Question 1

When countries engage in specialization and international trade, every individual person in those countries will gain.

Accepted Answer

A) True 
 B)False  False

Question 2

Alexander Hamilton used the infant-industry argument to support trade restrictions.

Accepted Answer

A) True 
 B)False  True

Question 3

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

Accepted Answer

A) True 
 B)False  True

Question 4

Exhibit 34-1   Refer to Exhibit 34-1. The opportunity cost of one unit of X in country B is

Accepted Answer

A) 1 unit of Y. 
B) 0.33 units of Y. 
C) 2 units of Y. 
D) 20 units of Y. 
A) 1 unit of Y. 
B) 0.33 units of Y. 
C) 2 units of Y. 
D) 20 units of Y.

Question 5

Exhibit 34-2  
Refer to Exhibit 34-2. The U.S. demand and supply for a good are shown. Under a policy of free trade, where imports are permitted, the world price is PW. If there is a policy change such that imports are prohibited, the price becomes PN, consumers' surplus equals __________ and producers' surplus equals __________.

Accepted Answer

A) PNAB; PNBE 
B) BCD; PNDE 
C) PNAD; BCD 
D) PNAD; PWBDE 
A) PNAB; PNBE 
B) BCD; PNDE 
C) PNAD; BCD 
D) PNAD; PWBDE

Question 6

Exhibit 34-10   Refer to Exhibit 34-10.  Danielle's opportunity cost of cleaning the house is

Accepted Answer

A) 0.50 mowed lawns. 
B) 1.00 mowed lawns. 
C) 2.00 mowed lawns. 
D) 0.60 mowed lawns. 
A) 0.50 mowed lawns. 
B) 1.00 mowed lawns. 
C) 2.00 mowed lawns. 
D) 0.60 mowed lawns.

Question 7

Exhibit 34-1   Refer to Exhibit 34-1. Considering the data, which of the following terms of trade would both countries agree to?

Accepted Answer

A) 1 unit of X for 2 units of Y 
B) 1 unit of X for 3 units of Y 
C) 1 unit of X for 1 unit of Y 
D) 1 unit of X for 1.50 units of Y 
A) 1 unit of X for 2 units of Y 
B) 1 unit of X for 3 units of Y 
C) 1 unit of X for 1 unit of Y 
D) 1 unit of X for 1.50 units of Y

Question 8

Exhibit 34-8  
Refer to Exhibit 34-8. Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports). The removal of the $100 per ton tariff would cause a(n)__________ in imports of __________ million tons.

Accepted Answer

A) increase; 5 
B) increase; 10 
C) increase; 15 
D) decrease; 5 
E) decrease; 10 
A) increase; 5 
B) increase; 10 
C) increase; 15 
D) decrease; 5 
E) decrease; 10

Question 9

Exhibit 34-3  
Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed, the price rises to PW + T. Because of the tariff, government collects tariff revenues equal to the area of

Accepted Answer

A) 1. 
B) 1 + 2. 
C) 3. 
D) 1 + 2 + 4. 
E) 1 + 3. 
A) 1. 
B) 1 + 2. 
C) 3. 
D) 1 + 2 + 4. 
E) 1 + 3.

Question 10

Countries tend to specialize in the production of goods in which they have a comparative advantage because

Accepted Answer

A) government officials calculate opportunity costs and suggest to people what they ought to produce. 
B) people want to make a profit. 
C) the Economic Development Office of the United Nations hires economic experts to calculate the opportunity costs of different goods in different countries and then suggests to countries what they ought to produce. 
D) the United Nations hires economic experts to calculate the opportunity costs of different goods in different countries and then suggests to countries what they ought to produce. 
A) government officials calculate opportunity costs and suggest to people what they ought to produce. 
B) people want to make a profit. 
C) the Economic Development Office of the United Nations hires economic experts to calculate the opportunity costs of different goods in different countries and then suggests to countries what they ought to produce. 
D) the United Nations hires economic experts to calculate the opportunity costs of different goods in different countries and then suggests to countries what they ought to produce.

Question 11

Arguments made against free trade include all of the following except

Accepted Answer

A) national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. 
B) infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. 
C) dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. 
D) free trade is inflationary and should be restricted in the domestic interest. 
E) if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against. 
A) national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. 
B) infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. 
C) dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. 
D) free trade is inflationary and should be restricted in the domestic interest. 
E) if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against.

Question 12

Exhibit 34-11  
Refer to Exhibit 34-11. A tariff raises the price in the market from PW to PW + T. As a result, U.S. domestic sales rise from __________.

Accepted Answer

A) Q1 to Q4 
B) Q3 to Q2 
C) Q1 to Q3 
D) Q4 to Q2 
E) Q3 to Q4 
A) Q1 to Q4 
B) Q3 to Q2 
C) Q1 to Q3 
D) Q4 to Q2 
E) Q3 to Q4

Question 13

Which of the following statements is false ?

Accepted Answer

A) As a result of a quota, consumers' surplus falls. 
B) As a result of a tariff, producers' surplus rises. 
C) As a result of a tariff, consumers' surplus falls. 
D) As a result of a quota, producers' surplus rises. 
E) As a result of a tariff, consumers' surplus rises. 
A) As a result of a quota, consumers' surplus falls. 
B) As a result of a tariff, producers' surplus rises. 
C) As a result of a tariff, consumers' surplus falls. 
D) As a result of a quota, producers' surplus rises. 
E) As a result of a tariff, consumers' surplus rises.

Question 14

Exhibit 34-10   Refer to Exhibit 34-10.  Jason's opportunity cost of mowing the lawn is

Accepted Answer

A) 0.50 clean houses. 
B) 2.40 clean houses. 
C) 2.00 clean houses. 
D) 0.60 clean houses. 
A) 0.50 clean houses. 
B) 2.40 clean houses. 
C) 2.00 clean houses. 
D) 0.60 clean houses.

Question 15

Exhibit 34-1   Refer to Exhibit 34-1. The opportunity cost of one unit of Y in country B is

Accepted Answer

A) 0.5 units of X. 
B) 1 unit of X. 
C) 2 units of X. 
D) 20 units of X. 
A) 0.5 units of X. 
B) 1 unit of X. 
C) 2 units of X. 
D) 20 units of X.

Question 16

Exhibit 34-9   Refer to Exhibit 34-9. In the no specialization-no trade case, suppose country X produces and consumes 100 units of good A and 20 units of good B. Country Y produces and consumes 20 units of good A and 60 units of good B. If the two countries specialize and trade, and the actual amounts traded are 125 units of good A for 25 units of good B, how many more units of good A will country X consume by specializing and trading?

Accepted Answer

A) 75 
B) 25 
C) 15 
D) 105 
E) 50 
A) 75 
B) 25 
C) 15 
D) 105 
E) 50

Question 17

Which of the following is not an argument for trade restrictions?

Accepted Answer

A) the national defense argument 
B) the infant industry argument 
C) the comparative advantage argument 
D) the antidumping argument 
A) the national defense argument 
B) the infant industry argument 
C) the comparative advantage argument 
D) the antidumping argument

Question 18

As a result of a quota, both consumers' surplus and producers' surplus fall.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an example of a trade restriction?

Accepted Answer

A) quotas 
B) comparative advantage 
C) dumping 
D) consumers' surplus 
A) quotas 
B) comparative advantage 
C) dumping 
D) consumers' surplus

Question 20

A quota is

Accepted Answer

A) a tax imposed on imported goods. 
B) a legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country. 
C) a legal limit on the amount of a good that can be imported. 
D) an agreement between two countries in which the exporting country voluntarily agrees to limit its exports to the importing country. 
A) a tax imposed on imported goods. 
B) a legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country. 
C) a legal limit on the amount of a good that can be imported. 
D) an agreement between two countries in which the exporting country voluntarily agrees to limit its exports to the importing country.

Exam 20: International Trade

When countries engage in specialization and international trade, every individual person in those countries will gain.

Alexander Hamilton used the infant-industry argument to support trade restrictions.

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

Exhibit 34-1 Refer to Exhibit 34-1. The opportunity cost of one unit of X in country B is

Exhibit 34-10 Refer to Exhibit 34-10. Danielle's opportunity cost of cleaning the house is

Exhibit 34-1 Refer to Exhibit 34-1. Considering the data, which of the following terms of trade would both countries agree to?

Exhibit 34-8 Refer to Exhibit 34-8. Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports). The removal of the $100 per ton tariff would cause a(n)__________ in imports of __________ million tons.

Exhibit 34-3 Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed, the price rises to PW + T. Because of the tariff, government collects tariff revenues equal to the area of

Countries tend to specialize in the production of goods in which they have a comparative advantage because

Arguments made against free trade include all of the following except

Exhibit 34-11 Refer to Exhibit 34-11. A tariff raises the price in the market from PW to PW + T. As a result, U.S. domestic sales rise from __________.

Which of the following statements is false ?

Exhibit 34-10 Refer to Exhibit 34-10. Jason's opportunity cost of mowing the lawn is

Exhibit 34-1 Refer to Exhibit 34-1. The opportunity cost of one unit of Y in country B is

Which of the following is not an argument for trade restrictions?

As a result of a quota, both consumers' surplus and producers' surplus fall.

Which of the following is an example of a trade restriction?

A quota is

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages, Union, and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Filters

Exhibit 34-8 Refer to Exhibit 34-8. Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports). The removal of the $100 per ton tariff would cause a(n) in imports of million tons.

Exhibit 34-3 Refer to Exhibit 34-3. The world price is P_W. If a tariff is imposed, the price rises to P_W + T. Because of the tariff, government collects tariff revenues equal to the area of

Exhibit 34-11 Refer to Exhibit 34-11. A tariff raises the price in the market from P_W to P_{W + T}. As a result, U.S. domestic sales rise from __________.