Question 1

An economic principle that explains why people pursue different occupations is

Accepted Answer

A)  absolute advantage. 
B)  international trade. 
C)  comparative advantage. 
D)  NAFTA. 
A)  absolute advantage. 
B)  international trade. 
C)  comparative advantage. 
D)  NAFTA.

Question 2

The ratio at which a country can trade its exports for imports from other countries is called

Accepted Answer

A)  a trade barrier. 
B)  the terms of trade. 
C)  autarky. 
D)  a free trade agreement. 
A)  a trade barrier. 
B)  the terms of trade. 
C)  autarky. 
D)  a free trade agreement.

Question 3

Which of the following statements is true?

Accepted Answer

A)  Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B)  Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop. 
C)  Most of the leading exporting countries are large, high-income countries. 
D)  All sectors of the U.S. economy are affected equally by international trade. 
A)  Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B)  Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop. 
C)  Most of the leading exporting countries are large, high-income countries. 
D)  All sectors of the U.S. economy are affected equally by international trade.

Question 4

Which of the following statements is true?

Accepted Answer

A)  All individuals in both countries are made better off as a result of international trade. 
B)  Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. 
C)  Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. 
D)  Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off. 
A)  All individuals in both countries are made better off as a result of international trade. 
B)  Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. 
C)  Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. 
D)  Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.

Question 5

Table 9-12
Output per hour Production and Production
of work Consumption without Trade with Trade
   Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 9-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. With trade, what is the total gain in sword production?

Accepted Answer

A)  40 
B)  60 
C)  100 
D)  200 
A)  40 
B)  60 
C)  100 
D)  200

Question 6

Table 9-11
Output per hour Production and Production
of work Consumption without Trade with Trade
   Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-11 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-11. Which country has an absolute advantage in producing hats?

Accepted Answer

A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country 
A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country

Question 7

Table 9-12
Output per hour Production and Production
of work Consumption without Trade with Trade
   Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 9-12 shows the output per hour of work, 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 50 belts are traded, how many swords will Morocco gain compared to the "without trade" numbers?

Accepted Answer

A)  0 
B)  15 
C)  60 
D)  75 
A)  0 
B)  15 
C)  60 
D)  75

Question 8

Which of the following is the best example of a voluntary export restraint?

Accepted Answer

A)  a limit imposed by the U.S. government on the number of cell phones that the United States can import from Korea 
B)  a subsidy granted by the U.S. government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers 
C)  a limit set by the Korean government on the number of cell phones that the United States can import from Korea 
D)  a $50 per-cell phone fee imposed on all cell phones imported into the United States 
A)  a limit imposed by the U.S. government on the number of cell phones that the United States can import from Korea 
B)  a subsidy granted by the U.S. government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers 
C)  a limit set by the Korean government on the number of cell phones that the United States can import from Korea 
D)  a $50 per-cell phone fee imposed on all cell phones imported into the United States

Question 9

Table 9-3
   Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Bryce has an absolute advantage in making candles and soap. 
B)  Tina has an absolute advantage in making candles and soap. 
C)  Neither Bryce nor Tina has an absolute advantage in making candles. 
D)  Neither Bryce nor Tina has an absolute advantage in making soap. 
A)  Bryce has an absolute advantage in making candles and soap. 
B)  Tina has an absolute advantage in making candles and soap. 
C)  Neither Bryce nor Tina has an absolute advantage in making candles. 
D)  Neither Bryce nor Tina has an absolute advantage in making soap.

Question 10

Protectionism refers to the use of trade barriers to shield domestic firms from foreign competition.

Accepted Answer

A) True 
 B)False

Question 11

What are terms of trade?

Accepted Answer

Terms of trade refers to the r

Question 12

Table 9-12
Output per hour Production and Production
of work Consumption without Trade with Trade
   Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 9-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. What is the opportunity cost to produce 1 belt in Morocco?

Accepted Answer

A)  1/2 of a sword 
B)  1 sword 
C)  1.5 swords 
D)  2 swords 
A)  1/2 of a sword 
B)  1 sword 
C)  1.5 swords 
D)  2 swords

Question 13

Figure 9-2   Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2. The increase in domestic producer surplus as a result of the tariff is equal to the area

Accepted Answer

A)  C. 
B)  C + G. 
C)  A + C + G. 
D)  C + D + G + H + I. 
A)  C. 
B)  C + G. 
C)  A + C + G. 
D)  C + D + G + H + I.

Question 14

Table 9-11
Output per hour Production and Production
of work Consumption without Trade with Trade
   Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 9-11 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-11. Which country has a comparative advantage in producing clocks?

Accepted Answer

A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country 
A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country

Question 15

Which of the following is the best example of a quota?

Accepted Answer

A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 16

Table 9-3
   Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Tina has a comparative advantage in making soap. 
B)  Bryce has a comparative advantage in making soap. 
C)  Tina has a comparative advantage in making candles and making soap. 
D)  Neither Bryce nor Tina has a comparative advantage in making soap. 
A)  Tina has a comparative advantage in making soap. 
B)  Bryce has a comparative advantage in making soap. 
C)  Tina has a comparative advantage in making candles and making soap. 
D)  Neither Bryce nor Tina has a comparative advantage in making soap.

Question 17

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. All of the following are reasons for this except

Accepted Answer

A)  not all goods and services are traded internationally. 
B)  some countries have more resources than other countries. 
C)  tastes for many traded goods are different in many countries because of globalization. 
D)  production of most goods involves increasing opportunity costs. 
A)  not all goods and services are traded internationally. 
B)  some countries have more resources than other countries. 
C)  tastes for many traded goods are different in many countries because of globalization. 
D)  production of most goods involves increasing opportunity costs.

Question 18

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. With the tariff in place, the United States consumes

Accepted Answer

A)  12 million pounds of coffee. 
B)  24 million pounds of coffee. 
C)  36 million pounds of coffee. 
D)  45 million pounds of coffee. 
A)  12 million pounds of coffee. 
B)  24 million pounds of coffee. 
C)  36 million pounds of coffee. 
D)  45 million pounds of coffee.

Question 19

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Accepted Answer

A) True 
 B)False

Question 20

Table 9-1
   Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B)  Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C)  Sandy has an absolute advantage in dog bathing and dog grooming. 
D)  Linda has an absolute advantage in dog bathing and dog grooming. 
A)  Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B)  Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C)  Sandy has an absolute advantage in dog bathing and dog grooming. 
D)  Linda has an absolute advantage in dog bathing and dog grooming.

Exam 9: Comparative Advantage and the Gains From International Trade

An economic principle that explains why people pursue different occupations is

The ratio at which a country can trade its exports for imports from other countries is called

Which of the following statements is true?

Which of the following statements is true?

Which of the following is the best example of a voluntary export restraint?

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Protectionism refers to the use of trade barriers to shield domestic firms from foreign competition.

What are terms of trade?

Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2. The increase in domestic producer surplus as a result of the tariff is equal to the area

Which of the following is the best example of a quota?

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. All of the following are reasons for this except

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. With the tariff in place, the United States consumes

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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