Question 1

An assumption behind the infant industry argument for tariff protection is that

Accepted Answer

A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand. 
A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand.

Question 2

According to the text, approximately how many countries are members of the WTO?

Accepted Answer

A) 100 
B) 135 
C) 150 
D) 180 
A) 100 
B) 135 
C) 150 
D) 180

Question 3

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources  
-Using the data in the above table and assuming constant opportunity costs, it is correct to state that

Accepted Answer

A) the United States has a comparative advantage in producing cloth. 
B) Mexico has an absolute advantage in producing both food and cloth. 
C) the United States has a comparative advantage in producing both food and cloth. 
D) Mexico has a comparative advantage in producing cloth. 
A) the United States has a comparative advantage in producing cloth. 
B) Mexico has an absolute advantage in producing both food and cloth. 
C) the United States has a comparative advantage in producing both food and cloth. 
D) Mexico has a comparative advantage in producing cloth.

Question 4

If country A exports good X to country B and country B exports good Y to country A, it is most likely that

Accepted Answer

A) A has an absolute advantage in the production of good X. 
B) B has a comparative advantage in the production of good Y. 
C) the opportunity cost of domestic production of good Y for country A is lowered with trade. 
D) B is producing less of good Y than in the no-trade case. 
A) A has an absolute advantage in the production of good X. 
B) B has a comparative advantage in the production of good Y. 
C) the opportunity cost of domestic production of good Y for country A is lowered with trade. 
D) B is producing less of good Y than in the no-trade case.

Question 5

An import quota will make the supply curve for the imported good

Accepted Answer

A) perfectly inelastic. 
B) perfectly elastic. 
C) unitary elastic. 
D) negatively sloped. 
A) perfectly inelastic. 
B) perfectly elastic. 
C) unitary elastic. 
D) negatively sloped.

Question 6

Maximum Feasible Hourly Production Rates of Either
Computers or Bicycles Using All Available Resources
Product United States Mexico
Computers 8 10
Bicycles 4 2
-Refer to the above table. Assuming constant opportunity costs, the opportunity cost of producing a bicycle in the United States is ________ while the opportunity cost of producing a bicycle in Mexico is ________.

Accepted Answer

A) 8 computers; 10 computer 
B) 4 computers; 10 computers 
C) 5 computers; 2 computers 
D) 2 computers; 5 computers 
A) 8 computers; 10 computer 
B) 4 computers; 10 computers 
C) 5 computers; 2 computers 
D) 2 computers; 5 computers

Question 7

Specialization in trade will be economically efficient if it is based upon

Accepted Answer

A) national security needs. 
B) absolute advantage. 
C) comparative advantage. 
D) government regulations. 
A) national security needs. 
B) absolute advantage. 
C) comparative advantage. 
D) government regulations.

Question 8

Which of the following is an argument against free trade?

Accepted Answer

A) Protecting infant industries 
B) Protecting against dumping 
C) Protecting domestic jobs 
D) All of the above 
A) Protecting infant industries 
B) Protecting against dumping 
C) Protecting domestic jobs 
D) All of the above

Question 9

An import quota specifies

Accepted Answer

A) the amount of funds that can be paid for any imported good. 
B) the amount of taxes that must be paid on any imported good. 
C) the maximum amount of an item that may be imported during a specified period. 
D) the minimum amount of an item that may be imported during a specified period. 
A) the amount of funds that can be paid for any imported good. 
B) the amount of taxes that must be paid on any imported good. 
C) the maximum amount of an item that may be imported during a specified period. 
D) the minimum amount of an item that may be imported during a specified period.

Question 10

The General Agreement on Tariffs and Trade is an international agreement

Accepted Answer

A) to establish the North American continent as a free trade area. 
B) to encourage peaceful settlements of trade disputes, but has no particular point of view about the desirability of higher or lower tariffs. 
C) to encourage world trade by lowering tariffs and other trade barriers. 
D) to make all tariffs illegal. 
A) to establish the North American continent as a free trade area. 
B) to encourage peaceful settlements of trade disputes, but has no particular point of view about the desirability of higher or lower tariffs. 
C) to encourage world trade by lowering tariffs and other trade barriers. 
D) to make all tariffs illegal.

Question 11

Selling a good abroad below the price charged in the home market, or at a price below the cost of production is called

Accepted Answer

A) dumping. 
B) import substitution. 
C) a quota. 
D) a tariff. 
A) dumping. 
B) import substitution. 
C) a quota. 
D) a tariff.

Question 12

Country A can product 100 units of Good X in a day and 40 units of Good Y while Country B can produce 50 units of Good X and 40 units of Good Y.

Accepted Answer

A) These countries will not trade since Country A has a comparative advantage in the production of both goods. 
B) These countries will not trade since Country A will always be able to take advantage of Country B. 
C) These countries should trade since Country A has a comparative advantage in the production of Good X and Country B has a comparative advantage in the production of Good Y. 
D) These countries should trade since Country B has a comparative advantage in the production of Good X and Country A has a comparative advantage in the production of Good Y. 
A) These countries will not trade since Country A has a comparative advantage in the production of both goods. 
B) These countries will not trade since Country A will always be able to take advantage of Country B. 
C) These countries should trade since Country A has a comparative advantage in the production of Good X and Country B has a comparative advantage in the production of Good Y. 
D) These countries should trade since Country B has a comparative advantage in the production of Good X and Country A has a comparative advantage in the production of Good Y.

Question 13

If Abigail can produce 4 tablets or 3 radios in a day, while Jacob can produce 1 tablet or 2 radios, then it is correct to state that

Accepted Answer

A) Abigail has a comparative advantage in producing radios. 
B) Abigail has an absolute advantage in producing computers but not radios. 
C) Jacob has a comparative advantage in radios. 
D) Jacob has an absolute advantage in radios. 
A) Abigail has a comparative advantage in producing radios. 
B) Abigail has an absolute advantage in producing computers but not radios. 
C) Jacob has a comparative advantage in radios. 
D) Jacob has an absolute advantage in radios.

Question 14

The argument that many critics of free trade have suggested that genetic engineering of plants and animals could lead to accidental production of new diseases is the

Accepted Answer

A) national security argument. 
B) infant industry argument. 
C) protecting domestic jobs argument. 
D) environmental and safety argument. 
A) national security argument. 
B) infant industry argument. 
C) protecting domestic jobs argument. 
D) environmental and safety argument.

Question 15

Comparative advantage is defined as

Accepted Answer

A) producing all goods at lower opportunity costs than other countries can. 
B) producing more output of all goods than anyone else can. 
C) producing one good at a lower opportunity cost than another country can. 
D) the ability to produce more output from given inputs than anyone else can. 
A) producing all goods at lower opportunity costs than other countries can. 
B) producing more output of all goods than anyone else can. 
C) producing one good at a lower opportunity cost than another country can. 
D) the ability to produce more output from given inputs than anyone else can.

Question 16

-According to economic historians, one result of international trade is that it

Accepted Answer

A) aids in the international transmission of ideas. 
B) reduces the world-wide output of goods. 
C) reduces the world-wide consumption of goods. 
D) causes persistent world-wide inflation. 
A) aids in the international transmission of ideas. 
B) reduces the world-wide output of goods. 
C) reduces the world-wide consumption of goods. 
D) causes persistent world-wide inflation.

Question 17

A new industry develops, and our government wants to protect it from foreign competition. Which one of the following arguments would appropriately describe this type of protection?

Accepted Answer

A) National security 
B) Cartelization 
C) Infant industry 
D) Protecting American jobs 
A) National security 
B) Cartelization 
C) Infant industry 
D) Protecting American jobs

Question 18

Protection of new products from global competition is known as

Accepted Answer

A) the infant-industry argument. 
B) dumping. 
C) a quota. 
D) protection of domestic jobs. 
A) the infant-industry argument. 
B) dumping. 
C) a quota. 
D) protection of domestic jobs.

Question 19

Governments sometimes subsidize domestic industries. When this occurs,

Accepted Answer

A) the governments also impose tariffs on imports to protect the industries even more. 
B) the subsidized industries have an advantage in international markets relative to non-subsidized industries. 
C) firms cannot be guilty of dumping because their prices are not below their costs. 
D) the subsidized industries sell less in international markets because it is more profitable to sell domestically. 
A) the governments also impose tariffs on imports to protect the industries even more. 
B) the subsidized industries have an advantage in international markets relative to non-subsidized industries. 
C) firms cannot be guilty of dumping because their prices are not below their costs. 
D) the subsidized industries sell less in international markets because it is more profitable to sell domestically.

Question 20

If protective import-restricting quota are imposed by a country, in the majority of cases that nation's consumers end up

Accepted Answer

A) paying a lower price for the good than they otherwise would. 
B) consuming more of the good than they otherwise would. 
C) having more consumption choices than they otherwise would. 
D) consuming less of the good than they otherwise would. 
A) paying a lower price for the good than they otherwise would. 
B) consuming more of the good than they otherwise would. 
C) having more consumption choices than they otherwise would. 
D) consuming less of the good than they otherwise would.

An assumption behind the infant industry argument for tariff protection is that

According to the text, approximately how many countries are members of the WTO?

Maximum Feasible Hourly Production Rates for Either Food or Cloth Using All Available Resources -Using the data in the above table and assuming constant opportunity costs, it is correct to state that

If country A exports good X to country B and country B exports good Y to country A, it is most likely that

An import quota will make the supply curve for the imported good

Specialization in trade will be economically efficient if it is based upon

Which of the following is an argument against free trade?

An import quota specifies

The General Agreement on Tariffs and Trade is an international agreement

Selling a good abroad below the price charged in the home market, or at a price below the cost of production is called

Country A can product 100 units of Good X in a day and 40 units of Good Y while Country B can produce 50 units of Good X and 40 units of Good Y.

If Abigail can produce 4 tablets or 3 radios in a day, while Jacob can produce 1 tablet or 2 radios, then it is correct to state that

The argument that many critics of free trade have suggested that genetic engineering of plants and animals could lead to accidental production of new diseases is the

Comparative advantage is defined as

-According to economic historians, one result of international trade is that it

A new industry develops, and our government wants to protect it from foreign competition. Which one of the following arguments would appropriately describe this type of protection?

Protection of new products from global competition is known as

Governments sometimes subsidize domestic industries. When this occurs,

If protective import-restricting quota are imposed by a country, in the majority of cases that nation's consumers end up

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

An assumption behind the infant industry argument for tariff protection is that

According to the text, approximately how many countries are members of the WTO?

Maximum Feasible Hourly Production Rates for Either Food or Cloth Using All Available Resources -Using the data in the above table and assuming constant opportunity costs, it is correct to state that

If country A exports good X to country B and country B exports good Y to country A, it is most likely that

An import quota will make the supply curve for the imported good

Specialization in trade will be economically efficient if it is based upon

Which of the following is an argument against free trade?

An import quota specifies

The General Agreement on Tariffs and Trade is an international agreement

Selling a good abroad below the price charged in the home market, or at a price below the cost of production is called

Country A can product 100 units of Good X in a day and 40 units of Good Y while Country B can produce 50 units of Good X and 40 units of Good Y.

If Abigail can produce 4 tablets or 3 radios in a day, while Jacob can produce 1 tablet or 2 radios, then it is correct to state that

The argument that many critics of free trade have suggested that genetic engineering of plants and animals could lead to accidental production of new diseases is the

Comparative advantage is defined as

-According to economic historians, one result of international trade is that it

A new industry develops, and our government wants to protect it from foreign competition. Which one of the following arguments would appropriately describe this type of protection?

Protection of new products from global competition is known as

Governments sometimes subsidize domestic industries. When this occurs,

If protective import-restricting quota are imposed by a country, in the majority of cases that nation's consumers end up

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