Question 1

Which of the following is not correct concerning predatory dumping?

Accepted Answer

A) It may be a way to discourage the development of domestic production of a good. 
B) It may drive out established firms. 
C) There are a great number of documented cases of predatory dumping. 
D) In actuality,the blocking of entry on a worldwide scale would be extremely difficult to accomplish. 
E) In pursuing their monopoly position after dumping,dumpers may actually encourage the entry of other firms. 
A) It may be a way to discourage the development of domestic production of a good. 
B) It may drive out established firms. 
C) There are a great number of documented cases of predatory dumping. 
D) In actuality,the blocking of entry on a worldwide scale would be extremely difficult to accomplish. 
E) In pursuing their monopoly position after dumping,dumpers may actually encourage the entry of other firms.

Question 2

Exhibit 17-10  
-In Exhibit 17-10 the domestic demand for sugar is represented by D and the domestic supply is represented by S and the world price of sugar is $.13 per pound with a domestic tariff of $.02 per pound of sugar.This tariff will reduce the consumer surplus enjoyed by domestic consumers by

Accepted Answer

A) $100,000 
B) $220,000 
C) $370,000 
D) $520,000 
E) $610,000 
A) $100,000 
B) $220,000 
C) $370,000 
D) $520,000 
E) $610,000

Question 3

Which of the following factors is the most significant in determining the pattern of international trade?

Accepted Answer

A) absolute advantage 
B) diplomatic expertise 
C) comparative advantage 
D) overpowering military strength 
E) a country's size relative to another country's 
A) absolute advantage 
B) diplomatic expertise 
C) comparative advantage 
D) overpowering military strength 
E) a country's size relative to another country's

Question 4

For each watch Denmark produces,it gives up the opportunity to make 50 pounds of cheese.Germany can produce one watch for every 100 pounds of cheese it produces.Which of the following is true concerning production possibilities curves in both countries?

Accepted Answer

A) The slopes of the countries' production possibilities frontiers cannot be determined unless the number of workers in each country is known. 
B) The countries' production possibilities frontiers have the usual bowed-out shape. 
C) On a graph with cheese on the vertical axis,the slope of Germany's production possibilities frontier is everywhere equal to 1/100. 
D) On a graph with cheese on the vertical axis,the slope of Germany's production possibilities frontier is steeper than Denmark's. 
E) On a graph with cheese on the vertical axis,the slope of Germany's production possibilities frontier is everywhere equal to negative 1/100. 
A) The slopes of the countries' production possibilities frontiers cannot be determined unless the number of workers in each country is known. 
B) The countries' production possibilities frontiers have the usual bowed-out shape. 
C) On a graph with cheese on the vertical axis,the slope of Germany's production possibilities frontier is everywhere equal to 1/100. 
D) On a graph with cheese on the vertical axis,the slope of Germany's production possibilities frontier is steeper than Denmark's. 
E) On a graph with cheese on the vertical axis,the slope of Germany's production possibilities frontier is everywhere equal to negative 1/100.

Question 5

As a result of a tariff on imports,consumers in the importing country

Accepted Answer

A) purchase more domestically produced goods and fewer foreign goods,resulting in the consumption of fewer total goods than without the tariff 
B) purchase more domestically produced goods and fewer foreign goods,resulting in the consumption of more total goods than without the tariff 
C) purchase more domestically produced goods and more foreign goods,resulting in the consumption of fewer total goods than without the tariff 
D) purchase fewer domestically produced goods and fewer foreign goods,resulting in the consumption of more total goods than without the tariff 
E) cease importing any goods at all 
A) purchase more domestically produced goods and fewer foreign goods,resulting in the consumption of fewer total goods than without the tariff 
B) purchase more domestically produced goods and fewer foreign goods,resulting in the consumption of more total goods than without the tariff 
C) purchase more domestically produced goods and more foreign goods,resulting in the consumption of fewer total goods than without the tariff 
D) purchase fewer domestically produced goods and fewer foreign goods,resulting in the consumption of more total goods than without the tariff 
E) cease importing any goods at all

Question 6

If U.S.consumption falls short of U.S.production,the U.S.imports the difference.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a problem with trade restrictions?

Accepted Answer

A) the high cost of rent-seeking activities such as lobbying 
B) the high cost of enforcement 
C) the unintended effects on related industries 
D) the inability to save U.S.jobs in the short run in industries that compete with imports 
E) the possibility of retaliation 
A) the high cost of rent-seeking activities such as lobbying 
B) the high cost of enforcement 
C) the unintended effects on related industries 
D) the inability to save U.S.jobs in the short run in industries that compete with imports 
E) the possibility of retaliation

Question 8

Firms in a high-wage nation such as the U.S.can compete effectively with imports from low-wage nations if

Accepted Answer

A) skill levels are identical in the nations 
B) the U.S.reduces tariffs on imports 
C) low-wage nations impose tariffs on U.S.made goods 
D) labor productivity is higher in the low-wage nation 
E) labor productivity is higher in the U.S. 
A) skill levels are identical in the nations 
B) the U.S.reduces tariffs on imports 
C) low-wage nations impose tariffs on U.S.made goods 
D) labor productivity is higher in the low-wage nation 
E) labor productivity is higher in the U.S.

Question 9

Exhibit 17-6  
-In Exhibit 17-6,if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States,which area represents the amount of tariff revenue the United States government collects?

Accepted Answer

A) a 
B) b 
C) c 
D) f 
E) e 
A) a 
B) b 
C) c 
D) f 
E) e

Question 10

If a manufacturer sells goods abroad for less than they sell for at home,which of the following is true?

Accepted Answer

A) An embargo has been established. 
B) A quota has been established. 
C) The manufacturer is engaged in dumping. 
D) There has been an improvement in the terms of trade. 
E) Tariffs have been reduced. 
A) An embargo has been established. 
B) A quota has been established. 
C) The manufacturer is engaged in dumping. 
D) There has been an improvement in the terms of trade. 
E) Tariffs have been reduced.

Question 11

The term autarky refers to

Accepted Answer

A) equilibrium after trade begins between two countries 
B) the gains received from trade 
C) self-sufficiency 
D) political isolationism 
E) the recognition that mutually beneficial trade is not possible between two countries 
A) equilibrium after trade begins between two countries 
B) the gains received from trade 
C) self-sufficiency 
D) political isolationism 
E) the recognition that mutually beneficial trade is not possible between two countries

Question 12

A country should export only those goods for which,relative to its trading partners,it has the

Accepted Answer

A) absolute advantage 
B) highest opportunity cost 
C) lowest production possibilities 
D) strongest demand 
E) lowest opportunity cost 
A) absolute advantage 
B) highest opportunity cost 
C) lowest production possibilities 
D) strongest demand 
E) lowest opportunity cost

Question 13

One reason for international specialization in production is

Accepted Answer

A) a high tariff imposed by a national government 
B) a low tariff imposed by a national government 
C) diminishing returns to a variable factor of production 
D) the different resource endowments throughout the world 
E) high fixed costs of production 
A) a high tariff imposed by a national government 
B) a low tariff imposed by a national government 
C) diminishing returns to a variable factor of production 
D) the different resource endowments throughout the world 
E) high fixed costs of production

Question 14

The establishment of GATT resulted in

Accepted Answer

A) lower tariff rates 
B) increased tariff rates 
C) decreases in total world trade 
D) increased protectionism 
E) a rise in the price of imports 
A) lower tariff rates 
B) increased tariff rates 
C) decreases in total world trade 
D) increased protectionism 
E) a rise in the price of imports

Question 15

A nation's consumption possibilities frontier is

Accepted Answer

A) always the same as its production possibilities frontier 
B) never the same as its production possibilities frontier 
C) the same as its production possibilities frontier only if there is advantageous trade 
D) the same as its production possibilities frontier only if there is no international trade 
E) usually lower than its production possibilities frontier 
A) always the same as its production possibilities frontier 
B) never the same as its production possibilities frontier 
C) the same as its production possibilities frontier only if there is advantageous trade 
D) the same as its production possibilities frontier only if there is no international trade 
E) usually lower than its production possibilities frontier

Question 16

Which of the following is true?

Accepted Answer

A) International trade makes it possible for a country's consumption possibilities to exceed its production possibilities. 
B) International trade requires that a country's production possibilities exceed its consumption possibilities. 
C) A country's production possibilities always equal its consumption possibilities. 
D) A country's consumption possibilities can never equal its production possibilities because of leakages in the system. 
E) As long as there is full employment of resources,a country's production possibilities will exceed its consumption possibilities even with trade. 
A) International trade makes it possible for a country's consumption possibilities to exceed its production possibilities. 
B) International trade requires that a country's production possibilities exceed its consumption possibilities. 
C) A country's production possibilities always equal its consumption possibilities. 
D) A country's consumption possibilities can never equal its production possibilities because of leakages in the system. 
E) As long as there is full employment of resources,a country's production possibilities will exceed its consumption possibilities even with trade.

Question 17

The GATT's most-favored nation clause means that tariff reductions granted by a member of GATT to imports from one country

Accepted Answer

A) apply only to that country 
B) are only extended to certain favored members of GATT 
C) are extended to all other members of GATT 
D) must be matched by equivalent quota reductions 
E) are extended to all other countries of the world 
A) apply only to that country 
B) are only extended to certain favored members of GATT 
C) are extended to all other members of GATT 
D) must be matched by equivalent quota reductions 
E) are extended to all other countries of the world

Question 18

Suppose that workers in Transylvania can produce only two goods -- yo-yos or sweatsocks.The Transylvanian currency is the daler.In what unit is the opportunity cost of yo-yos measured?

Accepted Answer

A) dalers 
B) dalers per yo-yo 
C) dalers per sweatsock 
D) yo-yos 
E) sweatsocks 
A) dalers 
B) dalers per yo-yo 
C) dalers per sweatsock 
D) yo-yos 
E) sweatsocks

Question 19

The World Trade Organization (WTO)

Accepted Answer

A) members are required to eliminate tariffs and customs duties 
B) supervises trade in merchandise and in services 
C) supervises merchandise trade only 
D) members are required to eliminate ad valorem tariffs but not specific tariffs 
E) includes all nations with populations greater than 10 million,with the exception of North Korea and Cuba 
A) members are required to eliminate tariffs and customs duties 
B) supervises trade in merchandise and in services 
C) supervises merchandise trade only 
D) members are required to eliminate ad valorem tariffs but not specific tariffs 
E) includes all nations with populations greater than 10 million,with the exception of North Korea and Cuba

Question 20

Exhibit 17-3  
-In Exhibit 17-3,if the world price of corn is $6 and there are no trade restrictions,the United States will

Accepted Answer

A) produce 7,000,consume 3,000,and import 4,000 bushels of corn 
B) produce 7,000,consume 3,000,and export 4,000 bushels of corn 
C) have an excess demand for corn 
D) be a net importer of corn 
E) not produce any corn 
A) produce 7,000,consume 3,000,and import 4,000 bushels of corn 
B) produce 7,000,consume 3,000,and export 4,000 bushels of corn 
C) have an excess demand for corn 
D) be a net importer of corn 
E) not produce any corn

Exam 18: International Trade

Which of the following is not correct concerning predatory dumping?

Which of the following factors is the most significant in determining the pattern of international trade?

For each watch Denmark produces,it gives up the opportunity to make 50 pounds of cheese.Germany can produce one watch for every 100 pounds of cheese it produces.Which of the following is true concerning production possibilities curves in both countries?

As a result of a tariff on imports,consumers in the importing country

If U.S.consumption falls short of U.S.production,the U.S.imports the difference.

Which of the following is not a problem with trade restrictions?

Firms in a high-wage nation such as the U.S.can compete effectively with imports from low-wage nations if

Exhibit 17-6 -In Exhibit 17-6,if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States,which area represents the amount of tariff revenue the United States government collects?

If a manufacturer sells goods abroad for less than they sell for at home,which of the following is true?

The term autarky refers to

A country should export only those goods for which,relative to its trading partners,it has the

One reason for international specialization in production is

The establishment of GATT resulted in

A nation's consumption possibilities frontier is

Which of the following is true?

The GATT's most-favored nation clause means that tariff reductions granted by a member of GATT to imports from one country

Suppose that workers in Transylvania can produce only two goods -- yo-yos or sweatsocks.The Transylvanian currency is the daler.In what unit is the opportunity cost of yo-yos measured?

The World Trade Organization (WTO)

Exhibit 17-3 -In Exhibit 17-3,if the world price of corn is $6 and there are no trade restrictions,the United States will

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