Question 1

Import protections are often imposed because:

Accepted Answer

A) import protections increase total surplus, even though some groups are harmed. 
B) groups representing import-competing industries are more cohesive than consumers. 
C) benefits to producers outweigh the costs to the consumer. 
D) the loss in consumer surplus is usually quite small. 
A) import protections increase total surplus, even though some groups are harmed. 
B) groups representing import-competing industries are more cohesive than consumers. 
C) benefits to producers outweigh the costs to the consumer. 
D) the loss in consumer surplus is usually quite small.

Question 2

The Ricardian model of international trade assumes that countries have the usual bowed-out (concave to the origin) production possibility frontiers.

Accepted Answer

A) True 
 B)False

Question 3

An economy moves from autarky to free international trade. In the import sector consumer surplus _____, producer surplus _____, and the economy as a whole _____.

Accepted Answer

A) rises; rises; gains 
B) rises; falls; gains 
C) falls; rises; gains 
D) rises; falls; loses 
A) rises; rises; gains 
B) rises; falls; gains 
C) falls; rises; gains 
D) rises; falls; loses

Question 4

The infant industry argument for trade protection states that:

Accepted Answer

A) small, traditional industries such as handicrafts should be protected from foreign competition or they would not be able to survive. 
B) new industries should be protected from foreign competition until they become established. 
C) industries that provide day care for their employees' children ought to be protected from foreign competition. 
D) industries that produce products essential for the well-being of infants (e.g., the baby food industry) ought to be protected, since such products are essential for the good health of future generations. 
A) small, traditional industries such as handicrafts should be protected from foreign competition or they would not be able to survive. 
B) new industries should be protected from foreign competition until they become established. 
C) industries that provide day care for their employees' children ought to be protected from foreign competition. 
D) industries that produce products essential for the well-being of infants (e.g., the baby food industry) ought to be protected, since such products are essential for the good health of future generations.

Question 5

Use the following to answer questions :
Figure: The Market for Tea in Sri Lanka  
-(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1, consumer surplus equals _____, and producer surplus equals _____.

Accepted Answer

A) F + G + H + I; J + K 
B) F; G + H + I + J + K 
C) F + I; J + K 
D) F + G + H; J + K 
A) F + G + H + I; J + K 
B) F; G + H + I + J + K 
C) F + I; J + K 
D) F + G + H; J + K

Question 6

If the executives of the U.S. silicon chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the _____ argument.

Accepted Answer

A) environmental standards 
B) infant industry 
C) cheap foreign labor 
D) national security 
A) environmental standards 
B) infant industry 
C) cheap foreign labor 
D) national security

Question 7

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____ .

Accepted Answer

A) fall; fall 
B) fall; rise 
C) rise; fall 
D) rise; rise 
A) fall; fall 
B) fall; rise 
C) rise; fall 
D) rise; rise

Question 8

France and the United Kingdom both produce wine and cloth with constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England MUST have a comparative advantage in cloth production.

Accepted Answer

A) True 
 B)False

Question 9

Comparative advantage in international trade:

Accepted Answer

A) is used only by large countries. 
B) is used to determine whether trade will be beneficial to both countries involved. 
C) provides benefits to developed countries only. 
D) does not determine what goods countries should produce. 
A) is used only by large countries. 
B) is used to determine whether trade will be beneficial to both countries involved. 
C) provides benefits to developed countries only. 
D) does not determine what goods countries should produce.

Question 10

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. Both nations will gain from trade when 1 tire trades for:

Accepted Answer

A) 0.33 radio. 
B) 0.5 radio. 
C) 1.5 radios. 
D) 2 radios. 
A) 0.33 radio. 
B) 0.5 radio. 
C) 1.5 radios. 
D) 2 radios.

Question 11

Use the following to answer questions :
Figure: Comparative Advantage and the Production Possibility Frontier  
-(Figure: Comparative Advantage and the Production Possibility Frontier) Look at the figure Comparative Advantage and the Production Possibility Frontier. _____ has an absolute advantage in the production of _____ and a comparative advantage in the production of _____.

Accepted Answer

A) The United States; computers; roses 
B) Colombia; computers; roses 
C) The United States; roses; computers 
D) Colombia; roses; roses 
A) The United States; computers; roses 
B) Colombia; computers; roses 
C) The United States; roses; computers 
D) Colombia; roses; roses

Question 12

Bangladesh exports shirts, the making of which is labor-intensive, to the United States. The likely source of Bangladesh's comparative advantage in shirts is:

Accepted Answer

A) a hotter climate, which makes it possible to produce shirts outdoors, eliminating the need for factory buildings and hence reducing costs. 
B) superior production technology. 
C) that in comparison with the United States, Bangladesh is a labor-abundant country. 
D) the higher labor productivity in Bangladesh. 
A) a hotter climate, which makes it possible to produce shirts outdoors, eliminating the need for factory buildings and hence reducing costs. 
B) superior production technology. 
C) that in comparison with the United States, Bangladesh is a labor-abundant country. 
D) the higher labor productivity in Bangladesh.

Question 13

If Japan levies tariffs on U.S. goods entering Japan, this will tend in the short run to _____ U.S. producers and _____ Japanese producers.

Accepted Answer

A) benefit; benefit 
B) damage; benefit 
C) benefit; damage 
D) damage; damage 
A) benefit; benefit 
B) damage; benefit 
C) benefit; damage 
D) damage; damage

Question 14

If the opportunity cost of producing either of two goods in question is constant, the production possibility frontier is:

Accepted Answer

A) linear. 
B) concave to the origin. 
C) convex to the origin. 
D) upward-sloping. 
A) linear. 
B) concave to the origin. 
C) convex to the origin. 
D) upward-sloping.

Question 15

Use the following to answer questions :
Figure: The Market for Oranges in South Africa  
-(Figure: The Market for Oranges in South Africa) Look at the figure The Market for Oranges in South Africa. In autarky, the price of oranges in South Africa is P1. When the economy is opened to trade, the price falls to PW and producer surplus will _____ to area _____.

Accepted Answer

A) fall; N + Q 
B) fall; Q 
C) rise; M + N + O + P 
D) rise; M + N + O + P + Q 
A) fall; N + Q 
B) fall; Q 
C) rise; M + N + O + P 
D) rise; M + N + O + P + Q

Question 16

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 with 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 17

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. The opportunity cost of producing 1 tire in Indonesia is _____ radio(s), while the opportunity cost of producing 1 tire in Malaysia is _____ radio(s).

Accepted Answer

A) 0.5; 2 
B) 2; 1 
C) 600; 800 
D) 800; 1,200 
A) 0.5; 2 
B) 2; 1 
C) 600; 800 
D) 800; 1,200

Question 18

Imports are good and services that are:

Accepted Answer

A) sold outside of the country. 
B) domestically produced. 
C) purchased from another country. 
D) purchased inside the country. 
A) sold outside of the country. 
B) domestically produced. 
C) purchased from another country. 
D) purchased inside the country.

Question 19

Which of the following is a common argument for trade protection?

Accepted Answer

A) national security 
B) increased efficiency 
C) increased profitability 
D) increased productivity 
A) national security 
B) increased efficiency 
C) increased profitability 
D) increased productivity

Question 20

In practice much trade protection reflects the political influence of import-competing producers.

Accepted Answer

A) True 
 B)False

Import protections are often imposed because:

The Ricardian model of international trade assumes that countries have the usual bowed-out (concave to the origin) production possibility frontiers.

An economy moves from autarky to free international trade. In the import sector consumer surplus ___, producer surplus _, and the economy as a whole ___.

The infant industry argument for trade protection states that:

Use the following to answer questions : Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁, consumer surplus equals _, and producer surplus equals _.

If the executives of the U.S. silicon chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the _____ argument.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _ and the quantity of shoes consumed in the domestic market to _ .

France and the United Kingdom both produce wine and cloth with constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England MUST have a comparative advantage in cloth production.

Comparative advantage in international trade:

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. Both nations will gain from trade when 1 tire trades for:

Bangladesh exports shirts, the making of which is labor-intensive, to the United States. The likely source of Bangladesh's comparative advantage in shirts is:

If Japan levies tariffs on U.S. goods entering Japan, this will tend in the short run to _ U.S. producers and _ Japanese producers.

If the opportunity cost of producing either of two goods in question is constant, the production possibility frontier is:

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 with international trade would be area:

Imports are good and services that are:

Which of the following is a common argument for trade protection?

In practice much trade protection reflects the political influence of import-competing producers.

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

Import protections are often imposed because:

The Ricardian model of international trade assumes that countries have the usual bowed-out (concave to the origin) production possibility frontiers.

An economy moves from autarky to free international trade. In the import sector consumer surplus _____, producer surplus _____, and the economy as a whole _____.

The infant industry argument for trade protection states that:

Use the following to answer questions : Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1, consumer surplus equals _____, and producer surplus equals _____.

If the executives of the U.S. silicon chip industry lobby Congress for protection from imports on the grounds that theirs is a new industry that needs time to develop technological efficiency, they are using the _____ argument.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____ .

France and the United Kingdom both produce wine and cloth with constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England MUST have a comparative advantage in cloth production.

Comparative advantage in international trade:

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. Both nations will gain from trade when 1 tire trades for:

Bangladesh exports shirts, the making of which is labor-intensive, to the United States. The likely source of Bangladesh's comparative advantage in shirts is:

If Japan levies tariffs on U.S. goods entering Japan, this will tend in the short run to _____ U.S. producers and _____ Japanese producers.

If the opportunity cost of producing either of two goods in question is constant, the production possibility frontier is:

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 with international trade would be area:

Imports are good and services that are:

Which of the following is a common argument for trade protection?

In practice much trade protection reflects the political influence of import-competing producers.

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

An economy moves from autarky to free international trade. In the import sector consumer surplus ___, producer surplus _, and the economy as a whole ___.

Use the following to answer questions : Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁, consumer surplus equals _, and producer surplus equals _.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _ and the quantity of shoes consumed in the domestic market to _ .

If Japan levies tariffs on U.S. goods entering Japan, this will tend in the short run 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 with international trade would be area: