Question 1

Which of the following is the best example of a quota?

Accepted Answer

A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment B

Question 2

Figure 7-2   Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.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. D

Question 3

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.Prior to trade,what was the opportunity cost to produce 1 belt in Morocco?

Accepted Answer

A) 1/2 of a sword 
B) 4/5 of a sword 
C) 1.25 swords 
D) 2 swords 
A) 1/2 of a sword 
B) 4/5 of a sword 
C) 1.25 swords 
D) 2 swords C

Question 4

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country

Accepted Answer

A) total employment is greater. 
B) total consumption of goods is greater. 
C) wages are higher. 
D) total welfare is greater. 
A) total employment is greater. 
B) total consumption of goods is greater. 
C) wages are higher. 
D) total welfare is greater.

Question 5

Is the value of U.S.exports is typically larger or smaller than the value of U.S.imports.

Accepted Answer

As a percentage of G

Question 6

Which of the following is the best example of a tariff?

Accepted Answer

A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 7

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Accepted Answer

A) marginal 
B) explicit 
C) opportunity 
D) implicit 
A) marginal 
B) explicit 
C) opportunity 
D) implicit

Question 8

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

Accepted Answer

A country has a comparative ad

Question 9

Figure 7-2   Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff.
-Refer to Figure 7-2.The tariff revenue collected by the government equals

Accepted Answer

A) $10 million. 
B) $15 million. 
C) $19.875 million. 
D) $35 million. 
A) $10 million. 
B) $15 million. 
C) $19.875 million. 
D) $35 million.

Question 10

Figure 7-1   Figure 7-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will be the domestic quantity supplied?

Accepted Answer

A) Q0 
B) Q1 
C) Q2 
D) Q2 - Q0 
A) Q0 
B) Q1 
C) Q2 
D) Q2 - Q0

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

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports.Which of the following counter-arguments is made by economists who oppose trade restrictions?

Accepted Answer

A) Statistics show that trade restrictions actually do not save jobs. 
B) Consumers pay a high cost for jobs saved through trade restrictions. 
C) Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. 
D) Trade restrictions benefit consumers in the short run but not in the long run. 
A) Statistics show that trade restrictions actually do not save jobs. 
B) Consumers pay a high cost for jobs saved through trade restrictions. 
C) Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. 
D) Trade restrictions benefit consumers in the short run but not in the long run.

Question 13

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.Prior to trade,what was the opportunity cost to produce 1 belt in Estonia?

Accepted Answer

A) 1/2 of a sword 
B) 4/5 of a sword 
C) 1.25 swords 
D) 2 swords 
A) 1/2 of a sword 
B) 4/5 of a sword 
C) 1.25 swords 
D) 2 swords

Question 14

Which of the following statements is false?

Accepted Answer

A) Exports benefit trading countries because exports create jobs.Imports do not benefit trading countries because they result in a loss of jobs. 
B) Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. 
C) Most of the leading exporting countries are large,high-income countries. 
D) Not all sectors of the U.S.economy are affected equally by international trade. 
A) Exports benefit trading countries because exports create jobs.Imports do not benefit trading countries because they result in a loss of jobs. 
B) Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. 
C) Most of the leading exporting countries are large,high-income countries. 
D) Not all sectors of the U.S.economy are affected equally by international trade.

Question 15

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.Prior to trade,what was the opportunity cost to produce 1 sword in Morocco?

Accepted Answer

A) 1/2 of a belt 
B) 4/5 of a belt 
C) 1.25 belts 
D) 2 belts 
A) 1/2 of a belt 
B) 4/5 of a belt 
C) 1.25 belts 
D) 2 belts

Question 16

Autarky is a situation where one country does not trade with other countries.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Figure 7-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.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 19

a.Define the term "globalization."
b.Describe the benefits of globalization.
c.Who is likely to oppose globalization and why?

Accepted Answer

a.Globalization refers to the process of

Question 20

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

Accepted Answer

A country can have a comparative advanta

Which of the following is the best example of a quota?

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The loss in domestic consumer surplus as a result of the tariff is equal to

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country

Is the value of U.S.exports is typically larger or smaller than the value of U.S.imports.

Which of the following is the best example of a tariff?

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

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

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The tariff revenue collected by the government equals

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will be the domestic quantity supplied?

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

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports.Which of the following counter-arguments is made by economists who oppose trade restrictions?

Which of the following statements is false?

Autarky is a situation where one country does not trade with other countries.

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

a.Define the term "globalization." b.Describe the benefits of globalization. c.Who is likely to oppose globalization and why?

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

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

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 7: Comparative Advantage and the Gains From International Trade

Which of the following is the best example of a quota?

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The loss in domestic consumer surplus as a result of the tariff is equal to

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country

Is the value of U.S.exports is typically larger or smaller than the value of U.S.imports.

Which of the following is the best example of a tariff?

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

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

Figure 7-2 Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 7-2 shows the impact of this tariff. -Refer to Figure 7-2.The tariff revenue collected by the government equals

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will be the domestic quantity supplied?

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

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports.Which of the following counter-arguments is made by economists who oppose trade restrictions?

Which of the following statements is false?

Autarky is a situation where one country does not trade with other countries.

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

a.Define the term "globalization." b.Describe the benefits of globalization. c.Who is likely to oppose globalization and why?

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

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

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters