Question 1

Adam Smith believed that specialization is limited by:

Accepted Answer

A) the size of the market. 
B) the political environment. 
C) the number of unskilled workers in the labour market. 
D) the size of a country's debt. 
A) the size of the market. 
B) the political environment. 
C) the number of unskilled workers in the labour market. 
D) the size of a country's debt.

Question 2

Table 13.14 shows the output of kumquats per month.
  
-If the prices of a country's exports decrease and the prices of its imports increase,then the terms of trade will move in its favour.

Accepted Answer

A) True 
 B)False

Question 3

Table 13.14 shows the output of kumquats per month.
  
-List four arguments against free trade.

Accepted Answer

The strategic industry argument suggests

Question 4

A country has favourable terms of trade when:

Accepted Answer

A) The average price of its exports increases relatively more than does the average price of its imports. 
B) The average value of its imports increases relatively more than does the average value of its exports. 
C) The average volume of its exports decreases more than does the average volume of its imports. 
D) The average price of its imports increases relatively more than does the average price of its exports. 
A) The average price of its exports increases relatively more than does the average price of its imports. 
B) The average value of its imports increases relatively more than does the average value of its exports. 
C) The average volume of its exports decreases more than does the average volume of its imports. 
D) The average price of its imports increases relatively more than does the average price of its exports.

Question 5

Below are the production possibilities (without trade)and the trading possibilities (with free trade)for Canada.
  
-Refer to the graph above to answer this question.Assuming free trade,what is the opportunity cost of 1 more aircraft?

Accepted Answer

A) 0.033 railcars. 
B) 33.33 railcars. 
C) 30 railcars. 
D) 50 railcars. 
E) 3,000 railcars 
A) 0.033 railcars. 
B) 33.33 railcars. 
C) 30 railcars. 
D) 50 railcars. 
E) 3,000 railcars

Question 6

Table 13.14 shows the output of kumquats per month.
  
-Suppose the following domestic demand and supply schedule for Germany's laptop industry:
   a)In the absence of free trade,what is the equilibrium price and quantity traded for domestically Germany's laptop industry?
b)Suppose the international price for a laptop is €400.Will Germany export or import laptops? How many units?
c)Now suppose the German government places a €100 tariff on imported laptop.How many units will Germany import?

Accepted Answer

a)€600 and 60,000 un

Question 7

Table 13.14 shows the output of kumquats per month.
  
-Refer to Table 13.14 to answer this question.What is the world (free trade)price of kumquats,and what quantity of this product is being consumed domestically?

Accepted Answer

A) $4 and 50 kilos consumed. 
B) $4 and 90 kilos consumed. 
C) $5 and 80 kilos consumed. 
D) $6 and 70 kilos consumed. 
E) $6 and 130 kilos consumed. 
A) $4 and 50 kilos consumed. 
B) $4 and 90 kilos consumed. 
C) $5 and 80 kilos consumed. 
D) $6 and 70 kilos consumed. 
E) $6 and 130 kilos consumed.

Question 8

Table 13.14 shows the output of kumquats per month.
  
-If a country is able to produce all products more cheaply than any other country can,then there is no advantage in trade.

Accepted Answer

A) True 
 B)False

Question 9

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.Which of the following is true?

Accepted Answer

A) Cholesterol has an absolute advantage in pork and Fat has an absolute advantage in beef. 
B) Cholesterol has an absolute advantage in beef and Fat has an absolute advantage in pork. 
C) Cholesterol has a comparative advantage in pork and Fat has a comparative advantage in beef. 
D) Cholesterol has a comparative advantage in pork and Fat has an absolute advantage in beef. 
A) Cholesterol has an absolute advantage in pork and Fat has an absolute advantage in beef. 
B) Cholesterol has an absolute advantage in beef and Fat has an absolute advantage in pork. 
C) Cholesterol has a comparative advantage in pork and Fat has a comparative advantage in beef. 
D) Cholesterol has a comparative advantage in pork and Fat has an absolute advantage in beef.

Question 10

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.If each country totally specializes in the product in which it has a comparative advantage,what is the total combined output that they are capable of producing?

Accepted Answer

A) 80 wheat and 96 beans. 
B) 160 wheat and 192 beans. 
C) 48 wheat and 32 beans. 
D) 128 wheat and 128 beans. 
A) 80 wheat and 96 beans. 
B) 160 wheat and 192 beans. 
C) 48 wheat and 32 beans. 
D) 128 wheat and 128 beans.

Question 11

Below is some hypothetical data for the countries of Canada and Mexico.(Assume that Canada has 10 million workers per month available and Mexico has 20 million. )
Canada's Production Possibilities
(Output in millions of bushels per month)
   Mexico's Production Possibilities
(Output in millions of bushels per month)
   Output Before Trade
(Output in millions of bushels per month)
  
-Refer to the information above to answer this question.Which of the following would be feasible terms of trade between the two countries?

Accepted Answer

A) 1 bushel of beans = 2 bushels of rye. 
B) 1 bushel of beans = 0.4 bushels of rye. 
C) 1 bushel of beans = 1.25 bushels of rye. 
D) 1 bushel of beans = 4 bushels of rye. 
A) 1 bushel of beans = 2 bushels of rye. 
B) 1 bushel of beans = 0.4 bushels of rye. 
C) 1 bushel of beans = 1.25 bushels of rye. 
D) 1 bushel of beans = 4 bushels of rye.

Question 12

What is the term for a tax or duty levied on imported products?

Accepted Answer

A) Quota. 
B) Tariff. 
C) Dumping. 
D) Trade barrier. 
A) Quota. 
B) Tariff. 
C) Dumping. 
D) Trade barrier.

Question 13

-Refer to above figure to answer this question.What is the opportunity cost of producing 1 apple in Harmony and in Tranquility?

Accepted Answer

A) 2 pears in Harmony and 3 pears in Tranquility. 
B) 1/2 pear in Harmony and 1/3 pear in Tranquility. 
C) 2 pears in Harmony and 1/3 pear in Tranquility. 
D) 1/2 pear in Harmony and 3 pears in Tranquility. 
E) 3 pears in Harmony and 2 pears in Tranquility. 
A) 2 pears in Harmony and 3 pears in Tranquility. 
B) 1/2 pear in Harmony and 1/3 pear in Tranquility. 
C) 2 pears in Harmony and 1/3 pear in Tranquility. 
D) 1/2 pear in Harmony and 3 pears in Tranquility. 
E) 3 pears in Harmony and 2 pears in Tranquility.

Question 14

Some commentators have suggested that the government should not allow American universities to operate in Canada.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 15

Below is some hypothetical data for the countries of Canada and Mexico.(Assume that Canada has 10 million workers per month available and Mexico has 20 million. )
Canada's Production Possibilities
(Output in millions of bushels per month)
   Mexico's Production Possibilities
(Output in millions of bushels per month)
   Output Before Trade
(Output in millions of bushels per month)
  
-Suppose that a country has a comparative advantage in the production of wheat.Which of the following statements is true?

Accepted Answer

A) It must also have an absolute advantage in the production of wheat. 
B) The purchasing power parity theory must also be in its favour. 
C) Specialization is wise only up to a point because of the law of increasing costs. 
D) Specialization is wise only if exchange rates are fixed. 
A) It must also have an absolute advantage in the production of wheat. 
B) The purchasing power parity theory must also be in its favour. 
C) Specialization is wise only up to a point because of the law of increasing costs. 
D) Specialization is wise only if exchange rates are fixed.

Question 16

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 specialize and trade in the products in which they have a comparative advantage 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 consumption combinations for Mental?

Accepted Answer

A) 30 million units of soya milk and 55 million units of rice cakes. 
B) 45 million units of soya milk and 90 million units of rice cakes. 
C) 35 million units of soya milk and 30 million units of rice cakes. 
D) 90 million units of soya milk and 45 million units of rice cakes. 
E) 10 million units of soya milk and 30 million units of rice cakes. 
A) 30 million units of soya milk and 55 million units of rice cakes. 
B) 45 million units of soya milk and 90 million units of rice cakes. 
C) 35 million units of soya milk and 30 million units of rice cakes. 
D) 90 million units of soya milk and 45 million units of rice cakes. 
E) 10 million units of soya milk and 30 million units of rice cakes.

Question 17

Below is production possibilities data for the countries of Mental and Etheric.
  
-Refer to the information above to answer this question.What is the opportunity cost of one unit of rice cakes in Mental?

Accepted Answer

A) 0.25 units of soya milk. 
B) 0.5 units of soya milk. 
C) 2 units of soya milk. 
D) 10 units of soya milk. 
E) 20 units of soya milk. 
A) 0.25 units of soya milk. 
B) 0.5 units of soya milk. 
C) 2 units of soya milk. 
D) 10 units of soya milk. 
E) 20 units of soya milk.

Question 18

Table 13.14 shows the output of kumquats per month.
  
-What are the terms of trade? In general,what could cause the terms of trade to move in Canada's favour?

Accepted Answer

The terms of trade refers to the trading

Question 19

Table 13.14 shows the output of kumquats per month.
  
-Consider the effects of each of the following events on Canadian trade.Indicate whether the Canadian terms of trade will improve or deteriorate.
a)% ∆average price of imports = % ∆average price of exports
b)% ∆average price of imports  % ∆average price of exports

Accepted Answer

a)No chang

Question 20

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.What is the cost of a kilo of wheat in Caledonia?

Accepted Answer

A) 0.4 beans. 
B) 2 beans. 
C) 0.4 wheat. 
D) 2.5 beans. 
A) 0.4 beans. 
B) 2 beans. 
C) 0.4 wheat. 
D) 2.5 beans.

Adam Smith believed that specialization is limited by:

Table 13.14 shows the output of kumquats per month. -If the prices of a country's exports decrease and the prices of its imports increase,then the terms of trade will move in its favour.

Table 13.14 shows the output of kumquats per month. -List four arguments against free trade.

A country has favourable terms of trade when:

Below are the production possibilities (without trade)and the trading possibilities (with free trade)for Canada. -Refer to the graph above to answer this question.Assuming free trade,what is the opportunity cost of 1 more aircraft?

Table 13.14 shows the output of kumquats per month. -Refer to Table 13.14 to answer this question.What is the world (free trade)price of kumquats,and what quantity of this product is being consumed domestically?

Table 13.14 shows the output of kumquats per month. -If a country is able to produce all products more cheaply than any other country can,then there is no advantage in trade.

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.Which of the following is true?

What is the term for a tax or duty levied on imported products?

-Refer to above figure to answer this question.What is the opportunity cost of producing 1 apple in Harmony and in Tranquility?

Some commentators have suggested that the government should not allow American universities to operate in Canada.Which argument against free trade is being suggested?

Below is production possibilities data for the countries of Mental and Etheric. -Refer to the information above to answer this question.What is the opportunity cost of one unit of rice cakes in Mental?

Table 13.14 shows the output of kumquats per month. -What are the terms of trade? In general,what could cause the terms of trade to move in Canada's favour?

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.What is the cost of a kilo of wheat in Caledonia?

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

Adam Smith believed that specialization is limited by:

Table 13.14 shows the output of kumquats per month. -If the prices of a country's exports decrease and the prices of its imports increase,then the terms of trade will move in its favour.

Table 13.14 shows the output of kumquats per month. -List four arguments against free trade.

A country has favourable terms of trade when:

Below are the production possibilities (without trade)and the trading possibilities (with free trade)for Canada. -Refer to the graph above to answer this question.Assuming free trade,what is the opportunity cost of 1 more aircraft?

Table 13.14 shows the output of kumquats per month. -Refer to Table 13.14 to answer this question.What is the world (free trade)price of kumquats,and what quantity of this product is being consumed domestically?

Table 13.14 shows the output of kumquats per month. -If a country is able to produce all products more cheaply than any other country can,then there is no advantage in trade.

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.Which of the following is true?

What is the term for a tax or duty levied on imported products?

-Refer to above figure to answer this question.What is the opportunity cost of producing 1 apple in Harmony and in Tranquility?

Some commentators have suggested that the government should not allow American universities to operate in Canada.Which argument against free trade is being suggested?

Below is production possibilities data for the countries of Mental and Etheric. -Refer to the information above to answer this question.What is the opportunity cost of one unit of rice cakes in Mental?

Table 13.14 shows the output of kumquats per month. -What are the terms of trade? In general,what could cause the terms of trade to move in Canada's favour?

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.What is the cost of a kilo of wheat in Caledonia?

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