Question 1

Imports arise because:

Accepted Answer

A)  the importing country can produce the good more cheaply than the exporting country 
B)  the exporting country can produce the good at a higher cost than the importing country 
C)  the importing country can produce the good at an equal cost to the exporting country 
D)  the exporting country can produce the good more cheaply than the importing country 
A)  the importing country can produce the good more cheaply than the exporting country 
B)  the exporting country can produce the good at a higher cost than the importing country 
C)  the importing country can produce the good at an equal cost to the exporting country 
D)  the exporting country can produce the good more cheaply than the importing country

Question 2

Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Accepted Answer

Comparative advantage is the principle u

Question 3

Exports arise because:

Accepted Answer

A)  the importing country has a comparative advantage in consuming a good 
B)  the exporting country has a comparative advantage in producing a good 
C)  the exporting country has a comparative advantage in consuming a good 
D)  the importing country has a comparative advantage in producing a good 
A)  the importing country has a comparative advantage in consuming a good 
B)  the exporting country has a comparative advantage in producing a good 
C)  the exporting country has a comparative advantage in consuming a good 
D)  the importing country has a comparative advantage in producing a good

Question 4

Absolute advantage is found by:

Accepted Answer

A)  comparing opportunity costs 
B)  calculating the dollar cost of production 
C)  comparing the productivity of one nation to that of another 
D)  first determining which country has a comparative advantage 
A)  comparing opportunity costs 
B)  calculating the dollar cost of production 
C)  comparing the productivity of one nation to that of another 
D)  first determining which country has a comparative advantage

Question 5

Table 3-4
  
-According to Table 3-4, if the English government decided to impose a tariff on cheese imports, this would:

Accepted Answer

A)  make bread and cheese cheaper for English consumers 
B)  make bread and cheese more expensive for English consumers 
C)  make bread more expensive for English consumers 
D)  make cheese more expensive for English consumers 
A)  make bread and cheese cheaper for English consumers 
B)  make bread and cheese more expensive for English consumers 
C)  make bread more expensive for English consumers 
D)  make cheese more expensive for English consumers

Question 6

International trade may make some individuals in a nation better off, while other individuals are made worse off.

Accepted Answer

A) True 
 B)False

Question 7

It takes Barbara four hours to make a pie and four hours to make a shirt. It takes Gary two hours to make a pie and five hours to make a shirt. Barbara should specialise in making shirts and Gary should specialise in making pies. Then they should trade.

Accepted Answer

A) True 
 B)False

Question 8

Table 3-3
  
-Refer to Table 3-3. The opportunity cost of one aeroplane for Europe is:

Accepted Answer

A)  four cars 
B)  three cars 
C)  1/3 car 
D)  1/4 car 
A)  four cars 
B)  three cars 
C)  1/3 car 
D)  1/4 car

Question 9

Suppose it takes Jean four hours to catch 10 fish and one hour to collect one kilogram of mushrooms. It takes Lee four hours to catch 10 fish and 30 minutes to collect 1 kg of mushrooms. Lee should specialise in catching fish and Jean should specialise in collecting mushrooms.

Accepted Answer

A) True 
 B)False

Question 10

One reason for which the English government might impose a tariff on Spanish cheese imports is:

Accepted Answer

A)  national pride 
B)  a general rivalry between Spain and England 
C)  the possibility of disease in Spanish cheese 
D)  pressure from English cheese lobby groups 
A)  national pride 
B)  a general rivalry between Spain and England 
C)  the possibility of disease in Spanish cheese 
D)  pressure from English cheese lobby groups

Question 11

Graph 3-1
   These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.
-Refer to Graph 3-1. For Friday, the opportunity cost of 1 kg of fish is:

Accepted Answer

A)  1 kg of coconuts 
B)  3/2 kg of coconuts 
C)  1/3 kg of coconuts 
D)  2 kg of fish 
A)  1 kg of coconuts 
B)  3/2 kg of coconuts 
C)  1/3 kg of coconuts 
D)  2 kg of fish

Question 12

Jess makes coconut brownies that all her friends rave about but is also a highly paid marketing executive. Should she open a healthy bakery, like her friends suggest?

Accepted Answer

Probably not. Unless Jess can make more

Question 13

Table 3-3
  
-Refer to Table 3-3. If Europe and the US trade according to the principle of comparative advantage:

Accepted Answer

A)  all individuals in both countries will gain 
B)  both countries can have more aeroplanes and cars 
C)  Europe will specialise in cars and the US will specialise in aeroplanes 
D)  both countries will consume on their own production possibilities frontier 
A)  all individuals in both countries will gain 
B)  both countries can have more aeroplanes and cars 
C)  Europe will specialise in cars and the US will specialise in aeroplanes 
D)  both countries will consume on their own production possibilities frontier

Question 14

Table 3-2
  
-According to Table 3-2:

Accepted Answer

A)  Lee has an absolute advantage in neither goods, and John has an absolute advantage in both goods 
B)  Lee has an absolute advantage in neither goods, and John has an absolute advantage in butter 
C)  Lee has an absolute advantage in rice, and John has an absolute advantage in butter 
D)  Lee has an absolute advantage in rice, and John has an absolute advantage in both goods 
A)  Lee has an absolute advantage in neither goods, and John has an absolute advantage in both goods 
B)  Lee has an absolute advantage in neither goods, and John has an absolute advantage in butter 
C)  Lee has an absolute advantage in rice, and John has an absolute advantage in butter 
D)  Lee has an absolute advantage in rice, and John has an absolute advantage in both goods

Question 15

Table 3-4
  
-Refer to Table 3-4. The fact of England imposing a tariff on cheese imports would be:

Accepted Answer

A)  protecting the English cheese industry from international competition 
B)  encouraging England to specialise in and export cheese 
C)  allowing a greater production of dairy products in England 
D)  a policy intended to harm the Spanish cheese industry 
A)  protecting the English cheese industry from international competition 
B)  encouraging England to specialise in and export cheese 
C)  allowing a greater production of dairy products in England 
D)  a policy intended to harm the Spanish cheese industry

Question 16

Graph 3-1
   These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.
-Refer to Table 3-1. For the cattle farmer, the opportunity cost of 1 kg of meat is:

Accepted Answer

A)  five hours of labour 
B)  one hour of labour 
C)  1/4 kg of potatoes 
D)  4 kg of potatoes 
A)  five hours of labour 
B)  one hour of labour 
C)  1/4 kg of potatoes 
D)  4 kg of potatoes

Question 17

Trade can benefit society as a whole because it allows:

Accepted Answer

A)  people to specialise in activities in which they have a comparative advantage 
B)  for a more efficient use of resources 
C)  for goods to be obtained at a lower opportunity cost 
D)  all of the above are correct 
A)  people to specialise in activities in which they have a comparative advantage 
B)  for a more efficient use of resources 
C)  for goods to be obtained at a lower opportunity cost 
D)  all of the above are correct

Question 18

Table 3-4
  
-Refer to Table 3-4. If England and Spain trade according to the principle of comparative advantage, England will export which product to Spain:

Accepted Answer

A)  bread 
B)  cheese 
C)  both cheese and bread 
D)  England cannot benefit from trade with Spain 
A)  bread 
B)  cheese 
C)  both cheese and bread 
D)  England cannot benefit from trade with Spain

Question 19

Trade allows a country to pivot outwards its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 20

Table 3-2
  
-Refer to Table 3-2. For John the opportunity cost of one kg of rice:

Accepted Answer

A)  3/4 kg of butter 
B)  3/2 kg of butter 
C)  4/3 kg of butter 
D)  2/3 kg of butter 
A)  3/4 kg of butter 
B)  3/2 kg of butter 
C)  4/3 kg of butter 
D)  2/3 kg of butter

Exam 3: Interdependence and the Gains From Trade

Imports arise because:

Which is more important in determining trade patterns, absolute advantage or comparative advantage? Why?

Exports arise because:

Absolute advantage is found by:

Table 3-4 -According to Table 3-4, if the English government decided to impose a tariff on cheese imports, this would:

International trade may make some individuals in a nation better off, while other individuals are made worse off.

It takes Barbara four hours to make a pie and four hours to make a shirt. It takes Gary two hours to make a pie and five hours to make a shirt. Barbara should specialise in making shirts and Gary should specialise in making pies. Then they should trade.

Table 3-3 -Refer to Table 3-3. The opportunity cost of one aeroplane for Europe is:

Suppose it takes Jean four hours to catch 10 fish and one hour to collect one kilogram of mushrooms. It takes Lee four hours to catch 10 fish and 30 minutes to collect 1 kg of mushrooms. Lee should specialise in catching fish and Jean should specialise in collecting mushrooms.

One reason for which the English government might impose a tariff on Spanish cheese imports is:

Graph 3-1 These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour. -Refer to Graph 3-1. For Friday, the opportunity cost of 1 kg of fish is:

Jess makes coconut brownies that all her friends rave about but is also a highly paid marketing executive. Should she open a healthy bakery, like her friends suggest?

Table 3-3 -Refer to Table 3-3. If Europe and the US trade according to the principle of comparative advantage:

Table 3-2 -According to Table 3-2:

Table 3-4 -Refer to Table 3-4. The fact of England imposing a tariff on cheese imports would be:

Graph 3-1 These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour. -Refer to Table 3-1. For the cattle farmer, the opportunity cost of 1 kg of meat is:

Trade can benefit society as a whole because it allows:

Table 3-4 -Refer to Table 3-4. If England and Spain trade according to the principle of comparative advantage, England will export which product to Spain:

Trade allows a country to pivot outwards its production possibilities frontier.

Table 3-2 -Refer to Table 3-2. For John the opportunity cost of one kg of rice:

Ten Principles of Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly and Business Strategy

Competition Policy

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters