Question 1

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane, then

Accepted Answer

A)  the average cost of production for sugar cane is lower in Brazil than in Cuba. 
B)  the implicit costs of production for sugar cane are lower in Brazil than in Cuba. 
C)  the opportunity cost of production for sugar cane is lower in Brazil than in Cuba. 
D)  the explicit cost of production for sugar cane is lower in Brazil than in Cuba.

Question 2

A consequence of increasing marginal costs of producing laptop computers in the United States is

Accepted Answer

A)  the United States will import laptop computers from countries that don't experience increasing marginal costs. 
B)  the United States will stop short of complete specialization in the production of laptop computers. 
C)  the United States will not export laptop computers. 
D)  the United States will likely impose trade restrictions on imported laptop computers.

Question 3

Figure 9-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3. With a quota in place, what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Accepted Answer

A)  Domestic consumption equals 28 million pounds of which 18 million pounds are imports. 
B)  Domestic consumption equals 40 million pounds of which 22 million pounds are imports. 
C)  Domestic consumption equals 34 million pounds of which 16 million pounds are imports. 
D)  Domestic consumption equals 34 million pounds of which 18 million pounds are imports.

Question 4

Table 9-8
  Table 9-8 shows the output per week for bows and arrows by Ahmet and MyLinh.
-Refer to Table 9-8. Fill in the following table with the opportunity costs of producing bows and arrows for Ahmet and MyLinh.

Accepted Answer

The answer of Table 9-8
  Table 9-8 shows the...

Question 5

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to voluntary export restraints. With voluntary export restraints, foreign producers

Accepted Answer

A)  agree to meet specific quality standards required by the importing country. 
B)  limit their exports to a country. 
C)  pay a tax on all products they export. 
D)  must agree to import an equal quantity of products that they export.

Question 6

The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Accepted Answer

A) True 
 B)False

Question 7

A tax imposed by a government on imports of a good into a country is called a

Accepted Answer

A)  tariff. 
B)  quota. 
C)  value added tax. 
D)  sales tax.

Question 8

A tariff

Accepted Answer

A)  makes domestic consumers better off. 
B)  makes both domestic producers and consumers better off. 
C)  makes everyone worse off. 
D)  makes domestic producers better off.

Question 9

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision. This policy, similar to the original "Buy American" provision in the 2009 U.S. stimulus bill, is likely to cause

Accepted Answer

A)  exporting countries to retaliate by placing trade barriers on Canadian imports. 
B)  Canadian manufacturers to become more efficient. 
C)  Canadian companies to pay lower prices for protected products. 
D)  most countries to reduce their own trade barriers to be able to better compete with Canadian imports at home.

Question 10

What does it mean for a country to have an absolute advantage in producing a product?

Accepted Answer

The answer of What does it mean for a country...

Question 11

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade?

Accepted Answer

A)  Sweden has a lower opportunity cost of producing cell phones than Denmark, and Denmark has a comparative advantage in producing butter. 
B)  The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden. 
C)  Sweden must have an absolute advantage in producing cell phones, and Denmark must have an absolute advantage in producing butter. 
D)  Sweden has a higher opportunity cost of producing cell phones than Denmark, and Denmark has a higher opportunity cost of producing butter.

Question 12

Which of the following statements about the importance of trade to the U.S. economy is false?

Accepted Answer

A)  Since 1950, both exports and imports have steadily increased as a fraction of U.S. gross domestic product. 
B)  Overall, about 20 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the second largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product.

Question 13

A consequence of increasing marginal costs of producing digital music players in Japan is

Accepted Answer

A)  Japan will not export digital music players. 
B)  Japan will stop short of complete specialization in the production of digital music players. 
C)  Japan will import digital music players from countries that don't experience increasing marginal costs. 
D)  Japan will likely impose trade restrictions on imported digital music players.

Question 14

Table 9-12
Production and
Consumption Production
Without Trade With Trade
  Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, how many belts will Morocco consume?

Accepted Answer

A)  40 
B)  50 
C)  70 
D)  120

Question 15

Figure 9-5  Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5. The increase in domestic producer surplus as a result of the tariff is equal to

Accepted Answer

A)  $11.25 million. 
B)  $18 million. 
C)  $32.5 million. 
D)  $45 million.

Question 16

Table 9-12
Production and
Consumption Production
Without Trade With Trade
  Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, how many belts will Estonia consume?

Accepted Answer

A)  50 
B)  70 
C)  90 
D)  120

Question 17

A tariff is

Accepted Answer

A)  a limit placed on the quantity of goods that can be imported into a country. 
B)  a tax imposed by a government on goods imported into a country. 
C)  a subsidy granted to importers of a vital input. 
D)  a health and safety restriction imposed on an imported product.

Question 18

Which of the following countries is not one of the top three exporting countries in the world?

Accepted Answer

A)  China 
B)  Germany 
C)  South Korea 
D)  the United States

Question 19

Distinguish between a voluntary export restraint and a quota.

Accepted Answer

The answer of Distinguish between a voluntary export restraint and...

Question 20

Figure 9-3  Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3. What is the area of domestic producer surplus without a quota?

Accepted Answer

A)  C 
B)  C + B 
C)  A + B + C 
D)  A + B + C + D

Exam 9: Comparative Advantage and the Gains From International Trade