Question 1

What are the two largest categories of goods that Canada exports?

Accepted Answer

A) Energy and forestry products. 
B) Agricultural and forestry products. 
C) Forestry products and industrial materials. 
D) Energy and automotive products. 
A) Energy and forestry products. 
B) Agricultural and forestry products. 
C) Forestry products and industrial materials. 
D) Energy and automotive products.

Question 2

Table 10.2 shows the production possibilities curves for Troy and Sparta.Prior to specialization and trade,Troy is producing combination B,and Sparta is producing combination D.
Table 10.2
   a)What is the total output of the two countries for both products?
b)If each country were to specialize in the product in which it has a comparative advantage,what will be the total output of the two countries for both products?
c)Suppose Troy and Sparta engage in trade.Can world output of both goods increase?

Accepted Answer

a)7 units of carrot and 7 units of olive

Question 3

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.

Question 4

On what basis are the gains from trade divided between countries?

Accepted Answer

A) According to the terms of trade. 
B) According to international trade agreements. 
C) According to the quantity of resources possessed by each. 
D) According to each country's comparative advantage. 
A) According to the terms of trade. 
B) According to international trade agreements. 
C) According to the quantity of resources possessed by each. 
D) According to each country's comparative advantage.

Question 5

Below are the production possibilities (without trade)and the trading possibilities (with free trade)for Canada.
  
-All of the following,except one,are reasons why complete free trade may not be possible.Which is the exception?

Accepted Answer

A) Transportation costs might exceed any cost differences between countries. 
B) Higher taxes in one country than another might exceed any cost differences. 
C) Free trade usually causes a reduction in international competition. 
D) Differences in languages and cultures might restrict the amount of trade. 
E) Cost differences between countries disappear as one country tries to totally specialize. 
A) Transportation costs might exceed any cost differences between countries. 
B) Higher taxes in one country than another might exceed any cost differences. 
C) Free trade usually causes a reduction in international competition. 
D) Differences in languages and cultures might restrict the amount of trade. 
E) Cost differences between countries disappear as one country tries to totally specialize.

Question 6

Which of the following statements about the impact of the introduction of free trade is correct?

Accepted Answer

A) It results in higher prices for domestic producers. 
B) It results in higher prices for foreign producers. 
C) It results in lower prices for foreign consumers. 
D) It results in higher prices for domestic consumers. 
A) It results in higher prices for domestic producers. 
B) It results in higher prices for foreign producers. 
C) It results in lower prices for foreign consumers. 
D) It results in higher prices for domestic consumers.

Question 7

Suppose that the productivity per worker in the corn and barley industries of China and Russia are as follows:
   a)What is the opportunity cost of 1 bushel of corn for China? For Russia?
b)What is the opportunity cost of 1 bushel of barley for China? For Russia?
c)Suppose there are 1000 workers in both China and Russia.Draw a production possibility curve for China and Russia

Accepted Answer

a)China: 2 bushels of barley.
Russia: 3

Question 8

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 9

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 10

Protectionism is the economic policy of protecting domestic producers by putting restrictions on exports.

Accepted Answer

A) True 
 B)False

Question 11

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 12

If a country wishes to specialize its production,it will also want to engage in trade.

Accepted Answer

A) True 
 B)False

Question 13

What does it mean if the opportunity costs differ between two countries?

Accepted Answer

A) Then comparative costs must be the same. 
B) There can be no gains from trade. 
C) It is possible for both countries to gain from specialization and trade. 
D) Then absolute costs must be the same. 
A) Then comparative costs must be the same. 
B) There can be no gains from trade. 
C) It is possible for both countries to gain from specialization and trade. 
D) Then absolute costs must be the same.

Question 14

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 soya milk in Etheric?

Accepted Answer

A) 0.5 units of rice cakes. 
B) 0.75 units of rice cakes. 
C) 1.33 units of rice cakes. 
D) 20 units of rice cakes. 
E) 40 units of rice cakes. 
A) 0.5 units of rice cakes. 
B) 0.75 units of rice cakes. 
C) 1.33 units of rice cakes. 
D) 20 units of rice cakes. 
E) 40 units of rice cakes.

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)
  
-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 16

Suppose that the productivity per worker in the caviar and salmon industries of Canada and Russia are as follows:
   a)Which country has the absolute advantage in producing caviar?
b)Which country has the absolute advantage in producing salmon?
c)Which country has the comparative advantage in producing caviar?
d)Which country has the comparative advantage in producing salmon?
e)According to the theory of comparative advantage,will there be trade? If yes,what is the direction of trade?

Accepted Answer

a)Russia has the absolute advantage in p

Question 17

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 18

If comparative cost is the basis for trade,why are the developing nations,which have very low wage rates,not the world's greatest trading nations?

Accepted Answer

It is not the cost of the factors of pro

Question 19

Table 10.1 shows the production possibilities curves for Augustus and Nero.Prior to specialization and trade,Augustus is producing combination B,and Nero is producing combination D.
Table 10.1
   a)What is the total output of the two countries for both products?
b)If each country were to specialize in the product in which it has a comparative advantage,what will be the total output of the two countries for both products?
c)What will be the gain from trade?

Accepted Answer

a)9 units of apples and 5 units of orang

Question 20

Domestic producers gain and domestic consumers lose as a result of the imposition of tariffs or quotas.

Accepted Answer

A) True 
 B)False

What are the two largest categories of goods that Canada exports?

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?

On what basis are the gains from trade divided between countries?

Below are the production possibilities (without trade)and the trading possibilities (with free trade)for Canada. -All of the following,except one,are reasons why complete free trade may not be possible.Which is the exception?

Which of the following statements about the impact of the introduction of free trade is correct?

Protectionism is the economic policy of protecting domestic producers by putting restrictions on exports.

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?

If a country wishes to specialize its production,it will also want to engage in trade.

What does it mean if the opportunity costs differ between two countries?

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 soya milk in Etheric?

A country has favourable terms of trade when:

If comparative cost is the basis for trade,why are the developing nations,which have very low wage rates,not the world's greatest trading nations?

Domestic producers gain and domestic consumers lose as a result of the imposition of tariffs or quotas.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 10: International Trade

What are the two largest categories of goods that Canada exports?

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?

On what basis are the gains from trade divided between countries?

Below are the production possibilities (without trade)and the trading possibilities (with free trade)for Canada. -All of the following,except one,are reasons why complete free trade may not be possible.Which is the exception?

Which of the following statements about the impact of the introduction of free trade is correct?

Protectionism is the economic policy of protecting domestic producers by putting restrictions on exports.

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?

If a country wishes to specialize its production,it will also want to engage in trade.

What does it mean if the opportunity costs differ between two countries?

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 soya milk in Etheric?

A country has favourable terms of trade when:

If comparative cost is the basis for trade,why are the developing nations,which have very low wage rates,not the world's greatest trading nations?

Domestic producers gain and domestic consumers lose as a result of the imposition of tariffs or quotas.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters