Exam 8: International Trade

Figure: The Production Possibilities for Two Countries (Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries.The opportunity cost of producing 1 radio in Malaysia is: A.1/2 tire. B.1 tire. C.2 tires. D.6 tires.

Figure: The Domestic Supply and Demand for SUVs in the United States (Figure: The Domestic Supply and Demand for SUVs in the United States) Look at the figure The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.The United States would SUVs. A.import 6 million B.export 6 million C.export 2 million D.import 2 million

A regulation that specifies the maximum amount of a good or service that may be imported during a specified period is: A.quota. B.tariff. C.nontariff barrier. D.export quota.

A road blockade at the border between the United States and Canada prevents the entry of all lumber products to the United States from Canada.This blockade will: A.increase the consumer surplus for American lumber consumers. B.decrease the producer surplus for Canadian lumber producers. C.increase the total surplus for the American lumber market. D.increase the total surplus for the Canadian lumber market.

A tariff imposed on U.S.imports into Japan tends to: A.penalize U.S.producers and benefit Japanese producers. B.benefit U.S.producers and penalize Japanese producers. C.penalize both U.S.producers and Japanese producers. D.benefit both U.S.producers and Japanese producers.

Figure: The Market for Oranges in South Africa (Figure: The Market for Oranges in South Africa) Look at the figure The Market for Oranges in South Africa.In autarky, the price of oranges in South Africa is P₁.When the economy is opened to trade, the price falls to PW and the change in total surplus is:

If a nation exports a good when the economy is opened to trade, the domestic price of the good will ________ and domestic consumption will _. A.rise; rise B.rise; fall C.fall; rise D.fall; fall

(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada.Both nations can produce cars and lumber.Based on the table, which of the following is true? A.In the United States, the opportunity cost of 1 million cars is 10 million board feet of lumber. B.In the United States, the opportunity cost of 10 million cars is 1 million board feet of lumber. C.In Canada, the opportunity cost of 1 million cars is 6 million board feet of lumber. D.In Canada, the opportunity cost of 1 million cars is 1/6 million board feet of lumber.

In the case of U.S.import protection, quota rents for the most important import licenses are earned by: A.foreign governments. B.the U.S.government. C.U.S.producers of the good. D.importers who pay the highest price to get the quota.

If a country has the comparative advantage in producing cloth, we would predict that in the market for cloth, the autarky price would be the world price and the country would choose to cloth. A.less than; export B.greater than; export C.less than; import D.the same as; export

Figure: The Market for Tea in Sri Lanka (Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka.In autarky, the price of tea in Sri Lanka is P₁.When the economy is opened to trade, the price rises to PW and consumer surplus will ________ to _. A.fall; F B.fall; F + G C.rise; F + G + H + I D.rise; G + H + I

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips.In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips.When the two countries begin trading beef for tulips, we would expect the total surplus from beef consumption and production to: A.fall in Argentina. B.rise in Argentina. C.stay the same in Venezuela. D.either rise or fall in Venezuela.

(Table: Production Possibilities) Look at the table Production Possibilities.According to the data in the table, the opportunity cost of 1 computer for ________ is _. A.the United States; 2 boxes of roses B.Colombia; 1/2 box of roses C.the United States; 1/2 box of roses D.Colombia; 1 box of roses

(Figure: The Market for Calculators) Look at the figure The Market for Calculators.The world price, PW, equals $100.The government imposes a quota restricting imports to 25 calculators.The domestic price rises to ________ and the quota rent is equal to area _. A.$120; K + L B.$150; K + H + I + L C.$120; H + I D.$150; G + H + I + J

(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil.Which of the following is true? A.The opportunity cost of crude oil is lower in the United States than in Mexico. B.The opportunity cost of crude oil is higher in the United States than in Mexico. C.Crude oil costs are the same in the United States and in Mexico. D.Tractor costs are the same in the United States and in Mexico.

Gains from trade will result if a country specializes in:

Which is not a source of comparative advantage? A.In general, France has absolute advantage in production of all goods and services when compared to Italy. B.The United States has more advanced technology for computer chip design than India. C.Hawaii has a more favorable climate to grow pineapple than Italy. D.In the market for lumber, Canada has many more trees than England.

Goods and services purchased from abroad are , while goods and services sold abroad are _. A.exports; imports B.imports; exports C.exports; quotas D.quotas; factors

Sri Lanka's comparative advantage over the United States in textiles can be explained by its: A.labor abundance. B.mild climate. C.advanced technology. D.increasing returns.

Mexico has an abundance of unskilled labor and the United States has an abundance of skilled labor.The Heckscher-Ohlin model implies that trade between the United States and Mexico will lead to a decrease in the wages of unskilled labor in the United States and an increase in the wages of skilled labor in the United States.