Question 1

-Refer to Table 13-1. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Sandy has a greater opportunity cost than Linda for dog grooming. 
B)  Sandy's opportunity cost for dog grooming is less than Linda's. 
C)  Linda has a greater opportunity cost than Sandy for dog bathing. 
D)  Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's. 
A)  Sandy has a greater opportunity cost than Linda for dog grooming. 
B)  Sandy's opportunity cost for dog grooming is less than Linda's. 
C)  Linda has a greater opportunity cost than Sandy for dog bathing. 
D)  Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's.

Question 2

If the opportunity cost of production for two goods is different between two countries, then

Accepted Answer

A)  trade cannot benefit either country. 
B)  only one country can be made better off by trade. 
C)  mutually beneficial trade is possible. 
D)  trade will only benefit both countries if one can lower its opportunity costs. 
A)  trade cannot benefit either country. 
B)  only one country can be made better off by trade. 
C)  mutually beneficial trade is possible. 
D)  trade will only benefit both countries if one can lower its opportunity costs.

Question 3

Jobs lost to foreign trade are generally easy to identify, but jobs created by foreign trade are generally less easy to identify.

Accepted Answer

A) True 
 B)False

Question 4

The selling of a product for a price below its cost of production is called

Accepted Answer

A)  fair competition. 
B)  dumping. 
C)  unfair competition. 
D)  operating at a loss. 
A)  fair competition. 
B)  dumping. 
C)  unfair competition. 
D)  operating at a loss.

Question 5

Which of the following is not a source of comparative advantage?

Accepted Answer

A)  relative abundance of labour and capital 
B)  technology 
C)  climate and natural resources 
D)  a strong foreign currency exchange rate 
A)  relative abundance of labour and capital 
B)  technology 
C)  climate and natural resources 
D)  a strong foreign currency exchange rate

Question 6

Japan has developed a comparative advantage in designing and producing automobiles. The source of its comparative advantage in these products is

Accepted Answer

A)  abundant supplies of natural resources. 
B)  a favourable climate. 
C)  a strong central government. 
D)  technology. 
A)  abundant supplies of natural resources. 
B)  a favourable climate. 
C)  a strong central government. 
D)  technology.

Question 7

Many economists criticise protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products. Why, then, do some people support protectionism?

Accepted Answer

A)  The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. 
B)  Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. 
C)  Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage. 
D)  Supporters of protectionism believe that free trade will lead to inflation. 
A)  The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. 
B)  Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. 
C)  Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage. 
D)  Supporters of protectionism believe that free trade will lead to inflation.

Question 8

Under autarky, domestic producer surplus is represented by the area

Accepted Answer

A)  above the supply curve and below the equilibrium price. 
B)  above the supply curve and below the demand curve. 
C)  below the demand curve and above the equilibrium price. 
D)  above the demand curve and below the supply curve. 
A)  above the supply curve and below the equilibrium price. 
B)  above the supply curve and below the demand curve. 
C)  below the demand curve and above the equilibrium price. 
D)  above the demand curve and below the supply curve.

Question 9

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Accepted Answer

A country can have an absolute advantage

Question 10

Under autarky, consumer surplus is represented by the area

Accepted Answer

A)  above the supply curve and below the equilibrium price. 
B)  above the supply curve and below the demand curve. 
C)  below the demand curve and above the equilibrium price. 
D)  above the demand curve and below the supply curve. 
A)  above the supply curve and below the equilibrium price. 
B)  above the supply curve and below the demand curve. 
C)  below the demand curve and above the equilibrium price. 
D)  above the demand curve and below the supply curve.

Question 11

China has developed a comparative advantage in the production of clothing. The source of this comparative advantage is

Accepted Answer

A)  a large supply of natural resources. 
B)  a large supply of unskilled workers and relatively little capital. 
C)  investment in capital used to produce clothing. 
D)  superior process technology. 
A)  a large supply of natural resources. 
B)  a large supply of unskilled workers and relatively little capital. 
C)  investment in capital used to produce clothing. 
D)  superior process technology.

Question 12

a. What is the World Trade Organisation?
b. When was it established?
c. How many countries are members of the World Trade Organisation?

Accepted Answer

is an international organisation based i

Question 13

Free trade ________ living standards by ________ economic efficiency.

Accepted Answer

A)  raises; increasing 
B)  lowers; decreasing 
C)  raises; equalising 
D)  lowers; eliminating 
A)  raises; increasing 
B)  lowers; decreasing 
C)  raises; equalising 
D)  lowers; eliminating

Question 14

-Refer to Table 13-3. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Bryce has an absolute advantage in making candles and soap. 
B)  Tina has an absolute advantage in making candles and soap. 
C)  Neither Bryce nor Tina has an absolute advantage in making candles. 
D)  Neither Bryce nor Tina has an absolute advantage in making soap. 
A)  Bryce has an absolute advantage in making candles and soap. 
B)  Tina has an absolute advantage in making candles and soap. 
C)  Neither Bryce nor Tina has an absolute advantage in making candles. 
D)  Neither Bryce nor Tina has an absolute advantage in making soap.

Question 15

Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it.

Accepted Answer

A)  higher; less efficient 
B)  higher; more efficient 
C)  lower; less efficient 
D)  lower; more efficient 
A)  higher; less efficient 
B)  higher; more efficient 
C)  lower; less efficient 
D)  lower; more efficient

Question 16

What does it mean for a country to have an absolute advantage in producing a product?

Accepted Answer

A country has an absolute adva

Question 17

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Accepted Answer

A)  Absolute advantage 
B)  Specialisation 
C)  Autarky 
D)  Comparative advantage 
A)  Absolute advantage 
B)  Specialisation 
C)  Autarky 
D)  Comparative advantage

Question 18

-Refer to Table 13-5.
a. Which person has an absolute advantage in the production of bows? arrows?
b. Which person has a comparative advantage in the production of bows?
c. Which person has a comparative advantage in the production of arrows?

Accepted Answer

a. MyLinh has an absolute advantage in t

Question 19

Over the past several decades there has been a rapid growth in international trade. This growth has been due to all except one of the following factors. Which factor has not contributed to the growth of international trade?

Accepted Answer

A)  a favourable change in government policies 
B)  the spread of reliable communications 
C)  a reduction in shipping costs 
D)  an increase in the tariffs charged on many goods 
A)  a favourable change in government policies 
B)  the spread of reliable communications 
C)  a reduction in shipping costs 
D)  an increase in the tariffs charged on many goods

Question 20

Use Figure 13-1 to answer questions a-i.
a. Following the imposition of the tariff, what is the price that domestic consumers must now pay and what is the quantity purchased?
b. Calculate the value of consumer surplus with the tariff in place.
c. What is the quantity supplied by domestic sugar producers with the tariff in place?
d. Calculate the value of producer surplus received by Australian sugar producers with the tariff in place.
e. What is the quantity of sugar imported with the tariff in place?
f. What is the amount of tariff revenue collected by the government?
g. The tariff has reduced consumer surplus. Calculate the loss in consumer surplus due to the tariff.
h. What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i. Calculate the deadweight loss due to the tariff.

Accepted Answer

a. Price = $2.00 per pound; Quantity pur

-Refer to Table 13-1. Select the statement that accurately interprets the data in the table.

If the opportunity cost of production for two goods is different between two countries, then

Jobs lost to foreign trade are generally easy to identify, but jobs created by foreign trade are generally less easy to identify.

The selling of a product for a price below its cost of production is called

Which of the following is not a source of comparative advantage?

Japan has developed a comparative advantage in designing and producing automobiles. The source of its comparative advantage in these products is

Many economists criticise protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products. Why, then, do some people support protectionism?

Under autarky, domestic producer surplus is represented by the area

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Under autarky, consumer surplus is represented by the area

China has developed a comparative advantage in the production of clothing. The source of this comparative advantage is

a. What is the World Trade Organisation? b. When was it established? c. How many countries are members of the World Trade Organisation?

Free trade living standards by economic efficiency.

-Refer to Table 13-3. Select the statement that accurately interprets the data in the table.

Once a country has lost its comparative advantage in producing a good, its income will be and its economy will be if it switches from producing the good to importing it.

What does it mean for a country to have an absolute advantage in producing a product?

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

-Refer to Table 13-5. a. Which person has an absolute advantage in the production of bows? arrows? b. Which person has a comparative advantage in the production of bows? c. Which person has a comparative advantage in the production of arrows?

Over the past several decades there has been a rapid growth in international trade. This growth has been due to all except one of the following factors. Which factor has not contributed to the growth of international trade?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 13: International Trade

-Refer to Table 13-1. Select the statement that accurately interprets the data in the table.

If the opportunity cost of production for two goods is different between two countries, then

Jobs lost to foreign trade are generally easy to identify, but jobs created by foreign trade are generally less easy to identify.

The selling of a product for a price below its cost of production is called

Which of the following is not a source of comparative advantage?

Japan has developed a comparative advantage in designing and producing automobiles. The source of its comparative advantage in these products is

Many economists criticise protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products. Why, then, do some people support protectionism?

Under autarky, domestic producer surplus is represented by the area

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Under autarky, consumer surplus is represented by the area

China has developed a comparative advantage in the production of clothing. The source of this comparative advantage is

a. What is the World Trade Organisation? b. When was it established? c. How many countries are members of the World Trade Organisation?

Free trade ________ living standards by ________ economic efficiency.

-Refer to Table 13-3. Select the statement that accurately interprets the data in the table.

Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it.

What does it mean for a country to have an absolute advantage in producing a product?

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

-Refer to Table 13-5. a. Which person has an absolute advantage in the production of bows? arrows? b. Which person has a comparative advantage in the production of bows? c. Which person has a comparative advantage in the production of arrows?

Over the past several decades there has been a rapid growth in international trade. This growth has been due to all except one of the following factors. Which factor has not contributed to the growth of international trade?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Free trade living standards by economic efficiency.

Once a country has lost its comparative advantage in producing a good, its income will be and its economy will be if it switches from producing the good to importing it.