Question 1

A nation that has a comparative advantage in a product will not import any of it.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer question(s): Production Possibilities Schedule for Two Commodities
  
-(Exhibit: Production Possibilities Schedule for Two Commodities) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of commodity X each country would have to forgo to produce the additional units of commodity Y indicated.Further assume that the only input is labor and that it remains fully employed.If there were unrestricted trade and specialization according to the law of comparative advantage:

Accepted Answer

A)  the United States would export X and import Y. 
B)  Canada would export X. 
C)  the United States would import both X and Y. 
D)  Canada would import both X and Y. 
A)  the United States would export X and import Y. 
B)  Canada would export X. 
C)  the United States would import both X and Y. 
D)  Canada would import both X and Y.

Question 3

The point on the production possibilities curve at which an economy will operate is determined by:

Accepted Answer

A)  which point produces the greatest amount of both goods. 
B)  the demands of consumers. 
C)  the absolute prices of the two goods. 
D)  which point requires the fewest resources. 
A)  which point produces the greatest amount of both goods. 
B)  the demands of consumers. 
C)  the absolute prices of the two goods. 
D)  which point requires the fewest resources.

Question 4

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 4 sweaters is _______ hats.

Accepted Answer

A)  4 
B)  12 
C)  71 
D)  79 
A)  4 
B)  12 
C)  71 
D)  79

Question 5

Compare and contrast the effect of tariffs, quotas, voluntary export restrictions, and nontariff barriers on the consumers and producers in both the importing and exporting country.

Accepted Answer

Tariffs, quotas, voluntary export restri

Question 6

A new domestic industry with potential economies of scale is called an infant industry.

Accepted Answer

A) True 
 B)False

Question 7

According to Matthew Slaughter, as reported in the Case in Point on outsourcing, which of the following is a reason that suggests outsourcing might actually increase domestic employment?

Accepted Answer

A)  Reduced costs make domestic firms more likely to expand the quantities they produce. 
B)  Lower costs may lead firms to increase the scale of their operations which could generate more domestic employment. 
C)  A firm that engages in outsourcing is likely to increase its scope of operations. 
D)  all of the above 
A)  Reduced costs make domestic firms more likely to expand the quantities they produce. 
B)  Lower costs may lead firms to increase the scale of their operations which could generate more domestic employment. 
C)  A firm that engages in outsourcing is likely to increase its scope of operations. 
D)  all of the above

Question 8

The job-protection argument states that trade restrictions are needed to speed the reallocation of workers to new jobs in domestic industries.

Accepted Answer

A) True 
 B)False

Question 9

If the United States exports 6 million bushels of corn to Japan and thereby earns income with which it imports 3 million digital video recorders from Japan, the United States' terms of trade with Japan for corn and digital video recorders is 2:1.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true?

Accepted Answer

A)  Because of the transitional problems affecting some factors of production, the net benefits of free trade are generally negative. 
B)  Most economists are in favor of opening markets and extending international trade throughout the world. 
C)  Because of the compelling case for free trade, there are very few strong opponents and arguments against free trade remaining in the world today. 
D)  Cheap labor in foreign countries can almost always out-compete expensive labor in the United States. 
A)  Because of the transitional problems affecting some factors of production, the net benefits of free trade are generally negative. 
B)  Most economists are in favor of opening markets and extending international trade throughout the world. 
C)  Because of the compelling case for free trade, there are very few strong opponents and arguments against free trade remaining in the world today. 
D)  Cheap labor in foreign countries can almost always out-compete expensive labor in the United States.

Question 11

Use the following to answer question(s): Production Possibilities for Machinery and Petroleum
  
-(Exhibit: Production Possibilities for Machinery and Petroleum.) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of machinery each country would have to forgo in order to produce the additional petroleum indicated.The opportunity cost in Mexico of producing 210 units of petroleum is _______ units of machinery.

Accepted Answer

A)  35 
B)  70 
C)  90 
D)  160 
A)  35 
B)  70 
C)  90 
D)  160

Question 12

Use the following to answer question(s): Production Possibilities in Alphaland and Omegaland
  
-(Exhibit: Production Possibilities in Alphaland and Omegaland) Before trade, computer producers in Alphaland could exchange _______ computer(s) for _______ car(s).

Accepted Answer

A)  1; 1/3 
B)  1; 1 
C)  2; 1 
D)  2; 2 
A)  1; 1/3 
B)  1; 1 
C)  2; 1 
D)  2; 2

Question 13

Use the following to answer question(s): Production Possibilities for Machinery and Petroleum
  
-(Exhibit: Production Possibilities for Machinery and Petroleum) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of machinery each country would have to forgo in order to produce the additional petroleum indicated.The opportunity cost in the United States of producing 60 units of petroleum is _______ units of machinery.

Accepted Answer

A)  60 
B)  80 
C)  100 
D)  120 
A)  60 
B)  80 
C)  100 
D)  120

Question 14

In a perfectly competitive world:

Accepted Answer

A)  two-way trade would not occur. 
B)  one-way trade would not occur. 
C)  neither one-way trade nor two-trade would occur. 
D)  both one-way trade and two-way trade would occur. 
A)  two-way trade would not occur. 
B)  one-way trade would not occur. 
C)  neither one-way trade nor two-trade would occur. 
D)  both one-way trade and two-way trade would occur.

Question 15

A tax on imports of foreign goods is called a(n):

Accepted Answer

A)  quota. 
B)  subsidy 
C)  tariff. 
D)  export restriction. 
A)  quota. 
B)  subsidy 
C)  tariff. 
D)  export restriction.

Question 16

The relative costs of two goods produced by two countries can be determined by comparing the ________ of their ________.

Accepted Answer

A)  slopes; supply curves 
B)  prices; domestic production 
C)  slopes; production possibilities curves 
D)  their absolute efficiencies; production 
A)  slopes; supply curves 
B)  prices; domestic production 
C)  slopes; production possibilities curves 
D)  their absolute efficiencies; production

Question 17

If the executives of the U.S.silicon-chip industry lobby Congress for protection from imports on the grounds that foreign nations gain an unfair advantage in the silicon-chip market because they exploit their workers by paying low wages, they are using the:

Accepted Answer

A)  environmental standards argument. 
B)  infant industry argument. 
C)  cheap foreign labor argument. 
D)  national security argument. 
A)  environmental standards argument. 
B)  infant industry argument. 
C)  cheap foreign labor argument. 
D)  national security argument.

Question 18

Use the following to answer question(s): Heartland and Soulland
Suppose that there are only two countries in the world, Heartland and Soulland.The two countries produce only two goods, corn and drill presses.At its current level of production, Heartland must give up production of 1/4 drill press to produce an additional 100 bushels of corn.Soulland must give up 1 drill press to produce an additional 100 bushels of corn.No trade now occurs between the two economies, and both economies are operating on their respective production possibilities frontiers.
-(Exhibit: Heartland and Soulland) The country with a comparative advantage in the production of corn is:

Accepted Answer

A)  Heartland. 
B)  Soulland. 
C)  neither; they both use the same technology. 
D)  neither; they both use the same amount of resources. 
A)  Heartland. 
B)  Soulland. 
C)  neither; they both use the same technology. 
D)  neither; they both use the same amount of resources.

Question 19

In the importing country, the most likely effects of tariffs and/or import quotas is to _______ prices and ________ consumption of the protected goods.

Accepted Answer

A)  raise; reduce 
B)  raise; raise 
C)  raise; not affect 
D)  reduce; reduce 
A)  raise; reduce 
B)  raise; raise 
C)  raise; not affect 
D)  reduce; reduce

Question 20

In the last few decades, the United States has generally experienced trade deficits.

Accepted Answer

A) True 
 B)False

A nation that has a comparative advantage in a product will not import any of it.

The point on the production possibilities curve at which an economy will operate is determined by:

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 4 sweaters is _______ hats.

Compare and contrast the effect of tariffs, quotas, voluntary export restrictions, and nontariff barriers on the consumers and producers in both the importing and exporting country.

A new domestic industry with potential economies of scale is called an infant industry.

According to Matthew Slaughter, as reported in the Case in Point on outsourcing, which of the following is a reason that suggests outsourcing might actually increase domestic employment?

The job-protection argument states that trade restrictions are needed to speed the reallocation of workers to new jobs in domestic industries.

If the United States exports 6 million bushels of corn to Japan and thereby earns income with which it imports 3 million digital video recorders from Japan, the United States' terms of trade with Japan for corn and digital video recorders is 2:1.

Which of the following statements is true?

Use the following to answer question(s): Production Possibilities in Alphaland and Omegaland -(Exhibit: Production Possibilities in Alphaland and Omegaland) Before trade, computer producers in Alphaland could exchange _ computer(s) for _ car(s).

In a perfectly competitive world:

A tax on imports of foreign goods is called a(n):

The relative costs of two goods produced by two countries can be determined by comparing the of their .

If the executives of the U.S.silicon-chip industry lobby Congress for protection from imports on the grounds that foreign nations gain an unfair advantage in the silicon-chip market because they exploit their workers by paying low wages, they are using the:

In the importing country, the most likely effects of tariffs and/or import quotas is to _ prices and __ consumption of the protected goods.

In the last few decades, the United States has generally experienced trade deficits.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 17: International Trade

A nation that has a comparative advantage in a product will not import any of it.

The point on the production possibilities curve at which an economy will operate is determined by:

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 4 sweaters is _______ hats.

Compare and contrast the effect of tariffs, quotas, voluntary export restrictions, and nontariff barriers on the consumers and producers in both the importing and exporting country.

A new domestic industry with potential economies of scale is called an infant industry.

According to Matthew Slaughter, as reported in the Case in Point on outsourcing, which of the following is a reason that suggests outsourcing might actually increase domestic employment?

The job-protection argument states that trade restrictions are needed to speed the reallocation of workers to new jobs in domestic industries.

If the United States exports 6 million bushels of corn to Japan and thereby earns income with which it imports 3 million digital video recorders from Japan, the United States' terms of trade with Japan for corn and digital video recorders is 2:1.

Which of the following statements is true?

Use the following to answer question(s): Production Possibilities in Alphaland and Omegaland -(Exhibit: Production Possibilities in Alphaland and Omegaland) Before trade, computer producers in Alphaland could exchange _______ computer(s) for _______ car(s).

In a perfectly competitive world:

A tax on imports of foreign goods is called a(n):

The relative costs of two goods produced by two countries can be determined by comparing the ________ of their ________.

If the executives of the U.S.silicon-chip industry lobby Congress for protection from imports on the grounds that foreign nations gain an unfair advantage in the silicon-chip market because they exploit their workers by paying low wages, they are using the:

In the importing country, the most likely effects of tariffs and/or import quotas is to _______ prices and ________ consumption of the protected goods.

In the last few decades, the United States has generally experienced trade deficits.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Use the following to answer question(s): Production Possibilities in Alphaland and Omegaland -(Exhibit: Production Possibilities in Alphaland and Omegaland) Before trade, computer producers in Alphaland could exchange _ computer(s) for _ car(s).

The relative costs of two goods produced by two countries can be determined by comparing the of their .

In the importing country, the most likely effects of tariffs and/or import quotas is to _ prices and __ consumption of the protected goods.