Question 1

International trade permits greater consumption than would be possible from the domestic production alone.

Accepted Answer

A) True 
 B)False

Question 2

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

Accepted Answer

A) the differences in labor productivity in the U.S.and other countries. 
B) the differences in factor endowments in the U.S.and its trading partners. 
C) the world price of Budweiser beer is lower than Heineken beer. 
D) the fact that production of Budweiser beer in the U.S.is inadequate compared to its demand. 
E) the preference for foreign brands of beer by a part of the U.S.population. 
A) the differences in labor productivity in the U.S.and other countries. 
B) the differences in factor endowments in the U.S.and its trading partners. 
C) the world price of Budweiser beer is lower than Heineken beer. 
D) the fact that production of Budweiser beer in the U.S.is inadequate compared to its demand. 
E) the preference for foreign brands of beer by a part of the U.S.population.

Question 3

The table below shows the quantity demanded (in thousands)and quantity supplied (in thousands)of computers in the U.S.and Canada at different prices. Table 20.5
  According to Table 20.5, the equilibrium quantity of computers traded in the world market is:

Accepted Answer

A) 20, 000 computers. 
B) 30, 000 computers. 
C) 10, 000 computers. 
D) 15, 000 computers. 
E) 40, 000 computers. 
A) 20, 000 computers. 
B) 30, 000 computers. 
C) 10, 000 computers. 
D) 15, 000 computers. 
E) 40, 000 computers.

Question 4

Which of the following counties are largely dependent on trade with the United States?

Accepted Answer

A) China and Japan 
B) U.K.and Germany 
C) Canada and Mexico 
D) France and Belgium 
E) Canada and U.K 
A) China and Japan 
B) U.K.and Germany 
C) Canada and Mexico 
D) France and Belgium 
E) Canada and U.K

Question 5

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3   Refer to Table 20.3.Determine the limits on the terms of trade for 1 pound of rice.

Accepted Answer

A) Between 5 calculators and 10 calculators 
B) Between 1 calculator and 5 calculators 
C) Between 1 calculator and 10 calculators 
D) Between 1 calculator and 2 calculators 
E) Between two-fifths of a calculator and 1 calculator 
A) Between 5 calculators and 10 calculators 
B) Between 1 calculator and 5 calculators 
C) Between 1 calculator and 10 calculators 
D) Between 1 calculator and 2 calculators 
E) Between two-fifths of a calculator and 1 calculator

Question 6

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3   Refer to Table 20.3.What is the least amount Japan is willing to accept for 1 calculator?

Accepted Answer

A) 1 pound of rice 
B) 5 pounds of rice 
C) 2 pounds of rice 
D) 2.5 pounds of rice 
E) Half a pound of rice 
A) 1 pound of rice 
B) 5 pounds of rice 
C) 2 pounds of rice 
D) 2.5 pounds of rice 
E) Half a pound of rice

Question 7

The difference between absolute and comparative advantage is that:

Accepted Answer

A) absolute advantage refers to input cost, while comparative advantage refers to opportunity cost. 
B) absolute advantage refers to opportunity cost, while comparative advantage refers to input cost. 
C) absolute advantage refers to individuals, and comparative advantage refers to countries. 
D) absolute advantage refers to countries, and comparative advantage refers to individuals. 
E) absolute advantage is applicable to intranational trade, while comparative advantage applies to international trade. 
A) absolute advantage refers to input cost, while comparative advantage refers to opportunity cost. 
B) absolute advantage refers to opportunity cost, while comparative advantage refers to input cost. 
C) absolute advantage refers to individuals, and comparative advantage refers to countries. 
D) absolute advantage refers to countries, and comparative advantage refers to individuals. 
E) absolute advantage is applicable to intranational trade, while comparative advantage applies to international trade.

Question 8

If the world price of steel is greater than the U.S."no-trade" domestic equilibrium price of steel, the United States:

Accepted Answer

A) will not produce steel. 
B) will demand steel from the rest of the world. 
C) will supply steel to the rest of the world. 
D) will not trade steel. 
E) will have a shortage of steel in the domestic market. 
A) will not produce steel. 
B) will demand steel from the rest of the world. 
C) will supply steel to the rest of the world. 
D) will not trade steel. 
E) will have a shortage of steel in the domestic market.

Question 9

The international equilibrium price is the point at which:

Accepted Answer

A) the domestic supply curve of one country intersects the domestic demand curve of another. 
B) the domestic demand and supply curves of a country intersects each other. 
C) the export supply curve of one country intersects the import demand curve of another. 
D) the domestic demand of the trading partners become identical. 
E) the domestic supply of the trading partners become identical. 
A) the domestic supply curve of one country intersects the domestic demand curve of another. 
B) the domestic demand and supply curves of a country intersects each other. 
C) the export supply curve of one country intersects the import demand curve of another. 
D) the domestic demand of the trading partners become identical. 
E) the domestic supply of the trading partners become identical.

Question 10

Though the countries can benefit by completely specializing in the production of the good in which they have comparative advantage, in real world however, they do not completely specialize.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following lists gives world exports in the order of their value, from highest to lowest?

Accepted Answer

A) Aircraft, motor vehicle parts, crude petroleum 
B) Aircraft, crude petroleum, motor vehicle parts 
C) Crude petroleum, office and telecom equipments, automotive parts 
D) Motor vehicle parts, aircraft, crude petroleum 
E) Motor vehicle parts, crude petroleum, aircraft 
A) Aircraft, motor vehicle parts, crude petroleum 
B) Aircraft, crude petroleum, motor vehicle parts 
C) Crude petroleum, office and telecom equipments, automotive parts 
D) Motor vehicle parts, aircraft, crude petroleum 
E) Motor vehicle parts, crude petroleum, aircraft

Question 12

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following factors are least likely to affect what countries end up trading in the international market?

Accepted Answer

A) International trade tariffs 
B) Government debt levels 
C) Comparative advantages 
D) Differences in tastes 
E) Different technological needs 
A) International trade tariffs 
B) Government debt levels 
C) Comparative advantages 
D) Differences in tastes 
E) Different technological needs

Question 14

Absolute advantage is irrelevant, because knowing the absolute number of labor hours required to produce a good does not tell us if we can benefit from trade.

Accepted Answer

A) True 
 B)False

Question 15

The theory of comparative advantage is based on:

Accepted Answer

A) absolute opportunity costs. 
B) relative opportunity costs. 
C) total costs of production. 
D) total costs, including transportation costs. 
E) a comparison of marginal cost with average variable costs. 
A) absolute opportunity costs. 
B) relative opportunity costs. 
C) total costs of production. 
D) total costs, including transportation costs. 
E) a comparison of marginal cost with average variable costs.

Question 16

The first panel in the following figure shows the domestic demand (D)and supply (S)curves of Columbian coffee and the second panel shows the import demand and export supply of Columbian coffee in the international market. Figure 20.1   Refer to Figure 20.1.If the price of Columbian coffee in the international market is $10, Columbia will export _____ pound(s)of coffee.

Accepted Answer

A) two 
B) zero 
C) six 
D) eight 
E) ten 
A) two 
B) zero 
C) six 
D) eight 
E) ten

Question 17

Which of the following statements in the context of U.S.exports is true?

Accepted Answer

A) The U.S.exports products produced in the low wage industries. 
B) Primary products account for the largest share of U.S.exports to developed nations. 
C) The U.S.mainly exports labor intensive goods. 
D) Most U.S.exports are produced in high-wage industries. 
E) A bulk of U.S.exports to developing nations comprise of perishable commodities. 
A) The U.S.exports products produced in the low wage industries. 
B) Primary products account for the largest share of U.S.exports to developed nations. 
C) The U.S.mainly exports labor intensive goods. 
D) Most U.S.exports are produced in high-wage industries. 
E) A bulk of U.S.exports to developing nations comprise of perishable commodities.

Question 18

Trade between industrial countries account for the majority of international trade.

Accepted Answer

A) True 
 B)False

Question 19

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1   Refer to Table 20.1.Which of the following statements is true?

Accepted Answer

A) India has an absolute advantage in the production of cloth. 
B) India has an absolute advantage in the production of both wheat and cloth. 
C) The U.S.has an absolute advantage in the production of wheat but not cloth. 
D) The U.S.has an absolute advantage the production of cloth but not wheat. 
E) The U.S.has an absolute advantage in the production of both wheat and cloth. 
A) India has an absolute advantage in the production of cloth. 
B) India has an absolute advantage in the production of both wheat and cloth. 
C) The U.S.has an absolute advantage in the production of wheat but not cloth. 
D) The U.S.has an absolute advantage the production of cloth but not wheat. 
E) The U.S.has an absolute advantage in the production of both wheat and cloth.

Question 20

No country can have an absolute advantage in the production of more than one good.

Accepted Answer

A) True 
 B)False

Exam 38: World Trade Equilibrium

International trade permits greater consumption than would be possible from the domestic production alone.

The fact that the United States exports Budweiser beer and imports Heineken beer can be explained by:

The table below shows the quantity demanded (in thousands)and quantity supplied (in thousands)of computers in the U.S.and Canada at different prices. Table 20.5 According to Table 20.5, the equilibrium quantity of computers traded in the world market is:

Which of the following counties are largely dependent on trade with the United States?

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3 Refer to Table 20.3.Determine the limits on the terms of trade for 1 pound of rice.

The following table shows the units of calculators and rice produced by a laborer in a day in Japan and Korea. Table 20.3 Refer to Table 20.3.What is the least amount Japan is willing to accept for 1 calculator?

The difference between absolute and comparative advantage is that:

If the world price of steel is greater than the U.S."no-trade" domestic equilibrium price of steel, the United States:

The international equilibrium price is the point at which:

Though the countries can benefit by completely specializing in the production of the good in which they have comparative advantage, in real world however, they do not completely specialize.

Which of the following lists gives world exports in the order of their value, from highest to lowest?

Absolute advantage is determined by comparing the opportunity costs of producing each good in different countries.

Which of the following factors are least likely to affect what countries end up trading in the international market?

Absolute advantage is irrelevant, because knowing the absolute number of labor hours required to produce a good does not tell us if we can benefit from trade.

The theory of comparative advantage is based on:

Which of the following statements in the context of U.S.exports is true?

Trade between industrial countries account for the majority of international trade.

The table below shows units of wheat and cloth produced by each worker per day in both the countries. Table 20.1 Refer to Table 20.1.Which of the following statements is true?

No country can have an absolute advantage in the production of more than one good.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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