Question 1

Under what circumstances will there be no opportunity for mutually advantageous trade between two countries?

Accepted Answer

A) When the terms of trade are the same. 
B) When comparative costs are the same. 
C) When comparative costs are different. 
D) When tariffs exist. 
A) When the terms of trade are the same. 
B) When comparative costs are the same. 
C) When comparative costs are different. 
D) When tariffs exist.

Question 2

-Refer to above figure to answer this question.What could be possible terms of trade between the two countries?

Accepted Answer

A) 1 apple = 0.25 pears. 
B) 1 apple = 2.5 pears. 
C) 1 apple = 3 pears. 
D) 1 pear = 0.5 apples. 
E) 1 pear = 2.5 apples. 
A) 1 apple = 0.25 pears. 
B) 1 apple = 2.5 pears. 
C) 1 apple = 3 pears. 
D) 1 pear = 0.5 apples. 
E) 1 pear = 2.5 apples.

Question 3

Below is a graph illustrating the market for mustard seeds in Rysen III.(Sd is domestic supply,and Dd is domestic demand. ).The world price of mustard seeds is $100.
  
-Refer to the graph above to answer this question.Suppose that the government introduces a tariff of $20 on mustard seeds.What will be the new price?

Accepted Answer

A) $100. 
B) $120. 
C) $130. 
D) $140. 
E) $150. 
A) $100. 
B) $120. 
C) $130. 
D) $140. 
E) $150.

Question 4

Compared to 50 years ago,international world trade has ________ substantially and the geographical areas leading this change are _________.

Accepted Answer

A) Increased;Europe and Asia 
B) Increased;Canada and the U.S. 
C) Decreased;Europe and Asia 
D) Decreased;Canada and Asia 
A) Increased;Europe and Asia 
B) Increased;Canada and the U.S. 
C) Decreased;Europe and Asia 
D) Decreased;Canada and Asia

Question 5

Some commentators have suggested that the government should protect the Canadian automobile industry.Which argument against free trade is being suggested?

Accepted Answer

A) The strategic-industry argument. 
B) The comparative-protection argument. 
C) The infant-industry argument. 
D) The cultural-identity argument. 
A) The strategic-industry argument. 
B) The comparative-protection argument. 
C) The infant-industry argument. 
D) The cultural-identity argument.

Question 6

Below is production possibilities data for the countries of Mental and Etheric.
  
-Refer to the information above to answer this question.Suppose that the two countries,who were producing at combination D before trade,now specialize and engage in free trade and establish the terms of trade at 1 unit of rice cake = 1.5 units of soya milk.If Etheric exports 30 million units of rice cakes to Mental,what will be the gains from trade for each country?

Accepted Answer

A) Mental gains 30 million units of rice cakes and Etheric gains 45 million units of soya milk. 
B) Mental gains 45 million units of rice cakes and Etheric gains 30 million units of soya milk. 
C) Mental gains 15 million units of soya milk and Etheric gains 45 million units of soya milk. 
D) Mental gains 15 million units of soya milk and Etheric gains 5 million units of soya milk. 
E) Mental gains 15 million units of soya milk and Etheric gains 5 million units of rice cakes. 
A) Mental gains 30 million units of rice cakes and Etheric gains 45 million units of soya milk. 
B) Mental gains 45 million units of rice cakes and Etheric gains 30 million units of soya milk. 
C) Mental gains 15 million units of soya milk and Etheric gains 45 million units of soya milk. 
D) Mental gains 15 million units of soya milk and Etheric gains 5 million units of soya milk. 
E) Mental gains 15 million units of soya milk and Etheric gains 5 million units of rice cakes.

Question 7

What is the term for the policy of restricting the importation of foreign products?

Accepted Answer

A) Quota. 
B) Protectionism. 
C) Trade barriers. 
D) Terms of trade. 
A) Quota. 
B) Protectionism. 
C) Trade barriers. 
D) Terms of trade.

Question 8

Below is a graph illustrating rice and flax production in the countries of Cardassia and Bajor.
  
-Refer to the graph above to answer this question.Which of the following statements is true?

Accepted Answer

A) Cardassia has both an absolute and a comparative advantage in the production of rice. 
B) Bajor has both an absolute and a comparative advantage in the production of rice. 
C) Cardassia has both an absolute and a comparative advantage in the production of flax. 
D) Bajor has both an absolute and a comparative advantage in the production of flax. 
A) Cardassia has both an absolute and a comparative advantage in the production of rice. 
B) Bajor has both an absolute and a comparative advantage in the production of rice. 
C) Cardassia has both an absolute and a comparative advantage in the production of flax. 
D) Bajor has both an absolute and a comparative advantage in the production of flax.

Question 9

What is the term for restrictions imposed by a government limiting the amount of foreign currencies which can be obtained?

Accepted Answer

A) Tariffs. 
B) Taxes. 
C) Quotas. 
D) Exchange controls. 
A) Tariffs. 
B) Taxes. 
C) Quotas. 
D) Exchange controls.

Question 10

What does protectionism mean?

Accepted Answer

A) Policies designed to limit the amount of exports leaving a country. 
B) A form of insurance on exported goods in case of loss during transportation. 
C) Subsidies give in order to keep the prices of imported goods low. 
D) Policies designed to limit the amount of imports entering a country. 
A) Policies designed to limit the amount of exports leaving a country. 
B) A form of insurance on exported goods in case of loss during transportation. 
C) Subsidies give in order to keep the prices of imported goods low. 
D) Policies designed to limit the amount of imports entering a country.

Question 11

Table 13.14 shows the output of kumquats per month.
  
-Domestic producers gain and domestic consumers lose as a result of the imposition of tariffs or quotas.

Accepted Answer

A) True 
 B)False

Question 12

"According to the theory of comparative advantage,trade is always mutually beneficially." Evaluate this statement.

Accepted Answer

This statement is incorrect.Ac

Question 13

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people.
  
-Refer to the data above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Caledonia should specialize and export wheat. 
B) Ibrox should specialize and export wheat. 
C) Caledonia should specialize and export beans. 
D) Ibrox should specialize in beans but export wheat. 
A) Caledonia should specialize and export wheat. 
B) Ibrox should specialize and export wheat. 
C) Caledonia should specialize and export beans. 
D) Ibrox should specialize in beans but export wheat.

Question 14

-Refer to above table to answer this question.Supposing that there are 200 workers in Potter,how many swords could be produced if 540 broomsticks were produced?

Accepted Answer

A) 0 swords. 
B) 110 swords. 
C) 120 swords. 
D) 330 swords. 
A) 0 swords. 
B) 110 swords. 
C) 120 swords. 
D) 330 swords.

Question 15

Below is the total market demand and supply of wine for France and Germany.Quantities are in millions of litres per month.
  
-Refer to the information above to answer this question.Assume that France and Germany enter into a free trade agreement (and there are no extra transportation costs,etc. )what will France do?

Accepted Answer

A) Export 4 million litres of wine per month. 
B) Export 1 million litres of wine per month. 
C) Import 4 million litres of wine per month. 
D) Import 1 million litres of wine per month. 
A) Export 4 million litres of wine per month. 
B) Export 1 million litres of wine per month. 
C) Import 4 million litres of wine per month. 
D) Import 1 million litres of wine per month.

Question 16

Table 13.14 shows the output of kumquats per month.
  
-List five ways to restrict imports.

Accepted Answer

The five major ways of restricting impor

Question 17

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people.
  
-Refer to the information above to answer this question.Suppose that a single worker in each country is transferred from the less to the more productive industry.What will be the total gains from specialization?

Accepted Answer

A) Beef + 6 and pork + 2. 
B) Beef + 6 and pork - 2. 
C) Beef + 2 and pork + 6. 
D) Beef - 2 and pork + 6. 
A) Beef + 6 and pork + 2. 
B) Beef + 6 and pork - 2. 
C) Beef + 2 and pork + 6. 
D) Beef - 2 and pork + 6.

Question 18

Below is the total market demand and supply of wine for France and Germany.Quantities are in millions of litres per month.
  
-Refer to the information above to answer this question.Who gains from free trade in wine between France and Germany?

Accepted Answer

A) German wine producers and French wine drinkers. 
B) German wine producers and German wine drinkers. 
C) French wine producers and French wine drinkers. 
D) French wine producers and German wine drinkers. 
A) German wine producers and French wine drinkers. 
B) German wine producers and German wine drinkers. 
C) French wine producers and French wine drinkers. 
D) French wine producers and German wine drinkers.

Question 19

Table 13.14 shows the output of kumquats per month.
  
-Suppose the following domestic demand and supply schedule for Mexico's toothpaste industry:
   a)In the absence of free trade,what is the equilibrium price and quantity traded domestically for Mexico's toothpaste industry?
b)Suppose the international price for a toothpaste is 1 peso.Will Mexico export or import toothpaste? How many units?
Now suppose the international price is 0.75 peso.
c)If the Mexican government limits the number of imported toothpaste to 1 million units.How many units will Mexico import and what will be the equilibrium price?
d)If the Mexican government places a 0.10 peso tariff on toothpaste.How many units will Thailand import?

Accepted Answer

a)0.90 peso and 37.5 million u

Question 20

Suppose that the cost of producing 1 unit of wine in Happy Island is 2 units of rice and in Joy Island,1 unit of wine costs 4 units of rice.What does this mean for the two countries?

Accepted Answer

A) Happy Island should specialize in and export rice to Joy Island. 
B) Happy Island should specialize in and export wine to Joy Island. 
C) Happy Island should specialize in rice but export wine to Joy Island. 
D) Happy Island should specialize in wine but export rice to Joy Island. 
A) Happy Island should specialize in and export rice to Joy Island. 
B) Happy Island should specialize in and export wine to Joy Island. 
C) Happy Island should specialize in rice but export wine to Joy Island. 
D) Happy Island should specialize in wine but export rice to Joy Island.

Under what circumstances will there be no opportunity for mutually advantageous trade between two countries?

-Refer to above figure to answer this question.What could be possible terms of trade between the two countries?

Compared to 50 years ago,international world trade has substantially and the geographical areas leading this change are _.

Some commentators have suggested that the government should protect the Canadian automobile industry.Which argument against free trade is being suggested?

What is the term for the policy of restricting the importation of foreign products?

Below is a graph illustrating rice and flax production in the countries of Cardassia and Bajor. -Refer to the graph above to answer this question.Which of the following statements is true?

What is the term for restrictions imposed by a government limiting the amount of foreign currencies which can be obtained?

What does protectionism mean?

Table 13.14 shows the output of kumquats per month. -Domestic producers gain and domestic consumers lose as a result of the imposition of tariffs or quotas.

"According to the theory of comparative advantage,trade is always mutually beneficially." Evaluate this statement.

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people. -Refer to the data above to answer this question.Which of the following statements is correct?

-Refer to above table to answer this question.Supposing that there are 200 workers in Potter,how many swords could be produced if 540 broomsticks were produced?

Table 13.14 shows the output of kumquats per month. -List five ways to restrict imports.

Below is the total market demand and supply of wine for France and Germany.Quantities are in millions of litres per month. -Refer to the information above to answer this question.Who gains from free trade in wine between France and Germany?

Suppose that the cost of producing 1 unit of wine in Happy Island is 2 units of rice and in Joy Island,1 unit of wine costs 4 units of rice.What does this mean for the two countries?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

Filters

Exam 13: International Trade

Under what circumstances will there be no opportunity for mutually advantageous trade between two countries?

-Refer to above figure to answer this question.What could be possible terms of trade between the two countries?

Compared to 50 years ago,international world trade has ________ substantially and the geographical areas leading this change are _________.

Some commentators have suggested that the government should protect the Canadian automobile industry.Which argument against free trade is being suggested?

What is the term for the policy of restricting the importation of foreign products?

Below is a graph illustrating rice and flax production in the countries of Cardassia and Bajor. -Refer to the graph above to answer this question.Which of the following statements is true?

What is the term for restrictions imposed by a government limiting the amount of foreign currencies which can be obtained?

What does protectionism mean?

Table 13.14 shows the output of kumquats per month. -Domestic producers gain and domestic consumers lose as a result of the imposition of tariffs or quotas.

"According to the theory of comparative advantage,trade is always mutually beneficially." Evaluate this statement.

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people. -Refer to the data above to answer this question.Which of the following statements is correct?

-Refer to above table to answer this question.Supposing that there are 200 workers in Potter,how many swords could be produced if 540 broomsticks were produced?

Table 13.14 shows the output of kumquats per month. -List five ways to restrict imports.

Below is the total market demand and supply of wine for France and Germany.Quantities are in millions of litres per month. -Refer to the information above to answer this question.Who gains from free trade in wine between France and Germany?

Suppose that the cost of producing 1 unit of wine in Happy Island is 2 units of rice and in Joy Island,1 unit of wine costs 4 units of rice.What does this mean for the two countries?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

Filters

Compared to 50 years ago,international world trade has substantially and the geographical areas leading this change are _.