Question 1

Exhibit 17.b
 
-Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the government establishes a sugar quota of Q to Q', the supply curve combining U.S. production and imports becomes _____ at the world price of _____ and remains horizontal until the quantity supplied reaches _____.

Accepted Answer

A)  vertical; P; Q 
B)  vertical; P'; Q' 
C)  horizontal; P; Q 
D)  horizontal; P; Q' 
E)  horizontal; P'; Q'

Question 2

Selling a commodity abroad for less than is charged in the home market or less than the cost of production is known as _____

Accepted Answer

A)  free trade. 
B)  tariffs. 
C)  quotas. 
D)  dumping. 
E)  common markets.

Question 3

Specialization based on absolute advantage leads to gains from trade.

Accepted Answer

A) True 
 B)False

Question 4

Differences in tastes among nations _____

Accepted Answer

A)  make gains from trade possible even in the absence of differences in resource endowments. 
B)  make gains from trade possible only when there are differences in resource endowments. 
C)  negate any potential gains from trade. 
D)  are caused by differences in the stock of capital. 
E)  occur only among countries with different population sizes.

Question 5

Suppose the U.S. government is considering imposing either a tariff that would result in imports falling to 5 million units per year or an import quota of 5 million units per year. Which of the following would be true in such a case?

Accepted Answer

A)  U.S. consumers would lose more consumer surplus in the case of tariffs than quotas. 
B)  U.S. producers would gain more in the case of quotas than tariffs. 
C)  The change in quantity demanded would be greater in the case of tariffs than quotas. 
D)  The tariff revenue would go to the U.S. government; quota benefits may go to foreign producers. 
E)  The U.S. export market would shrink more in the case of quotas than tariffs.

Question 6

U.S. consumers would be better off if they bought only U.S.-produced goods.

Accepted Answer

A) True 
 B)False

Question 7

A lump-sum tax per unit on imports is known as _____

Accepted Answer

A)  a specific tariff. 
B)  an import quota. 
C)  an ad valorem tariff. 
D)  an import concession. 
E)  an import substitution.

Question 8

World trade totaled about ____ in 2016.

Accepted Answer

A)  $21 trillion 
B)  $15 trillion 
C)  $10 trillion 
D)  $11 trillion 
E)  $2 trillion

Question 9

The top trading partner for U.S. imports in 2016 was _____

Accepted Answer

A)  Canada 
B)  China 
C)  Ireland 
D)  Japan 
E)  Brazil

Question 10

Which of the following reasons best explains why the United States is a net exporter of farm crops?

Accepted Answer

A)  differences in resource endowments 
B)  economies of scale 
C)  differences in tastes 
D)  import quotas 
E)  import tariffs

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The top trading partners for U.S. exports and imports in 2016 were _____

Accepted Answer

A)  Canada, Ireland, Japan 
B)  China, Canada, Mexico 
C)  the United Kingdom, Germany, Brazil 
D)  South Korea, Japan, Germany 
E)  France, India, Ireland

Question 13

The world demand for and the world supply of a good will together determine the _____

Accepted Answer

A)  tariff. 
B)  world price. 
C)  exchange rate. 
D)  terms of trade. 
E)  quota.

Question 14

The industry for computers has just started growing in the nation of Verdana, and there is potential for the industry to flourish in the near future. However, there is stiff competition from other foreign nations that provide computers to the domestic market. The government is considering imposing a tariff. Which of the following arguments justifies the government's decision to impose a tariff on the import of computers?

Accepted Answer

A)  the antidumping argument 
B)  the infant industry argument 
C)  the jobs and income argument 
D)  the declining industries argument 
E)  the national defense argument

Question 15

The declining industries argument was formulated as a rationale for protecting emerging domestic industries from foreign competition.

Accepted Answer

A) True 
 B)False

Question 16

Economists argue that the U.S. government can earn federal revenue _____

Accepted Answer

A)  from quotas by auctioning off quotas to foreign producers. 
B)  by increasing the profitability of getting quota rights. 
C)  by encouraging foreign governments to retaliate with quotas and tariffs of their own. 
D)  from quotas, as quotas redistribute wealth from domestic consumers to domestic producers. 
E)  by distributing quota rights to domestic exporters.

Question 17

Table 17.1
 
-Refer to Table 17.1, which shows the per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni has a comparative advantage in the production of rice.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 17.4
 
-Refer to Exhibit 17.4, which shows the market for wheat in the country of Palatino. SD is the domestic supply of wheat, and DD is the domestic demand for wheat. Suppose the world price of wheat is $9 per bushel and a specific tariff of $6 is imposed on each bushel of wheat imported. The net welfare loss from the tariff is represented by area(s) _____

Accepted Answer

A)  A and C. 
B)  I and H. 
C)  B and D. 
D)  E. 
E)  F.

Question 19

The fourth largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

Accepted Answer

A)  capital goods; 24 percent 
B)  services; 31 percent 
C)  industrial supplies; 18 percent 
D)  consumer goods; 11 percent 
E)  food; 6 percent

Question 20

International trade increases the variety of goods and services available in a country.

Accepted Answer

A) True 
 B)False

Exam 17: International Trade.

Selling a commodity abroad for less than is charged in the home market or less than the cost of production is known as _____

Specialization based on absolute advantage leads to gains from trade.

Differences in tastes among nations _____

Suppose the U.S. government is considering imposing either a tariff that would result in imports falling to 5 million units per year or an import quota of 5 million units per year. Which of the following would be true in such a case?

U.S. consumers would be better off if they bought only U.S.-produced goods.

A lump-sum tax per unit on imports is known as _____

World trade totaled about ____ in 2016.

The top trading partner for U.S. imports in 2016 was _____

Which of the following reasons best explains why the United States is a net exporter of farm crops?

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

The top trading partners for U.S. exports and imports in 2016 were _____

The world demand for and the world supply of a good will together determine the _____

The declining industries argument was formulated as a rationale for protecting emerging domestic industries from foreign competition.

Economists argue that the U.S. government can earn federal revenue _____

Table 17.1 -Refer to Table 17.1, which shows the per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni has a comparative advantage in the production of rice.

The fourth largest category of U.S. exports in 2016 was _, which accounted for _ of total exports.

International trade increases the variety of goods and services available in a country.