Question 1

The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is

Accepted Answer

A) a basic argument for free trade. 
B) the infant industry argument. 
C) dumping. 
D) a voluntary restraint agreement. 
A) a basic argument for free trade. 
B) the infant industry argument. 
C) dumping. 
D) a voluntary restraint agreement.

Question 2

Comparative advantage is based on the

Accepted Answer

A) concept that some countries are superior to others. 
B) concept of absolute advantage of producing goods in different countries. 
C) concept of relative opportunity cost of producing goods in different countries. 
D) concept that some countries are better endowed with natural resources. 
A) concept that some countries are superior to others. 
B) concept of absolute advantage of producing goods in different countries. 
C) concept of relative opportunity cost of producing goods in different countries. 
D) concept that some countries are better endowed with natural resources.

Question 3

A tariff is

Accepted Answer

A) a subsidy on domestically produced goods. 
B) the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. 
C) a tax on imported goods. 
D) a government imposed restriction on the quantity of a specific good that can be imported into the country and sold. 
A) a subsidy on domestically produced goods. 
B) the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. 
C) a tax on imported goods. 
D) a government imposed restriction on the quantity of a specific good that can be imported into the country and sold.

Question 4

Maximum Feasible Hourly Production Rates of Either
Cuckoo Clocks or Movies Using All Available Resources
Product United States Switzerland
Cuckoo Clocks 4 2
Movies 10 4
-Assume that maximum feasible hourly productions levels if all resources are utilized in the United States are either 3 yards of fabric or 9 bushels of wheat. Maximum feasible production levels if all resources are utilized in Japan are either 6 yards of fabric or 12 bushels of wheat. Based on this information

Accepted Answer

A) beneficial trade is absolutely impossible between the two countries. 
B) the United States will benefit from trading but Japan will not. 
C) both nations will gain from specialization and trade, with the United States exporting wheat and Japan exporting fabric. 
D) Japan should specialize in both products. 
A) beneficial trade is absolutely impossible between the two countries. 
B) the United States will benefit from trading but Japan will not. 
C) both nations will gain from specialization and trade, with the United States exporting wheat and Japan exporting fabric. 
D) Japan should specialize in both products.

Question 5

All of the following are arguments in favor of restricting trade EXCEPT

Accepted Answer

A) comparative advantage. 
B) protecting domestic jobs. 
C) protecting emerging industries. 
D) dumping. 
A) comparative advantage. 
B) protecting domestic jobs. 
C) protecting emerging industries. 
D) dumping.

Question 6

Restricting imports

Accepted Answer

A) can protect United States jobs in the protected industry, which increases economic welfare of the country as a whole. 
B) can protect United States final goods and services in the protected industry and makes consumers better off. 
C) can protect United States final goods and services in the protected industry and increase economic welfare of the country as a whole. 
D) can protect United States jobs in the protected industry but will also lead to reductions in U.S. output and income. 
A) can protect United States jobs in the protected industry, which increases economic welfare of the country as a whole. 
B) can protect United States final goods and services in the protected industry and makes consumers better off. 
C) can protect United States final goods and services in the protected industry and increase economic welfare of the country as a whole. 
D) can protect United States jobs in the protected industry but will also lead to reductions in U.S. output and income.

Question 7

A problem with the infant industry argument is that

Accepted Answer

A) it is too restrictive in targeting new industries to protect. 
B) it does not protect the most important new industries in a country. 
C) it is almost impossible to eliminate the tariff once the industry matures. 
D) it allows infant industries to mature so that tariffs can be eliminated. 
A) it is too restrictive in targeting new industries to protect. 
B) it does not protect the most important new industries in a country. 
C) it is almost impossible to eliminate the tariff once the industry matures. 
D) it allows infant industries to mature so that tariffs can be eliminated.

Question 8

Consider a world with two countries and two goods. Under which of the following conditions does comparative advantage NOT exist?

Accepted Answer

A) One country can produce both goods more cheaply than the other country. 
B) One country has more productive resources or inputs than another country. 
C) The opportunity cost of producing each good is the same in each country. 
D) One country has an absolute advantage in producing one good while the other country has an absolute advantage in producing the other good. 
A) One country can produce both goods more cheaply than the other country. 
B) One country has more productive resources or inputs than another country. 
C) The opportunity cost of producing each good is the same in each country. 
D) One country has an absolute advantage in producing one good while the other country has an absolute advantage in producing the other good.

Question 9

Trade diversion results in

Accepted Answer

A) an increase in the total amount of trade in the world. 
B) a decrease in the total amount of trade in the world. 
C) no change in the total amount of trade in the world. 
D) either an increase or decrease in the amount of trade in the world, depending on where trade takes place. 
A) an increase in the total amount of trade in the world. 
B) a decrease in the total amount of trade in the world. 
C) no change in the total amount of trade in the world. 
D) either an increase or decrease in the amount of trade in the world, depending on where trade takes place.

Question 10

When a firm sells its good abroad below the cost of producing the good the firm is

Accepted Answer

A) using the concept of comparative advantage. 
B) dumping. 
C) taking advantage of the infant industry argument. 
D) taking advantage of absolute advantage. 
A) using the concept of comparative advantage. 
B) dumping. 
C) taking advantage of the infant industry argument. 
D) taking advantage of absolute advantage.

Question 11

The ability to produce the same quantity of a good or service using fewer units of labor is known as

Accepted Answer

A) competitive dominance. 
B) productive dominance. 
C) comparative advantage. 
D) absolute advantage. 
A) competitive dominance. 
B) productive dominance. 
C) comparative advantage. 
D) absolute advantage.

Question 12

Mercosur is a trade agreement between nations

Accepted Answer

A) in Southeast Asia. 
B) in South America. 
C) in South Africa. 
D) in Southern Europe. 
A) in Southeast Asia. 
B) in South America. 
C) in South Africa. 
D) in Southern Europe.

Question 13

Individual Opportunity Cost
Pramilla 2 units of good X to produce 1 unit of good Y
Sam 3 units of good X to produce 1 unit of good Y
George 4 units of good Y to produce 1 unit of good X
Lucas 5 units of good Y to produce 1 unit of good X
-Consider the opportunity costs of producing goods X and Y that are listed for the four individuals above. Which person has a comparative advantage in producing good X?

Accepted Answer

A) Pramilla 
B) Sam 
C) George 
D) Lucas 
A) Pramilla 
B) Sam 
C) George 
D) Lucas

Question 14

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
-Why is trade based on comparative advantage?

Accepted Answer

The relevant cost of producing a good is

Question 15

Goods that are produced in other countries and then sold domestically are called

Accepted Answer

A) exports. 
B) imports. 
C) tariffs. 
D) quotas. 
A) exports. 
B) imports. 
C) tariffs. 
D) quotas.

Question 16

The contention that specific sensitive domestic technologies must not be traded freely is

Accepted Answer

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

Question 17

One way to reduce exports is to

Accepted Answer

A) base trade on comparative advantage. 
B) base trade on opportunity costs. 
C) trade with poor countries. 
D) restrict imports. 
A) base trade on comparative advantage. 
B) base trade on opportunity costs. 
C) trade with poor countries. 
D) restrict imports.

Question 18

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

Accepted Answer

A) trade deflection. 
B) trade diversion. 
C) protectionism. 
D) rules of origin. 
A) trade deflection. 
B) trade diversion. 
C) protectionism. 
D) rules of origin.

Question 19

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
-In order to obtain an efficient allocation of resources worldwide

Accepted Answer

A) countries that have a lot of resources should ship resources to countries that do not have a lot of resources. 
B) countries that have a lot of resources should not trade since poorer countries cannot compete. 
C) each country should produce the good they have a comparative advantage in and then trade. 
D) no trade among countries should occur. 
A) countries that have a lot of resources should ship resources to countries that do not have a lot of resources. 
B) countries that have a lot of resources should not trade since poorer countries cannot compete. 
C) each country should produce the good they have a comparative advantage in and then trade. 
D) no trade among countries should occur.

Question 20

For the United States since 1950, imports as a percentage of GDP has

Accepted Answer

A) tripled. 
B) increased slightly. 
C) remained constant. 
D) decreased. 
A) tripled. 
B) increased slightly. 
C) remained constant. 
D) decreased.

The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is

Comparative advantage is based on the

A tariff is

All of the following are arguments in favor of restricting trade EXCEPT

Restricting imports

A problem with the infant industry argument is that

Consider a world with two countries and two goods. Under which of the following conditions does comparative advantage NOT exist?

Trade diversion results in

When a firm sells its good abroad below the cost of producing the good the firm is

The ability to produce the same quantity of a good or service using fewer units of labor is known as

Mercosur is a trade agreement between nations

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 -Why is trade based on comparative advantage?

Goods that are produced in other countries and then sold domestically are called

The contention that specific sensitive domestic technologies must not be traded freely is

One way to reduce exports is to

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

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 -In order to obtain an efficient allocation of resources worldwide

For the United States since 1950, imports as a percentage of GDP has

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

Exam 32: Comparative Advantage and the Open Economy

The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is

Comparative advantage is based on the

A tariff is

All of the following are arguments in favor of restricting trade EXCEPT

Restricting imports

A problem with the infant industry argument is that

Consider a world with two countries and two goods. Under which of the following conditions does comparative advantage NOT exist?

Trade diversion results in

When a firm sells its good abroad below the cost of producing the good the firm is

The ability to produce the same quantity of a good or service using fewer units of labor is known as

Mercosur is a trade agreement between nations

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 -Why is trade based on comparative advantage?

Goods that are produced in other countries and then sold domestically are called

The contention that specific sensitive domestic technologies must not be traded freely is

One way to reduce exports is to

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

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 -In order to obtain an efficient allocation of resources worldwide

For the United States since 1950, imports as a percentage of GDP has

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