Question 1

After the imposition of the quota, the quantity demanded of TVs is ________.

Accepted Answer

A) 20,000 
B) 40,000 
C) 80,000 
D) 100,000

Question 2

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year.  With the opportunity to trade Silvia and Art can ________ the maximum consumption of computers by ________ units.

Accepted Answer

A) decrease; 80 
B) increase; 160 
C) decrease; 160 
D) increase; 40

Question 3

Why is there often resistance to free trade?

Accepted Answer

A) Free trade does not benefit the economy as a whole. 
B) Specific groups may be hurt by free trade. 
C) Free trade does not benefit the global economy. 
D) Free trade usually hurts consumers.

Question 4

Suppose the automobile industry can import 10% of the total quantity demanded of cars in the U.S. This is an example of a(n)________.

Accepted Answer

A) tariff 
B) quota 
C) trade limit 
D) import tax

Question 5

Relative to an environment with free trade and no tariff, the winners from the tariff are the domestic ________, and the losers from the tariff are the domestic ________.

Accepted Answer

A) consumers of sugar; producers of sugar 
B) producers of sugar and the government; consumers of sugar 
C) producers of sugar; consumers of sugar and the government 
D) consumers of sugar and the government; producers of sugar

Question 6

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year.  With the opportunity to trade, Silvia can trade all the computers she can produce per year if she specializes in producing computers, for ________ pounds of beef.

Accepted Answer

A) 2,000 
B) 3,000 
C) 4,000 
D) 6,000

Question 7

After the imposition of the quota, the amount of revenue collected by the government is ________.

Accepted Answer

A) $0 
B) $50,000 
C) $75,000 
D) $150,000

Question 8

The combination of goods and services Mexico's citizens might feasibly consume are called Mexico's

Accepted Answer

A) total consumption. 
B) total production. 
C) production possibilities. 
D) consumption possibilities.

Question 9

The demand for cars in a certain country is given by: D = 20,000 - P, where P is the price of a car. Supply by domestic car producers is: S = 5,000 + 0.5. If this economy is open to trade, and the world price of a car is $6,000, and the government imposes a quota allowing 3,000 cars to be imported, then domestic price of the car will be ________.

Accepted Answer

A) $5,000 
B) $6,000 
C) $8,000 
D) $10,000

Question 10

In an open economy, the price of a TV will be ________.

Accepted Answer

A) $75 
B) $125 
C) $175 
D) $275

Question 11

Suppose that, a country with a closed economy opens itself to international trade and becomes a net exporter. In that case, the price of that good will ________ when the economy goes from closed to open for trade.

Accepted Answer

A) increase 
B) stay the same 
C) first decrease then increase 
D) decrease

Question 12

If the price of a good in a closed economy is lower than the world price, then with an open economy this country will be a ________ of that good.

Accepted Answer

A) net importer 
B) net exporter 
C) price taker 
D) price setter

Question 13

Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. Who has the comparative advantage in producing berries?

Accepted Answer

A) Sheila and Jim 
B) Jim 
C) Sheila 
D) Neither of them

Question 14

What is the domestic price of a TV in a closed economy?

Accepted Answer

A) $137.50 
B) $125 
C) $100 
D) $75

Question 15

Suppose that a country with a closed economy opens itself to international trade and becomes a net exporter. In that case, domestic suppliers will supply ________ of that good after it opens itself to international trade.

Accepted Answer

A) more 
B) same amount 
C) none 
D) less

Question 16

If this is a closed economy, how many bikes will be produced?

Accepted Answer

A) 20,000 
B) 50,000 
C) 80,000 
D) 100,000

Question 17

The clear winners from the quota are the ________, and the losers are the ________.

Accepted Answer

A) domestic consumers; domestic producers 
B) government; domestic consumers 
C) importers; domestic producers 
D) domestic producers; domestic consumers

Question 18

If Utopia opened itself to trade it would

Accepted Answer

A) import 150 cases of tile per year. 
B) export 100 cases of tile per year. 
C) export 450 cases of tile per year. 
D) import 250 cases of tile per year.

Question 19

The accompanying figure shows the annual production possibilities curve for a small country that is open to trade with the rest of the world. Suppose the world price of cashews is $12 per pound, and the world price of mangos is $4 per pound. As indicated in the figure, at these prices, this country will produce 21,000 pounds of mangos and 5,000 pounds of cashews each year.  At this country's current level of production, what is the opportunity cost of a pound of mangos in terms of cashews?

Accepted Answer

A) 1/3 pounds of cashews 
B) 3 pounds of cashews 
C) 5/21 pounds of cashews 
D) 21/5 pounds of cashews

Question 20

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year.  If both Art and Silvia worked full-time producing beef, how many pounds of beef can they produce per year?

Accepted Answer

A) 2,000 pounds 
B) 4,000 pounds 
C) 6,000 pounds 
D) 8,000 pounds

Exam 15: International Trade and Trade Policy