Question 1

In 2002, the steel industry argued that higher tariffs on steel were necessary to help fight the war on terrorism. This is an example of the _____ argument.

Accepted Answer

A) infant industry 
B) national security 
C) job creation 
D) predatory pricing 
A) infant industry 
B) national security 
C) job creation 
D) predatory pricing

Question 2

Use the following to answer questions:
Figure: The Production Possibilities for Two Countries  
-(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. If Indonesia and Malaysia specialize completely in the production of the good of their comparative advantage, the two nations together will produce _____ tires and _____ radios.

Accepted Answer

A) 600; 800 
B) 800; 1,200 
C) 1,200; 1,600 
D) 800; 600 
A) 600; 800 
B) 800; 1,200 
C) 1,200; 1,600 
D) 800; 600

Question 3

A tariff imposed on Japanese imports into the United States tends to _____ U.S. producers and _____ Japanese producers.

Accepted Answer

A) penalize; benefit. 
B) benefit; penalize 
C) penalize; penalize 
D) benefit; benefit 
A) penalize; benefit. 
B) benefit; penalize 
C) penalize; penalize 
D) benefit; benefit

Question 4

Use the following to answer questions :
Figure: The Production Possibility Frontiers for Jackson and Tahoe  
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. Assume each nation specializes completely, based on comparative advantage, and the price of 1 head of cattle equals the price of 2 bushels of wheat. If Jackson exports 120 bushels of wheat to Tahoe, Tahoe will export _____ head of cattle to Jackson.

Accepted Answer

A) 120 
B) 60 
C) 240 
D) 200 
A) 120 
B) 60 
C) 240 
D) 200

Question 5

In the case of U.S. trade protection, quota rents for the most important import licenses are earned by:

Accepted Answer

A) foreign governments. 
B) the U.S. government. 
C) U.S. producers of the good. 
D) importers who pay the highest price to get the licenses. 
A) foreign governments. 
B) the U.S. government. 
C) U.S. producers of the good. 
D) importers who pay the highest price to get the licenses.

Question 6

Use the following to answer questions:
Figure: The Production Possibilities for Two Countries  
-(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Malaysia has an absolute advantage in producing:

Accepted Answer

A) radios. 
B) tires. 
C) both radios and tires. 
D) neither radios nor tires. 
A) radios. 
B) tires. 
C) both radios and tires. 
D) neither radios nor tires.

Question 7

Policies that limit imports, usually to insulate domestic producers from foreign competition, are known as:

Accepted Answer

A) import-competing clauses. 
B) import reduction acts. 
C) trade protection. 
D) competition protection. 
A) import-competing clauses. 
B) import reduction acts. 
C) trade protection. 
D) competition protection.

Question 8

Use the following to answer questions :
Figure: The Production Possibility Frontiers for Jackson and Tahoe  
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe) Look at the figure The Production Possibility Frontiers for Jackson and Tahoe. In autarky, Jackson produces and consumes 30 head of cattle and 80 bushels of wheat, while Tahoe produces and consumes 80 head of cattle and 60 bushels of wheat. Each nation specializes completely, based on comparative advantage, and the price of 1 head of cattle equals the price of 2 bushels of wheat. If Jackson exports 120 bushels of wheat to Tahoe, then the new consumption point for Tahoe after trade is _____ bushels of wheat and _____head of cattle.

Accepted Answer

A) 120; 140 
B) 120; 60 
C) 60; 120 
D) 400; 200 
A) 120; 140 
B) 120; 60 
C) 60; 120 
D) 400; 200

Question 9

The United States must give up the production of 300 motorcycles to produce 20 additional SUVs with the same resources. In this case, the opportunity cost of producing 5 SUVs is ________ motorcycles.

Accepted Answer

A) 5 
B) 20 
C) 100 
D) 75 
A) 5 
B) 20 
C) 100 
D) 75

Question 10

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the price of beef in Argentina:

Accepted Answer

A) to fall. 
B) to rise. 
C) to remain at the autarky price. 
D) to be 10 boxes of tulips. 
A) to fall. 
B) to rise. 
C) to remain at the autarky price. 
D) to be 10 boxes of tulips.

Question 11

A tax on imported goods or services is a:

Accepted Answer

A) quota. 
B) tariff. 
C) nontariff barrier. 
D) trade embargo. 
A) quota. 
B) tariff. 
C) nontariff barrier. 
D) trade embargo.

Question 12

Use the following to answer questions :
Figure: The Market for Roses  
-(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus without international trade would be area:

Accepted Answer

A) X + Y + Z. 
B) W + X + Y. 
C) X + Y. 
D) Y. 
A) X + Y + Z. 
B) W + X + Y. 
C) X + Y. 
D) Y.

Question 13

Taken collectively, people in nations that engage in international trade are not likely to:

Accepted Answer

A) consume more than they were able to consume in the absence of trade. 
B) raise their standards of living. 
C) gain from lower opportunity costs of production. 
D) be made worse off. 
A) consume more than they were able to consume in the absence of trade. 
B) raise their standards of living. 
C) gain from lower opportunity costs of production. 
D) be made worse off.

Question 14

Which is NOT a source of comparative advantage?

Accepted Answer

A) In general, France has absolute advantage over Italy in production of goods and services. 
B) The United States' technology for computer chip design is more advanced than India's. 
C) Hawaii has a more favorable climate to grow pineapple than Italy. 
D) In the market for lumber, Canada has many more trees than England. 
A) In general, France has absolute advantage over Italy in production of goods and services. 
B) The United States' technology for computer chip design is more advanced than India's. 
C) Hawaii has a more favorable climate to grow pineapple than Italy. 
D) In the market for lumber, Canada has many more trees than England.

Question 15

Use the following to answer questions:
Figure: The Market for Calculators  
-(Figure: The Market for Calculators) Look at the figure The Market for Calculators. Assume that S and D represent the domestic demand and supply of calculators. The world price, PW, equals $100. The government imposes a quota restricting imports to 25 calculators. The domestic price rises to _____ and the quota rent is equal to area _____.

Accepted Answer

A) $120; K + L 
B) $150; K + H + I + L 
C) $120; H + I 
D) $150; G + H + I + J 
A) $120; K + L 
B) $150; K + H + I + L 
C) $120; H + I 
D) $150; G + H + I + J

Question 16

Use the following to answer questions :
Figure: The Market for Melons in Russia II  
-(Figure: The Markets for Melons in Russia II) Look at the figure The Market for Melons in Russia II. If the world price is $10 and a tariff of $5 is imposed on this market, the burden of the tariff will be borne by:

Accepted Answer

A) both producers and consumers. 
B) consumers. 
C) producers. 
D) the government. 
A) both producers and consumers. 
B) consumers. 
C) producers. 
D) the government.

Question 17

The United States can produce 30 computers for every car it produces, and Japan can produce 15 computers for every car it produces. Based on this information, which of the following statements is INCORRECT?

Accepted Answer

A) The United States should specialize in computer production. 
B) Japan has the comparative advantage in car production. 
C) There will be gains from trade if the United States exports computers to Japan. 
D) Japan has an absolute advantage in car production. 
A) The United States should specialize in computer production. 
B) Japan has the comparative advantage in car production. 
C) There will be gains from trade if the United States exports computers to Japan. 
D) Japan has an absolute advantage in car production.

Question 18

Use the following to answer questions:  
-(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____ in the United States as (than) in Mexico.

Accepted Answer

A) machinery; more 
B) machinery; the same 
C) machinery; less 
D) petroleum; less 
A) machinery; more 
B) machinery; the same 
C) machinery; less 
D) petroleum; less

Question 19

The United States places a tariff on imported Brazilian ethanol. The impact of this tariff on the domestic ethanol market is a _____ domestic price, _____ consumer surplus, and _____ producer surplus.

Accepted Answer

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

Question 20

Use the following to answer questions :  
-(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In Mexico the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

Accepted Answer

A) 30,000 
B) 90,000 
C) 120,000 
D) 270,000 
A) 30,000 
B) 90,000 
C) 120,000 
D) 270,000

In 2002, the steel industry argued that higher tariffs on steel were necessary to help fight the war on terrorism. This is an example of the _____ argument.

A tariff imposed on Japanese imports into the United States tends to _ U.S. producers and _ Japanese producers.

In the case of U.S. trade protection, quota rents for the most important import licenses are earned by:

Use the following to answer questions: Figure: The Production Possibilities for Two Countries -(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Malaysia has an absolute advantage in producing:

Policies that limit imports, usually to insulate domestic producers from foreign competition, are known as:

The United States must give up the production of 300 motorcycles to produce 20 additional SUVs with the same resources. In this case, the opportunity cost of producing 5 SUVs is ________ motorcycles.

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the price of beef in Argentina:

A tax on imported goods or services is a:

Use the following to answer questions : Figure: The Market for Roses -(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Producer surplus without international trade would be area:

Taken collectively, people in nations that engage in international trade are not likely to:

Which is NOT a source of comparative advantage?

Use the following to answer questions : Figure: The Market for Melons in Russia II -(Figure: The Markets for Melons in Russia II) Look at the figure The Market for Melons in Russia II. If the world price is $10 and a tariff of $5 is imposed on this market, the burden of the tariff will be borne by:

The United States can produce 30 computers for every car it produces, and Japan can produce 15 computers for every car it produces. Based on this information, which of the following statements is INCORRECT?

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost of _ is _ in the United States as (than) in Mexico.

The United States places a tariff on imported Brazilian ethanol. The impact of this tariff on the domestic ethanol market is a ___ domestic price, _ consumer surplus, and ___ producer surplus.

Use the following to answer questions : -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In Mexico the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

First Principles

Economic Models

Supply and Demand

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 5: International Trade 5

In 2002, the steel industry argued that higher tariffs on steel were necessary to help fight the war on terrorism. This is an example of the _____ argument.

A tariff imposed on Japanese imports into the United States tends to _____ U.S. producers and _____ Japanese producers.

In the case of U.S. trade protection, quota rents for the most important import licenses are earned by:

Use the following to answer questions: Figure: The Production Possibilities for Two Countries -(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. Malaysia has an absolute advantage in producing:

Policies that limit imports, usually to insulate domestic producers from foreign competition, are known as:

The United States must give up the production of 300 motorcycles to produce 20 additional SUVs with the same resources. In this case, the opportunity cost of producing 5 SUVs is ________ motorcycles.

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the price of beef in Argentina:

A tax on imported goods or services is a:

Use the following to answer questions : Figure: The Market for Roses -(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that PA is the autarky price and PW is the world price. Producer surplus without international trade would be area:

Taken collectively, people in nations that engage in international trade are not likely to:

Which is NOT a source of comparative advantage?

Use the following to answer questions : Figure: The Market for Melons in Russia II -(Figure: The Markets for Melons in Russia II) Look at the figure The Market for Melons in Russia II. If the world price is $10 and a tariff of $5 is imposed on this market, the burden of the tariff will be borne by:

The United States can produce 30 computers for every car it produces, and Japan can produce 15 computers for every car it produces. Based on this information, which of the following statements is INCORRECT?

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost of _____ is _____ in the United States as (than) in Mexico.

The United States places a tariff on imported Brazilian ethanol. The impact of this tariff on the domestic ethanol market is a _____ domestic price, _____ consumer surplus, and _____ producer surplus.

Use the following to answer questions : -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. In Mexico the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

First Principles

Economic Models

Supply and Demand

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

A tariff imposed on Japanese imports into the United States tends to _ U.S. producers and _ Japanese producers.

Use the following to answer questions : Figure: The Market for Roses -(Figure: The Market for Roses) Look at the figure The Market for Roses. Assume that P_A is the autarky price and P_W is the world price. Producer surplus without international trade would be area:

Use the following to answer questions: -(Table: Production Possibilities for Machinery and Petroleum) Look at the table Production Possibilities for Machinery and Petroleum. The opportunity cost of _ is _ in the United States as (than) in Mexico.

The United States places a tariff on imported Brazilian ethanol. The impact of this tariff on the domestic ethanol market is a ___ domestic price, _ consumer surplus, and ___ producer surplus.