Question 1

Absolute advantage

Accepted Answer

A) is the same as comparative advantage 
B) implies autarky 
C) means that countries of the same size have the same opportunity cost of producing both goods 
D) means that a country can produce more of two goods than another country can 
E) means that a country can produce less of two goods than another country can 
A) is the same as comparative advantage 
B) implies autarky 
C) means that countries of the same size have the same opportunity cost of producing both goods 
D) means that a country can produce more of two goods than another country can 
E) means that a country can produce less of two goods than another country can

Question 2

The difference between an import quota and a tariff that results in the same domestic price is

Accepted Answer

A) none; they are the same 
B) the quantity demanded is higher under the tariff 
C) the world price is higher under the quota 
D) the tariff revenue goes to the domestic government; quota benefits may go to foreigners 
E) none because both quotas and tariffs are illegal 
A) none; they are the same 
B) the quantity demanded is higher under the tariff 
C) the world price is higher under the quota 
D) the tariff revenue goes to the domestic government; quota benefits may go to foreigners 
E) none because both quotas and tariffs are illegal

Question 3

Which of the following is not a criticism of the national defense argument for trade restrictions?

Accepted Answer

A) National defense only makes sense in the absence of international trade. 
B) Stockpiling basic military hardware could eliminate the need to protect the domestic industry. 
C) Nearly all industries can make some claim to strategic importance,so such trade restrictions can get out of hand. 
D) National defense considerations can outweigh concerns about efficiency. 
E) Government subsidies to domestic producers may be more efficient than trade restrictions. 
A) National defense only makes sense in the absence of international trade. 
B) Stockpiling basic military hardware could eliminate the need to protect the domestic industry. 
C) Nearly all industries can make some claim to strategic importance,so such trade restrictions can get out of hand. 
D) National defense considerations can outweigh concerns about efficiency. 
E) Government subsidies to domestic producers may be more efficient than trade restrictions.

Question 4

The basis of the benefits of specialization is

Accepted Answer

A) comparative advantage 
B) absolute advantage 
C) size of country 
D) identical production costs between two countries 
E) self-sufficiency 
A) comparative advantage 
B) absolute advantage 
C) size of country 
D) identical production costs between two countries 
E) self-sufficiency

Question 5

Revenue from a(n)__________ goes to the U.S.government while revenue from a(n)__________ goes to whomever secures the right to sell foreign goods in the U.S.market.

Accepted Answer

A) export subsidy,quota 
B) tariff,quota 
C) domestic content requirement,low-interest loan 
D) tariff,export subsidy 
E) quota,tariff 
A) export subsidy,quota 
B) tariff,quota 
C) domestic content requirement,low-interest loan 
D) tariff,export subsidy 
E) quota,tariff

Question 6

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 with regard to opportunity costs in the two countries?

Accepted Answer

A) The opportunity cost of producing watches is lower in Denmark. 
B) The opportunity cost of producing cheese is lower in Denmark. 
C) The opportunity cost of producing watches is identical in both countries. 
D) It is impossible to compare opportunity costs because the two countries use different currencies. 
E) In Germany the opportunity cost of producing one pound of cheese is one watch. 
A) The opportunity cost of producing watches is lower in Denmark. 
B) The opportunity cost of producing cheese is lower in Denmark. 
C) The opportunity cost of producing watches is identical in both countries. 
D) It is impossible to compare opportunity costs because the two countries use different currencies. 
E) In Germany the opportunity cost of producing one pound of cheese is one watch.

Question 7

Which pair of groups benefits from an import quota when quota rights are given away without charge?

Accepted Answer

A) domestic and foreign producers 
B) domestic producers and foreign consumers 
C) domestic government and foreign consumers 
D) domestic government and producers 
E) foreign consumers and producers 
A) domestic and foreign producers 
B) domestic producers and foreign consumers 
C) domestic government and foreign consumers 
D) domestic government and producers 
E) foreign consumers and producers

Question 8

Which of the following is not a type of trade restriction?

Accepted Answer

A) low-interest loans to foreign buyers 
B) export subsidies for domestic firms 
C) domestic content requirements 
D) restrictive health and safety standards 
E) economies of scale 
A) low-interest loans to foreign buyers 
B) export subsidies for domestic firms 
C) domestic content requirements 
D) restrictive health and safety standards 
E) economies of scale

Question 9

Under a tariff,the domestic government gains revenue,but under an import quota it does not,unless it sells the quota rights.

Accepted Answer

A) True 
 B)False

Question 10

It is possible for one country to have a comparative advantage in the production of all products.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 17-9  
-If the country in Exhibit 17-9 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted,the welfare loss resulting from higher domestic production costs is represented by area

Accepted Answer

A) a 
B) b 
C) c + d 
D) b + d 
E) e 
A) a 
B) b 
C) c + d 
D) b + d 
E) e

Question 12

If a tariff increases,everybody loses except the government imposing the tariff.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true concerning the impact of tariffs and quotas?

Accepted Answer

A) Tariffs raise the price of a good but quotas do not. 
B) Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus. 
C) Both tariffs and quotas increase the quantity demanded. 
D) The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product. 
E) The potential welfare loss is greater with tariffs than quotas. 
A) Tariffs raise the price of a good but quotas do not. 
B) Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus. 
C) Both tariffs and quotas increase the quantity demanded. 
D) The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product. 
E) The potential welfare loss is greater with tariffs than quotas.

Question 14

Exhibit 17-3  
-In Exhibit 17-3,if the world price of corn is $2 and there are no trade restrictions,the United States will

Accepted Answer

A) produce 3,000,consume 7,000,and export 2,000 bushels of corn 
B) have an excess supply of corn 
C) be a net exporter of corn 
D) not produce any corn 
E) consume all of the corn that it produces 
A) produce 3,000,consume 7,000,and export 2,000 bushels of corn 
B) have an excess supply of corn 
C) be a net exporter of corn 
D) not produce any corn 
E) consume all of the corn that it produces

Question 15

Exhibit 17-1  
-Exhibit 17-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts.What can you say about comparative advantage from the information in Exhibit 31-9?

Accepted Answer

A) Lambda has a comparative advantage in the production of coconuts and Beta has a comparative advantage in the production of fish 
B) Lambda has a comparative advantage in the production of fish and Beta has a comparative advantage in the production of coconuts 
C) Lambda has a comparative advantage in the production of both coconuts and fish 
D) Beta has a comparative advantage in the production of both coconuts and fish 
E) neither Lambda nor Beta has a comparative advantage in either coconuts or fish 
A) Lambda has a comparative advantage in the production of coconuts and Beta has a comparative advantage in the production of fish 
B) Lambda has a comparative advantage in the production of fish and Beta has a comparative advantage in the production of coconuts 
C) Lambda has a comparative advantage in the production of both coconuts and fish 
D) Beta has a comparative advantage in the production of both coconuts and fish 
E) neither Lambda nor Beta has a comparative advantage in either coconuts or fish

Question 16

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour.What is the opportunity cost of producing one walking stick?

Accepted Answer

A) 40 boomerangs 
B) 10 boomerangs 
C) 4 boomerangs 
D) 1/4 of a boomerang 
E) 1/2 worker 
A) 40 boomerangs 
B) 10 boomerangs 
C) 4 boomerangs 
D) 1/4 of a boomerang 
E) 1/2 worker

Question 17

As a result of a tariff on an imported good,

Accepted Answer

A) domestic producers are better off because they sell more goods at the same price 
B) domestic producers are better off because they sell more goods at a higher price 
C) domestic producers are better off because they sell the same quantity of goods at a higher price 
D) domestic consumers are better off because there are more domestically produced goods available 
E) domestic consumers are neither better off nor worse off because imports do not change 
A) domestic producers are better off because they sell more goods at the same price 
B) domestic producers are better off because they sell more goods at a higher price 
C) domestic producers are better off because they sell the same quantity of goods at a higher price 
D) domestic consumers are better off because there are more domestically produced goods available 
E) domestic consumers are neither better off nor worse off because imports do not change

Question 18

International trade between countries typically produces a winner and a loser.Generally,it is the economically more advanced country that gains at the expense of the less developed nation.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 17-1  
-Exhibit 17-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts.Lambda has a comparative advantage in coconuts and Beta has a comparative advantage in fish.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 17-5  
-In Exhibit 17-5,with a tariff of $0.50 per unit and a world price of $1.00,

Accepted Answer

A) 25 units will be exported 
B) 25 units will be imported 
C) 50 units will be exported 
D) 50 units will be imported 
E) 10 units will be exported 
A) 25 units will be exported 
B) 25 units will be imported 
C) 50 units will be exported 
D) 50 units will be imported 
E) 10 units will be exported

Exam 18: International Trade

Absolute advantage

The difference between an import quota and a tariff that results in the same domestic price is

Which of the following is not a criticism of the national defense argument for trade restrictions?

The basis of the benefits of specialization is

Revenue from a(n)__________ goes to the U.S.government while revenue from a(n)__________ goes to whomever secures the right to sell foreign goods in the U.S.market.

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 with regard to opportunity costs in the two countries?

Which pair of groups benefits from an import quota when quota rights are given away without charge?

Which of the following is not a type of trade restriction?

Under a tariff,the domestic government gains revenue,but under an import quota it does not,unless it sells the quota rights.

It is possible for one country to have a comparative advantage in the production of all products.

Exhibit 17-9 -If the country in Exhibit 17-9 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted,the welfare loss resulting from higher domestic production costs is represented by area

If a tariff increases,everybody loses except the government imposing the tariff.

Which of the following is true concerning the impact of tariffs and quotas?

Exhibit 17-3 -In Exhibit 17-3,if the world price of corn is $2 and there are no trade restrictions,the United States will

Exhibit 17-1 -Exhibit 17-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts.What can you say about comparative advantage from the information in Exhibit 31-9?

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour.What is the opportunity cost of producing one walking stick?

As a result of a tariff on an imported good,

International trade between countries typically produces a winner and a loser.Generally,it is the economically more advanced country that gains at the expense of the less developed nation.

Exhibit 17-1 -Exhibit 17-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts.Lambda has a comparative advantage in coconuts and Beta has a comparative advantage in fish.

Exhibit 17-5 -In Exhibit 17-5,with a tariff of $0.50 per unit and a world price of $1.00,

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters

Revenue from a(n) goes to the U.S.government while revenue from a(n) goes to whomever secures the right to sell foreign goods in the U.S.market.