Question 1

Selling a good abroad below the price charged in the home market 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

Explain the infant industry argument.

Accepted Answer

The infant industry argument is an argum

Question 3

A difference between a quota and a tariff is that

Accepted Answer

A) a tariff generates a higher price than a quota does. 
B) a tariff generates a greater reduction in exports. 
C) a quota increases profits of domestic producers more than a tariff does. 
D) the government collects revenues from a tariff, which does not happen with a quota. 
A) a tariff generates a higher price than a quota does. 
B) a tariff generates a greater reduction in exports. 
C) a quota increases profits of domestic producers more than a tariff does. 
D) the government collects revenues from a tariff, which does not happen with a quota.

Question 4

Quotas and tariffs both serve the purpose of

Accepted Answer

A) increasing foreign trade. 
B) restricting foreign trade. 
C) causing domestic producers to lose revenues. 
D) lowering prices on imported goods. 
A) increasing foreign trade. 
B) restricting foreign trade. 
C) causing domestic producers to lose revenues. 
D) lowering prices on imported goods.

Question 5

Which of the following are regulations that nations in regional trade blocs establish to delineate product categories eligible for trading preferences?

Accepted Answer

A) trade quotas 
B) trade tariffs 
C) rules of law 
D) rules of origin 
A) trade quotas 
B) trade tariffs 
C) rules of law 
D) rules of origin

Question 6

Dumping is

Accepted Answer

A) selling a good abroad in huge quantities at a very low price. 
B) exporting goods that are sources of pollution. 
C) exporting goods that are of inferior quality relative to the goods sold in the domestic market. 
D) selling a good abroad at a price below cost or below the price charged in the domestic market. 
A) selling a good abroad in huge quantities at a very low price. 
B) exporting goods that are sources of pollution. 
C) exporting goods that are of inferior quality relative to the goods sold in the domestic market. 
D) selling a good abroad at a price below cost or below the price charged in the domestic market.

Question 7

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 likely that

Accepted Answer

A) the United States will import food. 
B) Mexico will export cloth. 
C) the United States will export both cloth and food. 
D) Mexico will export both cloth and food. 
A) the United States will import food. 
B) Mexico will export cloth. 
C) the United States will export both cloth and food. 
D) Mexico will export both cloth and food.

Question 8

The argument that with initial protection an industry will eventually become competitive is called the

Accepted Answer

A) national security argument. 
B) strategic bargaining argument. 
C) the trade adjustment assistance argument. 
D) infant industry argument. 
A) national security argument. 
B) strategic bargaining argument. 
C) the trade adjustment assistance argument. 
D) infant industry argument.

Question 9

Restricting imports usually leads to

Accepted Answer

A) a country producing beyond its production possibilities frontier. 
B) a country consuming even further beyond its production possibilities frontier. 
C) a reduction in exports and employment. 
D) a higher per capita level of real consumption. 
A) a country producing beyond its production possibilities frontier. 
B) a country consuming even further beyond its production possibilities frontier. 
C) a reduction in exports and employment. 
D) a higher per capita level of real consumption.

Question 10

Trade deflection is an act that

Accepted Answer

A) decreases the amount of international trade in the world. 
B) increases the amount of international trade in the world. 
C) has no impact on the amount of international trade in the world. 
D) is illegal among all countries in the world. 
A) decreases the amount of international trade in the world. 
B) increases the amount of international trade in the world. 
C) has no impact on the amount of international trade in the world. 
D) is illegal among all countries in the world.

Question 11

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

Accepted Answer

A) paying a lower price and consuming more of the good than they otherwise would. 
B) paying a lower price and consuming less of the good than they otherwise would. 
C) paying a higher price and consuming less of the good than they otherwise would. 
D) paying a higher price and consuming more of the good than they otherwise would. 
A) paying a lower price and consuming more of the good than they otherwise would. 
B) paying a lower price and consuming less of the good than they otherwise would. 
C) paying a higher price and consuming less of the good than they otherwise would. 
D) paying a higher price and consuming more of the good than they otherwise would.

Question 12

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

Accepted Answer

A) paying a higher price for the good than they otherwise would. 
B) paying a lower price for the good than they otherwise would. 
C) consuming more of the good than they otherwise would. 
D) having a higher standard of living than they otherwise would. 
A) paying a higher price for the good than they otherwise would. 
B) paying a lower price for the good than they otherwise would. 
C) consuming more of the good than they otherwise would. 
D) having a higher standard of living than they otherwise would.

Question 13

If Kami can produce 40 tablets or 30 radios during a month's time, while Sally can produce 10 tablets or 20 radios, then it is correct to state that

Accepted Answer

A) Kami has a comparative advantage in producing tablets. 
B) Kami has a comparative advantage in producing both tablets and radios. 
C) Sally has a comparative advantage in producing both tablets and radios. 
D) Sally has an absolute advantage in tablets. 
A) Kami has a comparative advantage in producing tablets. 
B) Kami has a comparative advantage in producing both tablets and radios. 
C) Sally has a comparative advantage in producing both tablets and radios. 
D) Sally has an absolute advantage in tablets.

Question 14

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 Y?

Accepted Answer

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

Question 15

Suppose that opportunity costs in India and Australia are constant. In India, maximum feasible hourly production rates are either 0.3 unit of cloth or 0.2 unit of food. In Australia, maximum feasible hourly production rates are either 0.5 unit of cloth or 0.5 unit of food. It is correct to state that

Accepted Answer

A) India has a comparative advantage in producing cloth. 
B) India has a comparative advantage in producing both cloth and wheat. 
C) India has no comparative advantage in producing cloth or wheat. 
D) Australia has a comparative advantage in producing cloth. 
A) India has a comparative advantage in producing cloth. 
B) India has a comparative advantage in producing both cloth and wheat. 
C) India has no comparative advantage in producing cloth or wheat. 
D) Australia has a comparative advantage in producing cloth.

Question 16

The successor to GATT in 1995 is

Accepted Answer

A) the World Agreement on Tariff and Trade. 
B) the World Trade Organization. 
C) the World Trade Agreement. 
D) the World Trade and Tariff Organization. 
A) the World Agreement on Tariff and Trade. 
B) the World Trade Organization. 
C) the World Trade Agreement. 
D) the World Trade and Tariff Organization.

Question 17

When a tariff is imposed, the demand curve for the domestic good

Accepted Answer

A) shifts downward and to the right. 
B) shifts upward and to the left. 
C) shifts upward and to the right. 
D) shifts downward and to the left. 
A) shifts downward and to the right. 
B) shifts upward and to the left. 
C) shifts upward and to the right. 
D) shifts downward and to the left.

Question 18

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
-Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can produce a maximum of eight pies or two cakes in a day. Fred has an comparative advantage in the production of

Accepted Answer

A) cakes. 
B) pies. 
C) both cakes and pies. 
D) neither cakes nor pies. 
A) cakes. 
B) pies. 
C) both cakes and pies. 
D) neither cakes nor pies.

Question 19

The effect of a quota is to

Accepted Answer

A) increase quantity supplied and lower price. 
B) increase quantity supplied and increase price. 
C) increase demand for the good and increase price. 
D) reduce quantity supplied and raise price. 
A) increase quantity supplied and lower price. 
B) increase quantity supplied and increase price. 
C) increase demand for the good and increase price. 
D) reduce quantity supplied and raise price.

Question 20

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is ________ units of Good Y for Chen and ________ units of Good Y for Holly.

Accepted Answer

A) 25; 100 
B) 0.5; 2.5 
C) 2; 0.4 
D) 100; 25 
A) 25; 100 
B) 0.5; 2.5 
C) 2; 0.4 
D) 100; 25

Selling a good abroad below the price charged in the home market is

Explain the infant industry argument.

A difference between a quota and a tariff is that

Quotas and tariffs both serve the purpose of

Which of the following are regulations that nations in regional trade blocs establish to delineate product categories eligible for trading preferences?

Dumping is

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 likely that

The argument that with initial protection an industry will eventually become competitive is called the

Restricting imports usually leads to

Trade deflection is an act that

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

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

If Kami can produce 40 tablets or 30 radios during a month's time, while Sally can produce 10 tablets or 20 radios, then it is correct to state that

The successor to GATT in 1995 is

When a tariff is imposed, the demand curve for the domestic good

The effect of a quota is to

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is units of Good Y for Chen and units of Good Y for Holly.

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

Selling a good abroad below the price charged in the home market is

Explain the infant industry argument.

A difference between a quota and a tariff is that

Quotas and tariffs both serve the purpose of

Which of the following are regulations that nations in regional trade blocs establish to delineate product categories eligible for trading preferences?

Dumping is

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 likely that

The argument that with initial protection an industry will eventually become competitive is called the

Restricting imports usually leads to

Trade deflection is an act that

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

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

If Kami can produce 40 tablets or 30 radios during a month's time, while Sally can produce 10 tablets or 20 radios, then it is correct to state that

The successor to GATT in 1995 is

When a tariff is imposed, the demand curve for the domestic good

The effect of a quota is to

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is ________ units of Good Y for Chen and ________ units of Good Y for Holly.

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

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is units of Good Y for Chen and units of Good Y for Holly.