Question 1

Imposing tariffs in cases of dumping

Accepted Answer

A)  is allowed under the WTO agreement. 
B)  is not allowed under the WTO agreement. 
C)  is not addressed by the WTO agreement. 
D)  has never occurred, even though it is allowed under the WTO agreement. 
A)  is allowed under the WTO agreement. 
B)  is not allowed under the WTO agreement. 
C)  is not addressed by the WTO agreement. 
D)  has never occurred, even though it is allowed under the WTO agreement.

Question 2

Table 18-6
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 18-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 18-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many clocks will Denmark gain compared to the 'without trade' numbers?

Accepted Answer

A)  30 
B)  100 
C)  150 
D)  900 
A)  30 
B)  100 
C)  150 
D)  900

Question 3

Trade only occurs if there are only winners,and no losers,as a result of the trade.

Accepted Answer

A) True 
 B)False

Question 4

Imports are goods and services bought domestically

Accepted Answer

A)  but produced in other countries. 
B)  and resold at a profit. 
C)  and produced domestically. 
D)  and not subject to tariffs. 
A)  but produced in other countries. 
B)  and resold at a profit. 
C)  and produced domestically. 
D)  and not subject to tariffs.

Question 5

Table 18-1
   Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 18-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 18-1.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 6

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is true?

Accepted Answer

A)  All individuals in both countries are made better off as a result of international trade. 
B)  Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. 
C)  Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. 
D)  Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off. 
A)  All individuals in both countries are made better off as a result of international trade. 
B)  Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. 
C)  Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. 
D)  Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.

Question 8

Table 18-6
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 18-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 18-6.Prior to trade,what was the opportunity cost to produce 1 clock in Denmark?

Accepted Answer

A)  1/6 of a hat 
B)  2/3 of a hat 
C)  1.5 hats 
D)  6 hats 
A)  1/6 of a hat 
B)  2/3 of a hat 
C)  1.5 hats 
D)  6 hats

Question 9

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Accepted Answer

A)  Bulgaria also has an absolute advantage in producing sandals relative to Finland. 
B)  Bulgaria has a lower opportunity cost of producing sandals relative to Finland. 
C)  Finland has an absolute disadvantage in producing sandals relative to Bulgaria. 
D)  labour costs are higher for sandal producers in Finland than in Bulgaria. 
A)  Bulgaria also has an absolute advantage in producing sandals relative to Finland. 
B)  Bulgaria has a lower opportunity cost of producing sandals relative to Finland. 
C)  Finland has an absolute disadvantage in producing sandals relative to Bulgaria. 
D)  labour costs are higher for sandal producers in Finland than in Bulgaria.

Question 10

Table 18-1
   Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 18-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 18-1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B)  Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C)  Sandy has an absolute advantage in dog bathing and dog grooming. 
D)  Linda has an absolute advantage in dog bathing and dog grooming. 
A)  Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B)  Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C)  Sandy has an absolute advantage in dog bathing and dog grooming. 
D)  Linda has an absolute advantage in dog bathing and dog grooming.

Question 11

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

Accepted Answer

A)  The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. 
B)  People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote. 
C)  Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. 
D)  The benefits from free trade are less than the costs. 
A)  The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. 
B)  People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote. 
C)  Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. 
D)  The benefits from free trade are less than the costs.

Question 12

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

Accepted Answer

A)  A limit imposed on the number of sport utility vehicles that Australia can import from Japan. 
B)  A subsidy granted by the government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers. 
C)  A tax placed on all sport utility vehicles sold in the domestic market. 
D)  A $5000 per-car fee imposed on all sport utility vehicles imported into Australia. 
A)  A limit imposed on the number of sport utility vehicles that Australia can import from Japan. 
B)  A subsidy granted by the government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers. 
C)  A tax placed on all sport utility vehicles sold in the domestic market. 
D)  A $5000 per-car fee imposed on all sport utility vehicles imported into Australia.

Question 13

Which of the following describes the infant industry argument for protectionism?

Accepted Answer

A)  An industry must be protected in its early stages of development so that firms can compete with government-subsidised foreign competition. 
B)  Some strategic industries must be protected to ensure adequate supplies of resources needed for national defence in emergencies. 
C)  Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. 
D)  Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. 
A)  An industry must be protected in its early stages of development so that firms can compete with government-subsidised foreign competition. 
B)  Some strategic industries must be protected to ensure adequate supplies of resources needed for national defence in emergencies. 
C)  Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. 
D)  Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.

Question 14

The process of countries becoming more open to foreign trade and investment is known as outsourcing.

Accepted Answer

A) True 
 B)False

Question 15

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is case.

Accepted Answer

Three reasons outlined in the text are:

Question 16

Which of the following is not an example of a trade restriction?

Accepted Answer

A)  Tariffs 
B)  Quotas and voluntary export restraints 
C)  Legislation requiring that cars sold in a country have 50 per cent domestic content 
D)  Consumer preferences for goods produced domestically 
A)  Tariffs 
B)  Quotas and voluntary export restraints 
C)  Legislation requiring that cars sold in a country have 50 per cent domestic content 
D)  Consumer preferences for goods produced domestically

Question 17

A tariff

Accepted Answer

A)  makes domestic consumers worse off. 
B)  makes both domestic producers and consumers worse off. 
C)  makes everyone better off. 
D)  makes domestic producers worse off. 
A)  makes domestic consumers worse off. 
B)  makes both domestic producers and consumers worse off. 
C)  makes everyone better off. 
D)  makes domestic producers worse off.

Question 18

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 19

Economists believe the most persuasive argument for protectionism is to protect infant industries.But the argument has a drawback.What is this drawback?

Accepted Answer

A)  Governments always make the level of protection for infant industries too high. 
B)  Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets. 
C)  Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue.) 
D)  Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never 'growing up'. 
A)  Governments always make the level of protection for infant industries too high. 
B)  Governments are usually too impatient and do not allow protection to remain in place long enough to allow industries to be competitive in international markets. 
C)  Governments usually use tariffs, rather than quotas, to protect infant industries in order to collect tariff revenue. (Quotas do not result in government revenue.) 
D)  Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never 'growing up'.

Question 20

The ratio at which a country can trade its exports for imports from other countries is called

Accepted Answer

A)  a trade barrier. 
B)  the terms of trade. 
C)  autarky. 
D)  a free trade agreement. 
A)  a trade barrier. 
B)  the terms of trade. 
C)  autarky. 
D)  a free trade agreement.

Imposing tariffs in cases of dumping

Trade only occurs if there are only winners,and no losers,as a result of the trade.

Imports are goods and services bought domestically

Table 18-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 18-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 18-1.Select the statement that accurately interprets the data in the table.

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Which of the following statements is true?

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Table 18-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 18-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 18-1.Select the statement that accurately interprets the data in the table.

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

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

Which of the following describes the infant industry argument for protectionism?

The process of countries becoming more open to foreign trade and investment is known as outsourcing.

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is case.

Which of the following is not an example of a trade restriction?

A tariff

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

Economists believe the most persuasive argument for protectionism is to protect infant industries.But the argument has a drawback.What is this drawback?

The ratio at which a country can trade its exports for imports from other countries is called

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 18: Fiscal Policy

Imposing tariffs in cases of dumping

Trade only occurs if there are only winners,and no losers,as a result of the trade.

Imports are goods and services bought domestically

Table 18-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 18-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 18-1.Select the statement that accurately interprets the data in the table.

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Which of the following statements is true?

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Table 18-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 18-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 18-1.Select the statement that accurately interprets the data in the table.

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

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

Which of the following describes the infant industry argument for protectionism?

The process of countries becoming more open to foreign trade and investment is known as outsourcing.

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is case.

Which of the following is not an example of a trade restriction?

A tariff

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

Economists believe the most persuasive argument for protectionism is to protect infant industries.But the argument has a drawback.What is this drawback?

The ratio at which a country can trade its exports for imports from other countries is called

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters