needs face the problem that

Accepted Answer

A)  they can deplete their natural resources faster as a result. 
B)  some industries are too small to be efficient if restricted to their domestic markets alone. 
C)  the opportunity cost of producing some of their own goods is higher than that of trading with others for them. 
D)  all of the above are true. 
A)  they can deplete their natural resources faster as a result. 
B)  some industries are too small to be efficient if restricted to their domestic markets alone. 
C)  the opportunity cost of producing some of their own goods is higher than that of trading with others for them. 
D)  all of the above are true.

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.The opportunity costs of producing 1 ton of apples for Alpha and Omega,respectively,are:

Accepted Answer

A)  0.25 tons of oranges; 0.5 tons of oranges. 
B)  9 tons of oranges; 4 tons of oranges. 
C)  2 tons of oranges; 4 tons of oranges. 
D)  4 tons of oranges; 2 tons of oranges. 
A)  0.25 tons of oranges; 0.5 tons of oranges. 
B)  9 tons of oranges; 4 tons of oranges. 
C)  2 tons of oranges; 4 tons of oranges. 
D)  4 tons of oranges; 2 tons of oranges.

Question 10

Which term refers to the efforts by producers to gain profits from government protections such as tariffs and import quotas?

Accepted Answer

A)  lobbying 
B)  rent seeking 
C)  profit seeking 
D)  revenue seeking 
A)  lobbying 
B)  rent seeking 
C)  profit seeking 
D)  revenue seeking

Question 11

Which of the following observations is true of subsidies?

Accepted Answer

A)  They act as barriers to trade. 
B)  They reduce the amounts of actual labor, raw material, and capital costs of production. 
C)  They are capable of distorting trade patterns. 
D)  They reduce inefficiencies. 
A)  They act as barriers to trade. 
B)  They reduce the amounts of actual labor, raw material, and capital costs of production. 
C)  They are capable of distorting trade patterns. 
D)  They reduce inefficiencies.

Question 12

Relative to a no-international-trade initial situation,if the United States imported wine from other countries with a comparative advantage in wine production,the U.S.domestic price of wine:

Accepted Answer

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

Question 13

Assume that Germany can produce 10 million bottles of beer or 4 million bottles of vodka.Further assume that Russia can produce 7 million bottles of beer or 3 million bottles of vodka.As a result,which of the following is true with regard to absolute and comparative advantage?

Accepted Answer

A)  Germany has the absolute advantage in beer and the comparative advantage in beer. 
B)  Germany has the absolute advantage in beer and the comparative advantage in vodka. 
C)  Russia has the absolute advantage in beer and the comparative advantage in beer. 
D)  Russia has the absolute advantage in beer and the comparative advantage in vodka. 
A)  Germany has the absolute advantage in beer and the comparative advantage in beer. 
B)  Germany has the absolute advantage in beer and the comparative advantage in vodka. 
C)  Russia has the absolute advantage in beer and the comparative advantage in beer. 
D)  Russia has the absolute advantage in beer and the comparative advantage in vodka.

Question 14

If the United States could produce 4 tons of potatoes or 2 tons of wheat per worker per year,while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year,the country with the comparative advantage in producing potatoes is ____ and the country with the absolute advantage in producing potatoes is ____.

Accepted Answer

A)  the United States; the United States 
B)  the United States; Ireland 
C)  Ireland; the United States 
D)  Ireland; Ireland 
A)  the United States; the United States 
B)  the United States; Ireland 
C)  Ireland; the United States 
D)  Ireland; Ireland

Question 15

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

Accepted Answer

Trade restrictions will stop foreign imp

Question 16

Exhibit 28-4   Refer to Exhibit 28-4.The country should

Accepted Answer

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

Question 17

Suppose the Swiss government subsidized its watch-making industry,enabling Swiss producers to undersell foreign watch producers.The law of comparative advantage indicates that watch-importing nations would best take advantage of the Swiss subsidization policy by

Accepted Answer

A)  setting a tariff high enough to just offset the subsidy granted to the Swiss watch-making industry. 
B)  setting a declining quota on the import of Swiss watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy. 
C)  setting a tariff such that the prices of Swiss and domestic watches to the consumer are equal. 
D)  gladly accepting the subsidy of the Swiss government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry. 
A)  setting a tariff high enough to just offset the subsidy granted to the Swiss watch-making industry. 
B)  setting a declining quota on the import of Swiss watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy. 
C)  setting a tariff such that the prices of Swiss and domestic watches to the consumer are equal. 
D)  gladly accepting the subsidy of the Swiss government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.

Question 18

Which of the following is the best example of a tariff?

Accepted Answer

A)  a tax placed on all small cars sold in the domestic market. 
B)  a limit imposed on the number of small cars that can be imported from a foreign country. 
C)  a subsidy from the U.S. government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars. 
D)  a $100-per-car fee imposed on all small cars imported. 
A)  a tax placed on all small cars sold in the domestic market. 
B)  a limit imposed on the number of small cars that can be imported from a foreign country. 
C)  a subsidy from the U.S. government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars. 
D)  a $100-per-car fee imposed on all small cars imported.

Question 19

Reducing a tariff on a particular good does which of the following?

Accepted Answer

A)  It decreases the price of the domestic good to domestic consumers. 
B)  It increases the price of the good to domestic consumers. 
C)  It redistributes income away from domestic producers toward domestic consumers. 
D)  both (a) and (c) 
A)  It decreases the price of the domestic good to domestic consumers. 
B)  It increases the price of the good to domestic consumers. 
C)  It redistributes income away from domestic producers toward domestic consumers. 
D)  both (a) and (c)

Question 20

What are the commonly used arguments for the use of tariffs?

Accepted Answer

Arguments for the use of tariffs include

Exam 28: International Trade

The idea behind comparative advantage reflects the possibility that one party

If discussing trade,it is ____ which matters,rather than ____.

When a country allows trade and becomes an exporter of goods both domestic consumers and domestic producers benefit.

A new U.S.tariff on Mexican avocados would be likely to:

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

The supply and demand mechanism will bring an international market into equilibrium

If two countries produce both wheat and sugar and one country has the comparative advantage in producing wheat than the other country must have the absolute advantage producing sugar.

Some nations that seek to produce all of their own needs face the problem that

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.The opportunity costs of producing 1 ton of apples for Alpha and Omega,respectively,are:

Which term refers to the efforts by producers to gain profits from government protections such as tariffs and import quotas?

Which of the following observations is true of subsidies?

Relative to a no-international-trade initial situation,if the United States imported wine from other countries with a comparative advantage in wine production,the U.S.domestic price of wine:

Assume that Germany can produce 10 million bottles of beer or 4 million bottles of vodka.Further assume that Russia can produce 7 million bottles of beer or 3 million bottles of vodka.As a result,which of the following is true with regard to absolute and comparative advantage?

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

Exhibit 28-4 Refer to Exhibit 28-4.The country should

Suppose the Swiss government subsidized its watch-making industry,enabling Swiss producers to undersell foreign watch producers.The law of comparative advantage indicates that watch-importing nations would best take advantage of the Swiss subsidization policy by

Which of the following is the best example of a tariff?

Reducing a tariff on a particular good does which of the following?

What are the commonly used arguments for the use of tariffs?

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 discussing trade,it is which matters,rather than .