Question 1

The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as

Accepted Answer

A) recycling. 
B) a quota. 
C) dumping. 
D) a tariff. 
A) recycling. 
B) a quota. 
C) dumping. 
D) a tariff. C

Question 2

The principle of comparative advantage essentially states that

Accepted Answer

A) there are some goods for which the opportunity costs of production are the same regardless of who produces them. 
B) some goods have high opportunity costs and low absolute costs. 
C) specialization can reduce output rather than increase it. 
D) total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good. 
A) there are some goods for which the opportunity costs of production are the same regardless of who produces them. 
B) some goods have high opportunity costs and low absolute costs. 
C) specialization can reduce output rather than increase it. 
D) total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good. D

Question 3

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of

Accepted Answer

A) Good X. 
B) Good Y. 
C) both goods. 
D) neither good. 
A) Good X. 
B) Good Y. 
C) both goods. 
D) neither good. B

Question 4

It has been suggested that in order to protect U.S. jobs we need to restrict foreign competition by restricting imports.

Accepted Answer

A) This is a sound economic statement since the U.S. will still export protecting U.S. jobs. 
B) This is a sound economic statement since U.S. firms will have to increase output to make up for the lack of imports leading to increase employment in the U.S. 
C) This is not a sound economic statement since employment in the U.S. does not depend on imports and exports. 
D) This is not a sound economic statement since import restrictions lead to a reduction in employment in the export industries of the U.S. 
A) This is a sound economic statement since the U.S. will still export protecting U.S. jobs. 
B) This is a sound economic statement since U.S. firms will have to increase output to make up for the lack of imports leading to increase employment in the U.S. 
C) This is not a sound economic statement since employment in the U.S. does not depend on imports and exports. 
D) This is not a sound economic statement since import restrictions lead to a reduction in employment in the export industries of the U.S.

Question 5

If costs a firm $10 to produce a good and the same good sells for $7 abroad, then this firm is engaging in

Accepted Answer

A) profit maximization. 
B) price discrimination. 
C) price differentiation. 
D) dumping. 
A) profit maximization. 
B) price discrimination. 
C) price differentiation. 
D) dumping.

Question 6

The Number of Worker Days to Produce One
Cuckoo Clock or Movie Using All Available Resources
U.S. Switzerland
Product (Worker-Days)(Worker-Days)
Cuckoo Clocks 8 6
Movies 12 4
-According to international trade theory,

Accepted Answer

A) trade is based on absolute advantage. 
B) comparative advantage is based on absolute advantage. 
C) every country has a comparative advantage in something. 
D) less developed countries cannot trade successfully with developed countries. 
A) trade is based on absolute advantage. 
B) comparative advantage is based on absolute advantage. 
C) every country has a comparative advantage in something. 
D) less developed countries cannot trade successfully with developed countries.

Question 7

The argument that a tariff has to be imposed in order to protect any industry just getting started until it gets large enough to be competitive internationally is the

Accepted Answer

A) start-up industry argument. 
B) infant industry argument. 
C) baby industry argument. 
D) fledgling industry argument. 
A) start-up industry argument. 
B) infant industry argument. 
C) baby industry argument. 
D) fledgling industry argument.

Question 8

Comparative advantage is defined as

Accepted Answer

A) the ability to produce more output of one good relative to another good than another country can. 
B) the ability to produce more output from given inputs of resources than others can. 
C) the ability to use more input of resources than others can. 
D) having a lower average fixed cost in the production of a good than does someone else. 
A) the ability to produce more output of one good relative to another good than another country can. 
B) the ability to produce more output from given inputs of resources than others can. 
C) the ability to use more input of resources than others can. 
D) having a lower average fixed cost in the production of a good than does someone else.

Question 9

Mason and Chloe each produce two goods. According to the principle of comparative advantage, the total output produced by these individuals will be greatest

Accepted Answer

A) if Chloe produces both goods and Mason produces nothing. 
B) if each good is produced by the individual who has the lower opportunity cost of producing that good. 
C) if each good is produced by the individual who has the higher absolute cost of producing that good. 
D) if Mason produces both goods and Chloe produces nothing. 
A) if Chloe produces both goods and Mason produces nothing. 
B) if each good is produced by the individual who has the lower opportunity cost of producing that good. 
C) if each good is produced by the individual who has the higher absolute cost of producing that good. 
D) if Mason produces both goods and Chloe produces nothing.

Question 10

The successor organization to GATT that handles trade disputes among its member nations is the

Accepted Answer

A) World Trade Organization. 
B) European Union. 
C) General Agreement on Tariffs and Trade. 
D) North American Free Trade Agreement. 
A) World Trade Organization. 
B) European Union. 
C) General Agreement on Tariffs and Trade. 
D) North American Free Trade Agreement.

Question 11

Maximum Feasible Hourly Production Rates (in Tons)of Either
Wine or Beef Using All Available Resources
Product Argentina France
Wine (gallons)30 60
Beef (pounds)10 30
-Use the above table. Assuming constant opportunity costs, if Argentina and France specialize based on comparative advantage, then they will trade if the rate of exchange

Accepted Answer

A) is 7 gallons of wine for 1 pound of beef, and Argentina imports beef. 
B) 0.25 gallons of wine for 1 pound of beef, and France imports beef. 
C) 0.25 pounds of beef for 1 gallon of wine, and Argentina imports wine. 
D) 0.4 pounds of beef for 1 gallon of wine, and France imports wine. 
A) is 7 gallons of wine for 1 pound of beef, and Argentina imports beef. 
B) 0.25 gallons of wine for 1 pound of beef, and France imports beef. 
C) 0.25 pounds of beef for 1 gallon of wine, and Argentina imports wine. 
D) 0.4 pounds of beef for 1 gallon of wine, and France imports wine.

Question 12

Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This

Accepted Answer

A) is true and is a justification for tariffs to protect domestic jobs. 
B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy. 
C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries. 
D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages. 
A) is true and is a justification for tariffs to protect domestic jobs. 
B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy. 
C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries. 
D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages.

Question 13

Governments sometimes subsidize domestic industries. When this occurs,

Accepted Answer

A) the governments will not impose tariffs. 
B) the subsidized sell less in international markets because it is more profitable to sell at home. 
C) the subsidized industries have an advantage on international markets relative to non-subsidized firms. For this reason, other countries often impose tariffs on the subsidized imports. 
D) the subsidized industries have an advantage on international markets relative to nonsubsidized firms. However, this is not an argument for imposing tariffs and tariffs would violate international agreements. 
A) the governments will not impose tariffs. 
B) the subsidized sell less in international markets because it is more profitable to sell at home. 
C) the subsidized industries have an advantage on international markets relative to non-subsidized firms. For this reason, other countries often impose tariffs on the subsidized imports. 
D) the subsidized industries have an advantage on international markets relative to nonsubsidized firms. However, this is not an argument for imposing tariffs and tariffs would violate international agreements.

Question 14

The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called

Accepted Answer

A) GATT. 
B) NAFTA. 
C) WTO. 
D) Bretton-Woods agreement. 
A) GATT. 
B) NAFTA. 
C) WTO. 
D) Bretton-Woods agreement.

Question 15

If protective import-restricting quota are imposed by a country, all of the following groups benefit EXCEPT

Accepted Answer

A) domestic producers in the affected industry. 
B) domestic consumers in the affected industry. 
C) employees of domestic producers in the affected industry. 
D) importers that are able to obtain the rights to sell imported items in the affected industry. 
A) domestic producers in the affected industry. 
B) domestic consumers in the affected industry. 
C) employees of domestic producers in the affected industry. 
D) importers that are able to obtain the rights to sell imported items in the affected industry.

Question 16

Which of the following is the situation in which firms outside a trade bloc shift the final assembling process of partially assembled products into a member nation of the bloc and then export the finished products to other nations within the bloc?

Accepted Answer

A) trade diversion 
B) trade deflection 
C) trade retention 
D) rules of origin 
A) trade diversion 
B) trade deflection 
C) trade retention 
D) rules of origin

Question 17

The ability to produce a good or service at a lower opportunity cost than other producers is

Accepted Answer

A) absolute advantage. 
B) the quota system. 
C) intellectual property. 
D) comparative advantage. 
A) absolute advantage. 
B) the quota system. 
C) intellectual property. 
D) comparative advantage.

Question 18

If there are two goods and two countries, then one country can have

Accepted Answer

A) a comparative advantage in only one good. 
B) a comparative advantage in both goods. 
C) a higher opportunity cost of producing both goods. 
D) a lower opportunity cost of producing both goods. 
A) a comparative advantage in only one good. 
B) a comparative advantage in both goods. 
C) a higher opportunity cost of producing both goods. 
D) a lower opportunity cost of producing both goods.

Question 19

The argument a tariff on imported goods produced by an unlimited industry could benefit the members of the domestic union is

Accepted Answer

A) the national defense argument. 
B) the protect domestic jobs argument. 
C) the infant industry argument. 
D) the dumping argument. 
A) the national defense argument. 
B) the protect domestic jobs argument. 
C) the infant industry argument. 
D) the dumping argument.

Question 20

A legal limit on the amount of sugar imported into the United States is

Accepted Answer

A) a tariff. 
B) a subsidy. 
C) a quota. 
D) a voluntary import restriction. 
A) a tariff. 
B) a subsidy. 
C) a quota. 
D) a voluntary import restriction.

The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as

The principle of comparative advantage essentially states that

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of

It has been suggested that in order to protect U.S. jobs we need to restrict foreign competition by restricting imports.

If costs a firm $10 to produce a good and the same good sells for $7 abroad, then this firm is engaging in

The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources U.S. Switzerland Product (Worker-Days)(Worker-Days) Cuckoo Clocks 8 6 Movies 12 4 -According to international trade theory,

The argument that a tariff has to be imposed in order to protect any industry just getting started until it gets large enough to be competitive internationally is the

Comparative advantage is defined as

Mason and Chloe each produce two goods. According to the principle of comparative advantage, the total output produced by these individuals will be greatest

The successor organization to GATT that handles trade disputes among its member nations is the

Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This

Governments sometimes subsidize domestic industries. When this occurs,

The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called

If protective import-restricting quota are imposed by a country, all of the following groups benefit EXCEPT

Which of the following is the situation in which firms outside a trade bloc shift the final assembling process of partially assembled products into a member nation of the bloc and then export the finished products to other nations within the bloc?

The ability to produce a good or service at a lower opportunity cost than other producers is

If there are two goods and two countries, then one country can have

The argument a tariff on imported goods produced by an unlimited industry could benefit the members of the domestic union is

A legal limit on the amount of sugar imported into the United States is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

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Exam 32: Comparative Advantage and the Open Economy

The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as

The principle of comparative advantage essentially states that

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of

It has been suggested that in order to protect U.S. jobs we need to restrict foreign competition by restricting imports.

If costs a firm $10 to produce a good and the same good sells for $7 abroad, then this firm is engaging in

The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources U.S. Switzerland Product (Worker-Days)(Worker-Days) Cuckoo Clocks 8 6 Movies 12 4 -According to international trade theory,

The argument that a tariff has to be imposed in order to protect any industry just getting started until it gets large enough to be competitive internationally is the

Comparative advantage is defined as

Mason and Chloe each produce two goods. According to the principle of comparative advantage, the total output produced by these individuals will be greatest

The successor organization to GATT that handles trade disputes among its member nations is the

Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This

Governments sometimes subsidize domestic industries. When this occurs,

The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called

If protective import-restricting quota are imposed by a country, all of the following groups benefit EXCEPT

Which of the following is the situation in which firms outside a trade bloc shift the final assembling process of partially assembled products into a member nation of the bloc and then export the finished products to other nations within the bloc?

The ability to produce a good or service at a lower opportunity cost than other producers is

If there are two goods and two countries, then one country can have

The argument a tariff on imported goods produced by an unlimited industry could benefit the members of the domestic union is

A legal limit on the amount of sugar imported into the United States is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

Filters