Question 1

One reason a firm might dump its product in another country's market is

Accepted Answer

A)  to escape a sales tax in its home market. 
B)  to seek out firms to merge with. 
C)  to drive competitors out of the market. 
D)  that the importing country cannot produce its product. 
A)  to escape a sales tax in its home market. 
B)  to seek out firms to merge with. 
C)  to drive competitors out of the market. 
D)  that the importing country cannot produce its product. C

Question 2

The USMCA permits both the United States and Mexico to enforce measures designed to conserve exhaustible natural resources.

Accepted Answer

A) True 
 B)False  True

Question 3

Which statement does NOT describe the limitations of a policy of restriction to protect infant industries?

Accepted Answer

A)  There is not much evidence that protecting infant industries in advanced economies is needed. 
B)  Infant industry protection often focuses on protecting labor-intensive industries, which is not critical in countries with large labor supplies. 
C)  Infant industry protection is rarely done in a way that makes the industry internationally competitive. 
D)  Countries waste their resources protecting infant industries, since most develop well without protection. 
A)  There is not much evidence that protecting infant industries in advanced economies is needed. 
B)  Infant industry protection often focuses on protecting labor-intensive industries, which is not critical in countries with large labor supplies. 
C)  Infant industry protection is rarely done in a way that makes the industry internationally competitive. 
D)  Countries waste their resources protecting infant industries, since most develop well without protection. B

Question 4

The national defense argument for imposing trade restraints is unjustified during times of peace.

Accepted Answer

A) True 
 B)False

Question 5

Tariffs can depress world economies.

Accepted Answer

A) True 
 B)False

Question 6

Trade restrictions may be counterproductive if they discourage workers from migrating to industries that have a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 7

One rationale used for antidumping tariff protection arises when

Accepted Answer

A)  the importing country finds the cost of producing its products to be higher than it is in other countries. 
B)  imports are produced by foreign firms, which are more efficient than domestic producers. 
C)  the importing country wants to practice international price discrimination. 
D)  imports are produced by foreign firms that receive subsidies from their governments. 
A)  the importing country finds the cost of producing its products to be higher than it is in other countries. 
B)  imports are produced by foreign firms, which are more efficient than domestic producers. 
C)  the importing country wants to practice international price discrimination. 
D)  imports are produced by foreign firms that receive subsidies from their governments.

Question 8

Antiglobalization activists are opposed to increased trade because of three reasons. Which reason is NOT one of the three?

Accepted Answer

A)  Developing nations use child labor. 
B)  Developing nations pay low wages. 
C)  Developing nations employ workers with low human capital. 
D)  Developing nations degrade the environment. 
A)  Developing nations use child labor. 
B)  Developing nations pay low wages. 
C)  Developing nations employ workers with low human capital. 
D)  Developing nations degrade the environment.

Question 9

Increased trade benefits consumers by providing them with more choices.

Accepted Answer

A) True 
 B)False

Question 10

The diaper industry is an example of the infant industry argument.

Accepted Answer

A) True 
 B)False

Question 11

Which of these has NOT contributed to global integration?

Accepted Answer

A)  improved communications 
B)  better transportation 
C)  lower trade barriers 
D)  increased nationalism 
A)  improved communications 
B)  better transportation 
C)  lower trade barriers 
D)  increased nationalism

Question 12

The United States exports more services than it imports services.

Accepted Answer

A) True 
 B)False

Question 13

Increased trade and globalization are both beneficial for all domestic workers.

Accepted Answer

A) True 
 B)False

Question 14

A country should produce a good if it has a lower opportunity cost for producing that good than another country does.

Accepted Answer

A) True 
 B)False

Question 15

(Table: Econoland and Macroland Annual Production Capacity in Tons) Based on the table, which statement correctly identifies the situation described therein?

Accepted Answer

A)  Econoland's comparative advantage is in cabbages because its opportunity cost per ton of cabbage (0.8 ton of oranges) is lower than Macroland's. 
B)  Econoland's comparative advantage is in cabbages because its opportunity cost per ton of cabbages (1.25 tons of oranges) is lower than Macroland's. 
C)  Econoland's comparative advantage is in oranges because its opportunity cost per ton of orange (0.9 ton of cabbages) is lower than Macroland's. 
D)  Econoland's comparative advantage is in oranges because its opportunity cost per ton of orange (1.11 tons of cabbages) is lower than Macroland's. 
A)  Econoland's comparative advantage is in cabbages because its opportunity cost per ton of cabbage (0.8 ton of oranges) is lower than Macroland's. 
B)  Econoland's comparative advantage is in cabbages because its opportunity cost per ton of cabbages (1.25 tons of oranges) is lower than Macroland's. 
C)  Econoland's comparative advantage is in oranges because its opportunity cost per ton of orange (0.9 ton of cabbages) is lower than Macroland's. 
D)  Econoland's comparative advantage is in oranges because its opportunity cost per ton of orange (1.11 tons of cabbages) is lower than Macroland's.

Question 16

Workers in advanced economies cannot be displaced from their jobs due to offshoring.

Accepted Answer

A) True 
 B)False

Question 17

Antitrade legislation is often implemented for political reasons.

Accepted Answer

A) True 
 B)False

Question 18

A foreign firm sells its product in the United States for $50 per unit. Its cost per unit is $60. Based on this information, we can assume that the

Accepted Answer

A)  foreign firm is charging $50 per unit in its home country. 
B)  foreign firm may possibly be dumping. 
C)  cost-price difference is enough evidence to prove predatory pricing. 
D)  foreign firm has a comparative advantage in making this product. 
A)  foreign firm is charging $50 per unit in its home country. 
B)  foreign firm may possibly be dumping. 
C)  cost-price difference is enough evidence to prove predatory pricing. 
D)  foreign firm has a comparative advantage in making this product.

Question 19

One country has a comparative advantage in the production of a good if

Accepted Answer

A)  it has a lower opportunity cost in the production of the good than another country does. 
B)  it has a higher opportunity cost in the production of the good than another country does. 
C)  it can produce absolutely more than another country. 
D)  the quality of its finished good is consistently higher. 
A)  it has a lower opportunity cost in the production of the good than another country does. 
B)  it has a higher opportunity cost in the production of the good than another country does. 
C)  it can produce absolutely more than another country. 
D)  the quality of its finished good is consistently higher.

Question 20

If the infant industry argument is used to justify protecting an industry that has already matured, then

Accepted Answer

A)  consumers will lose because the price they will pay is less than the world price. 
B)  consumers will lose because the price they will pay is greater than the world price. 
C)  stockholders lose because firms in infant industries cannot compete with firms in other industries. 
D)  no one loses. 
A)  consumers will lose because the price they will pay is less than the world price. 
B)  consumers will lose because the price they will pay is greater than the world price. 
C)  stockholders lose because firms in infant industries cannot compete with firms in other industries. 
D)  no one loses.

One reason a firm might dump its product in another country's market is

The USMCA permits both the United States and Mexico to enforce measures designed to conserve exhaustible natural resources.

Which statement does NOT describe the limitations of a policy of restriction to protect infant industries?

The national defense argument for imposing trade restraints is unjustified during times of peace.

Tariffs can depress world economies.

Trade restrictions may be counterproductive if they discourage workers from migrating to industries that have a comparative advantage.

One rationale used for antidumping tariff protection arises when

Antiglobalization activists are opposed to increased trade because of three reasons. Which reason is NOT one of the three?

Increased trade benefits consumers by providing them with more choices.

The diaper industry is an example of the infant industry argument.

Which of these has NOT contributed to global integration?

The United States exports more services than it imports services.

Increased trade and globalization are both beneficial for all domestic workers.

A country should produce a good if it has a lower opportunity cost for producing that good than another country does.

(Table: Econoland and Macroland Annual Production Capacity in Tons) Based on the table, which statement correctly identifies the situation described therein?

Workers in advanced economies cannot be displaced from their jobs due to offshoring.

Antitrade legislation is often implemented for political reasons.

A foreign firm sells its product in the United States for $50 per unit. Its cost per unit is $60. Based on this information, we can assume that the

One country has a comparative advantage in the production of a good if

If the infant industry argument is used to justify protecting an industry that has already matured, then

Exploring Economics

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Introduction to Macroeconomics

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Exam 15: International Trade

One reason a firm might dump its product in another country's market is

The USMCA permits both the United States and Mexico to enforce measures designed to conserve exhaustible natural resources.

Which statement does NOT describe the limitations of a policy of restriction to protect infant industries?

The national defense argument for imposing trade restraints is unjustified during times of peace.

Tariffs can depress world economies.

Trade restrictions may be counterproductive if they discourage workers from migrating to industries that have a comparative advantage.

One rationale used for antidumping tariff protection arises when

Antiglobalization activists are opposed to increased trade because of three reasons. Which reason is NOT one of the three?

Increased trade benefits consumers by providing them with more choices.

The diaper industry is an example of the infant industry argument.

Which of these has NOT contributed to global integration?

The United States exports more services than it imports services.

Increased trade and globalization are both beneficial for all domestic workers.

A country should produce a good if it has a lower opportunity cost for producing that good than another country does.

(Table: Econoland and Macroland Annual Production Capacity in Tons) Based on the table, which statement correctly identifies the situation described therein?

Workers in advanced economies cannot be displaced from their jobs due to offshoring.

Antitrade legislation is often implemented for political reasons.

A foreign firm sells its product in the United States for $50 per unit. Its cost per unit is $60. Based on this information, we can assume that the

One country has a comparative advantage in the production of a good if

If the infant industry argument is used to justify protecting an industry that has already matured, then

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

Open Economy Macroeconomics

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