Question 1

Which of the following is an example of a trade restriction?

Accepted Answer

A) Japan places a tax on all Korean automobiles. 
B) Domestic wine is more expensive than wine imported from Chile. 
C) The United States,Canada,and Mexico sign the NAFTA agreement. 
D) Consumers prefer German beer to domestic beer. 
A) Japan places a tax on all Korean automobiles. 
B) Domestic wine is more expensive than wine imported from Chile. 
C) The United States,Canada,and Mexico sign the NAFTA agreement. 
D) Consumers prefer German beer to domestic beer.

Question 2

Figure 9-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Accepted Answer

A) Domestic consumption equals 28 million pounds of which 18 million pounds are imports. 
B) Domestic consumption equals 40 million pounds of which 22 million pounds are imports. 
C) Domestic consumption equals 34 million pounds of which 16 million pounds are imports. 
D) Domestic consumption equals 34 million pounds of which 18 million pounds are imports. 
A) Domestic consumption equals 28 million pounds of which 18 million pounds are imports. 
B) Domestic consumption equals 40 million pounds of which 22 million pounds are imports. 
C) Domestic consumption equals 34 million pounds of which 16 million pounds are imports. 
D) Domestic consumption equals 34 million pounds of which 18 million pounds are imports.

Question 3

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 4

Although the United States is the leading exporting country,international trade is less important to the U.S.than it is to most other countries.

Accepted Answer

A) True 
 B)False

Question 5

Protectionism is usually justified on the basis of one of four arguments.What are those four arguments?

Accepted Answer

1.saving jobs 2.protecting hig

Question 6

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 7

China has developed a comparative advantage in the production of children's toys.The source of this comparative advantage is

Accepted Answer

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

Question 8

The United States has developed a comparative advantage in digital computers,airliners and many prescription drugs.The source of its comparative advantage in these products is

Accepted Answer

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

Question 9

Prior to the 1998 World Cup,France banned the use of all soccer balls made by child workers.Several economists criticized the ban.Which of the following is an argument these economists used to justify the use of child labor in some countries?

Accepted Answer

A) Soccer balls are easy to carry and workers were given soccer balls to play with. 
B) Child workers were allowed to attend school during the periods they worked. 
C) Child workers were given gloves to protect their hands while they stitched soccer balls. 
D) Some of the alternatives to stitching soccer balls include begging and prostitution. 
A) Soccer balls are easy to carry and workers were given soccer balls to play with. 
B) Child workers were allowed to attend school during the periods they worked. 
C) Child workers were given gloves to protect their hands while they stitched soccer balls. 
D) Some of the alternatives to stitching soccer balls include begging and prostitution.

Question 10

Figure 9-1   Figure 9-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $24.What areas represent consumer surplus and domestic producer surplus?

Accepted Answer

A) Consumer surplus = R + S; producer surplus = V. 
B) Consumer surplus = R + S + T + U; producer surplus = V. 
C) Consumer surplus = R + S + T + U; producer surplus = V + W + X + Y. 
D) Consumer surplus = R + S + T; producer surplus = W + X + Y. 
A) Consumer surplus = R + S; producer surplus = V. 
B) Consumer surplus = R + S + T + U; producer surplus = V. 
C) Consumer surplus = R + S + T + U; producer surplus = V + W + X + Y. 
D) Consumer surplus = R + S + T; producer surplus = W + X + Y.

Question 11

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

Accepted Answer

A) unless the buyer resides in a different country than the seller resides in.International trade may make the buyer or seller worse off. 
B) unless one party is richer than the other. 
C) only if the buyer and seller live in countries with market economies. 
D) whether the buyer and seller live in the same city or different countries. 
A) unless the buyer resides in a different country than the seller resides in.International trade may make the buyer or seller worse off. 
B) unless one party is richer than the other. 
C) only if the buyer and seller live in countries with market economies. 
D) whether the buyer and seller live in the same city or different countries.

Question 12

Figure 9-2   Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2.As a result of the tariff,domestic producers increase their quantity supplied by

Accepted Answer

A) 6 million pounds of coffee. 
B) 18 million pounds of coffee. 
C) 26 million pounds or coffee. 
D) 38 million pounds of coffee. 
A) 6 million pounds of coffee. 
B) 18 million pounds of coffee. 
C) 26 million pounds or coffee. 
D) 38 million pounds of coffee.

Question 13

Table 9-1
   Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food.Rob and Bill spent one day each fishing and picking berries.The following table lists the pounds of output Rob and Bill produced.
-Refer to Table 9-1.Use the table above to select the statement that accurately interprets the data in the table.

Accepted Answer

A) Rob has an absolute advantage in picking berries and Bill has an absolute advantage in catching fish. 
B) Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish. 
C) Bill has an absolute advantage in picking berries and catching fish. 
D) Rob has an absolute advantage in picking berries and catching fish. 
A) Rob has an absolute advantage in picking berries and Bill has an absolute advantage in catching fish. 
B) Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish. 
C) Bill has an absolute advantage in picking berries and catching fish. 
D) Rob has an absolute advantage in picking berries and catching fish.

Question 14

Figure 9-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.Without the quota,the domestic price of peanuts equals the world price which is $2.00 per pound.What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?

Accepted Answer

A) 10 million pounds 
B) 28 million pounds 
C) 30 million pounds 
D) 40 million pounds 
A) 10 million pounds 
B) 28 million pounds 
C) 30 million pounds 
D) 40 million pounds

Question 15

Table 9-2
Output Per Hour of Work
   Table 9-2 shows the output per hour of work for light bulbs and flash drives in Mexico and in Canada.
-Refer to Table 9-2.
a.Which country has an absolute advantage in the production of light bulbs and flash drives?
b.Which country has a comparative advantage in the production of light bulbs?
c.Which country has a comparative advantage in the production of flash drives?

Accepted Answer

a.Neither country has an absolute advant

Question 16

Figure 9-2   Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2.The loss in domestic consumer surplus as a result of the tariff is equal to

Accepted Answer

A) $5 million. 
B) $19.875 million. 
C) $24.875 million. 
D) $31.125 million. 
A) $5 million. 
B) $19.875 million. 
C) $24.875 million. 
D) $31.125 million.

Question 17

What are terms of trade?

Accepted Answer

Terms of trade refers to the r

Question 18

More than half of Caterpillar's sales are made

Accepted Answer

A) outside the United States. 
B) inside the United States. 
C) in Latin America. 
D) in China. 
A) outside the United States. 
B) inside the United States. 
C) in Latin America. 
D) in China.

Question 19

Figure 9-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the value of domestic producer surplus after the imposition of a quota?

Accepted Answer

A) $10.75 million 
B) $15.75 million 
C) $17.25 million 
D) $27.75 million 
A) $10.75 million 
B) $15.75 million 
C) $17.25 million 
D) $27.75 million

Question 20

Which of the following describes the national security argument for protectionism?

Accepted Answer

A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand. 
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism. 
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. 
D) Private companies (for example,Coca-Cola)should not be forced to reveal their trade secrets to foreign companies. 
A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand. 
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism. 
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. 
D) Private companies (for example,Coca-Cola)should not be forced to reveal their trade secrets to foreign companies.

Which of the following is an example of a trade restriction?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

Although the United States is the leading exporting country,international trade is less important to the U.S.than it is to most other countries.

Protectionism is usually justified on the basis of one of four arguments.What are those four arguments?

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

China has developed a comparative advantage in the production of children's toys.The source of this comparative advantage is

The United States has developed a comparative advantage in digital computers,airliners and many prescription drugs.The source of its comparative advantage in these products is

Prior to the 1998 World Cup,France banned the use of all soccer balls made by child workers.Several economists criticized the ban.Which of the following is an argument these economists used to justify the use of child labor in some countries?

Figure 9-1 Figure 9-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $24.What areas represent consumer surplus and domestic producer surplus?

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

Figure 9-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.As a result of the tariff,domestic producers increase their quantity supplied by

Figure 9-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.The loss in domestic consumer surplus as a result of the tariff is equal to

What are terms of trade?

More than half of Caterpillar's sales are made

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of domestic producer surplus after the imposition of a quota?

Which of the following describes the national security argument for protectionism?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

Exam 9: Comparative Advantage and the Gains From International Trade

Which of the following is an example of a trade restriction?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

Although the United States is the leading exporting country,international trade is less important to the U.S.than it is to most other countries.

Protectionism is usually justified on the basis of one of four arguments.What are those four arguments?

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

China has developed a comparative advantage in the production of children's toys.The source of this comparative advantage is

The United States has developed a comparative advantage in digital computers,airliners and many prescription drugs.The source of its comparative advantage in these products is

Prior to the 1998 World Cup,France banned the use of all soccer balls made by child workers.Several economists criticized the ban.Which of the following is an argument these economists used to justify the use of child labor in some countries?

Figure 9-1 Figure 9-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.The market price falls to $24.What areas represent consumer surplus and domestic producer surplus?

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

Figure 9-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.As a result of the tariff,domestic producers increase their quantity supplied by

Figure 9-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.The loss in domestic consumer surplus as a result of the tariff is equal to

What are terms of trade?

More than half of Caterpillar's sales are made

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the value of domestic producer surplus after the imposition of a quota?

Which of the following describes the national security argument for protectionism?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters