Question 1

If opening up international trade resulted in the U.S. importing ballpoint pens, what would tend to happen to the U.S. price of ballpoint pens?

Accepted Answer

A) ​The domestic price will fall. 
B) ​The domestic price will rise. 
C) ​The domestic price will remain constant. 
D) ​It is impossible to predict the impact. 
A) ​The domestic price will fall. 
B) ​The domestic price will rise. 
C) ​The domestic price will remain constant. 
D) ​It is impossible to predict the impact.

Question 2

A major difference between a tariff and a quota is that a tariff

Accepted Answer

A) ​will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the demand of foreigners for the nation's exports. 
B) ​typically generates tax revenue while a quota does not. 
C) ​can easily be rescinded but a quota cannot. 
D) ​will reduce imports but a quota generally will not. 
A) ​will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the demand of foreigners for the nation's exports. 
B) ​typically generates tax revenue while a quota does not. 
C) ​can easily be rescinded but a quota cannot. 
D) ​will reduce imports but a quota generally will not.

Question 3

An import quota does which of the following?

Accepted Answer

A) ​decreases the price of the imported goods to consumers 
B) ​increases the price of the domestic goods to consumers 
C) ​increases the domestic quantity demanded. 
D) ​both (a) and (c) 
A) ​decreases the price of the imported goods to consumers 
B) ​increases the price of the domestic goods to consumers 
C) ​increases the domestic quantity demanded. 
D) ​both (a) and (c)

Question 4

If discussing trade, it is ____ which matters, rather than ____. absolute advantage; comparative advantage

Accepted Answer

A) ​absolute advantage; comparative advantage 
B) ​comparative advantage; absolute advantage 
C) ​resource cost; comparative advantage 
D) ​the total amount of the good producible; comparative advantage 
A) ​absolute advantage; comparative advantage 
B) ​comparative advantage; absolute advantage 
C) ​resource cost; comparative advantage 
D) ​the total amount of the good producible; comparative advantage

Question 5

​Exhibit 18-5
​  
-Refer to Exhibit 18-5. The change in producer surplus from free trade is equal to area:

Accepted Answer

A) ​A + B + E 
B) ​E + B + C + D 
C) ​B 
D) ​E + B 
A) ​A + B + E 
B) ​E + B + C + D 
C) ​B 
D) ​E + B

Question 6

When markets reach the ____ price all the opportunities for mutually beneficial trade have taken place and the sum of consumer and producer surplus is ____.

Accepted Answer

A) ​minimum, maximized 
B) ​maximum, minimized 
C) ​equilibrium, maximized 
D) ​equilibrium, shared equally between consumers and producers 
A) ​minimum, maximized 
B) ​maximum, minimized 
C) ​equilibrium, maximized 
D) ​equilibrium, shared equally between consumers and producers

Question 7

​Exhibit 18-6
​  
-Refer to Exhibit 18-6. After the tariff, this country

Accepted Answer

A) ​exports Q1 to Q4 
B) ​exports Q2 to Q3 
C) ​imports Q1 to Q4 
D) ​imports Q2 to Q3 
A) ​exports Q1 to Q4 
B) ​exports Q2 to Q3 
C) ​imports Q1 to Q4 
D) ​imports Q2 to Q3

Question 8

Relative to a no-international-trade initial situation, if the United States imported wine from other countries with a comparative advantage in wine production, the U.S. domestic price of wine:

Accepted Answer

A) ​would rise, but domestic output would fall. 
B) ​would fall, but domestic output would rise. 
C) ​would rise, and domestic output would rise. 
D) ​would fall, and domestic output would fall. 
A) ​would rise, but domestic output would fall. 
B) ​would fall, but domestic output would rise. 
C) ​would rise, and domestic output would rise. 
D) ​would fall, and domestic output would fall.

Question 9

The difference between the price the seller receives for a good or service and the minimum price he would be willing to accept for that unit is called:

Accepted Answer

A) ​the total gains from trading that unit. 
B) ​the gain in producer surplus. 
C) ​the gain in consumer surplus. 
D) ​the total surplus. 
A) ​the total gains from trading that unit. 
B) ​the gain in producer surplus. 
C) ​the gain in consumer surplus. 
D) ​the total surplus.

Question 10

Which of the following might lead a nation to engage in international trade?

Accepted Answer

A) ​Differences in natural endowments such as climate. 
B) ​Differences in skills of the labor force. 
C) ​Differences in endowments of natural resources. 
D) ​All of the above. 
A) ​Differences in natural endowments such as climate. 
B) ​Differences in skills of the labor force. 
C) ​Differences in endowments of natural resources. 
D) ​All of the above.

Question 11

According to international trade theory, a country should:

Accepted Answer

A) ​import goods in which it has an absolute advantage. 
B) ​specialize in the production of the good in which it has an absolute disadvantage. 
C) ​export goods when it has either a comparative or absolute disadvantage in producing them. 
D) ​specialize in the production of the good in which they have a comparative advantage. 
A) ​import goods in which it has an absolute advantage. 
B) ​specialize in the production of the good in which it has an absolute disadvantage. 
C) ​export goods when it has either a comparative or absolute disadvantage in producing them. 
D) ​specialize in the production of the good in which they have a comparative advantage.

Question 12

What is producer surplus? How is it different from consumer surplus?

Accepted Answer

Consumer surplus is the difference betwe

Question 13

A tariff differs from a quota in that a tariff is

Accepted Answer

A) ​levied on imports, whereas a quota is imposed on exports. 
B) ​levied on exports, whereas a quota is imposed on imports. 
C) ​a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D) ​a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. 
A) ​levied on imports, whereas a quota is imposed on exports. 
B) ​levied on exports, whereas a quota is imposed on imports. 
C) ​a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D) ​a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

Question 14

Raising an existing tariff on grapes from Chile will:

Accepted Answer

A) ​increase U.S.imports of Chilean grapes. 
B) ​increase U.S.consumption of domestically produced grapes. 
C) ​increase total U.S.consumption of grapes. 
D) ​do all of the above. 
A) ​increase U.S.imports of Chilean grapes. 
B) ​increase U.S.consumption of domestically produced grapes. 
C) ​increase total U.S.consumption of grapes. 
D) ​do all of the above.

Question 15

If two countries produce both wheat and sugar and one country has the comparative advantage in producing wheat than the other country must have the absolute advantage producing sugar.

Accepted Answer

A) True 
 B)False

Question 16

Comparative advantage occurs when a person or a country can produce a good or service at a lower ____ than others.

Accepted Answer

A) ​fixed cost 
B) ​variable cost 
C) ​opportunity cost 
D) ​total cost 
A) ​fixed cost 
B) ​variable cost 
C) ​opportunity cost 
D) ​total cost

Question 17

The reasons that nations trade include the fact that

Accepted Answer

A) ​resources are distributed unequally across countries, and persons must trade to get more of what they want by specialization and trade. 
B) ​differences in climate lead to unequal abilities to grow certain types of food. 
C) ​no one country produces all of what citizens within the country want. 
D) ​all of the above 
A) ​resources are distributed unequally across countries, and persons must trade to get more of what they want by specialization and trade. 
B) ​differences in climate lead to unequal abilities to grow certain types of food. 
C) ​no one country produces all of what citizens within the country want. 
D) ​all of the above

Question 18

What matters most in determining the efficient distribution of production over the world is

Accepted Answer

A) ​absolute advantage. 
B) ​efficiency. 
C) ​the stock of resources. 
D) ​comparative advantage. 
A) ​absolute advantage. 
B) ​efficiency. 
C) ​the stock of resources. 
D) ​comparative advantage.

Question 19

Which term refers to the efforts by producers to gain profits from government protections such as tariffs and import quotas?

Accepted Answer

A) ​lobbying 
B) ​rent seeking 
C) ​profit seeking 
D) ​revenue seeking 
A) ​lobbying 
B) ​rent seeking 
C) ​profit seeking 
D) ​revenue seeking

Question 20

A tariff can be defined simply as a

Accepted Answer

A) ​A tariff can be defined simply as a 
B) ​tax on exports. 
C) ​legal limit on imports. 
D) ​legal limit on exports. 
A) ​A tariff can be defined simply as a 
B) ​tax on exports. 
C) ​legal limit on imports. 
D) ​legal limit on exports.

Exam 20: Economic Growth in the Global Economy

If opening up international trade resulted in the U.S. importing ballpoint pens, what would tend to happen to the U.S. price of ballpoint pens?

A major difference between a tariff and a quota is that a tariff

An import quota does which of the following?

If discussing trade, it is ____ which matters, rather than ____. absolute advantage; comparative advantage

​Exhibit 18-5 ​ -Refer to Exhibit 18-5. The change in producer surplus from free trade is equal to area:

When markets reach the ____ price all the opportunities for mutually beneficial trade have taken place and the sum of consumer and producer surplus is ____.

​Exhibit 18-6 ​ -Refer to Exhibit 18-6. After the tariff, this country

Relative to a no-international-trade initial situation, if the United States imported wine from other countries with a comparative advantage in wine production, the U.S. domestic price of wine:

The difference between the price the seller receives for a good or service and the minimum price he would be willing to accept for that unit is called:

Which of the following might lead a nation to engage in international trade?

According to international trade theory, a country should:

What is producer surplus? How is it different from consumer surplus?

A tariff differs from a quota in that a tariff is

Raising an existing tariff on grapes from Chile will:

If two countries produce both wheat and sugar and one country has the comparative advantage in producing wheat than the other country must have the absolute advantage producing sugar.

Comparative advantage occurs when a person or a country can produce a good or service at a lower ____ than others.

The reasons that nations trade include the fact that

What matters most in determining the efficient distribution of production over the world is

Which term refers to the efforts by producers to gain profits from government protections such as tariffs and import quotas?

A tariff can be defined simply as a

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Financial Markets, Saving, and Investment

Filters

If discussing trade, it is which matters, rather than . absolute advantage; comparative advantage

Exhibit 18-5 -Refer to Exhibit 18-5. The change in producer surplus from free trade is equal to area:

When markets reach the price all the opportunities for mutually beneficial trade have taken place and the sum of consumer and producer surplus is .

Exhibit 18-6 -Refer to Exhibit 18-6. After the tariff, this country