Question 1

Constant costs leads countries engaging in trade to completely specialize in the production of the good that they export.

Accepted Answer

A) True 
 B)False  True

Question 2

With free trade under constant costs:

Accepted Answer

A)  neither country will completely specialize its production. 
B)  as least one country will completely specialize its production. 
C)  at least one country will consume inside its production possibilities frontier. 
D)  All of the above 
E)  None of the above 
A)  neither country will completely specialize its production. 
B)  as least one country will completely specialize its production. 
C)  at least one country will consume inside its production possibilities frontier. 
D)  All of the above 
E)  None of the above B

Question 3

An improvement of a country's terms of trade caused by a change in domestic conditions always improves a country's overall welfare

Accepted Answer

A) True 
 B)False  False

Question 4

Given free trade, a large country tends to benefit the least from trade because:

Accepted Answer

A)  large countries are more productive than small countries. 
B)  large countries are less productive than small countries. 
C)  large countries have higher incomes than smaller countries. 
D)  large countries will have terms of trade near the opportunity costs of the small country. 
E)  All of the above 
A)  large countries are more productive than small countries. 
B)  large countries are less productive than small countries. 
C)  large countries have higher incomes than smaller countries. 
D)  large countries will have terms of trade near the opportunity costs of the small country. 
E)  All of the above

Question 5

What is the commodity terms of trade? Why is it sometimes used as a measure of changes in the gains from trade? Explain some of the problems associated with this sort of use.

Accepted Answer

The commodity terms of trade refers to t

Question 6

Consider the data in the following table.
  
-Referring to the table above, the opportunity cost of producing a computer in Country A is:

Accepted Answer

A)  50 bushels of wheat. 
B)  30 bushels of wheat. 
C)  10 bushels of wheat. 
D)  5 bushels of wheat. 
E)  none of the above 
A)  50 bushels of wheat. 
B)  30 bushels of wheat. 
C)  10 bushels of wheat. 
D)  5 bushels of wheat. 
E)  none of the above

Question 7

Suppose a worker in Bolivia can produce 5 shoes per day and a worker in Chile can produce 1 shoe per day. The analogous figures for rings are 15 per day and 5 per day. Show and explain which country has an absolute advantage in which products. Explain which country has a comparative advantage in which product?

Accepted Answer

Bolivia has an absolute advantage in bot

Question 8

Countries that avoid trading with other countries are referred to as being in a state of autarky.

Accepted Answer

A) True 
 B)False

Question 9

Given free trade, a small country tends to benefit the most from trade because:

Accepted Answer

A)  small countries are more productive than large countries. 
B)  small countries are less productive than large countries. 
C)  small countries have lower incomes than larger countries. 
D)  small countries will have terms of trade near the opportunity costs of the large country. 
E)  None of the above 
A)  small countries are more productive than large countries. 
B)  small countries are less productive than large countries. 
C)  small countries have lower incomes than larger countries. 
D)  small countries will have terms of trade near the opportunity costs of the large country. 
E)  None of the above

Question 10

The commodity terms of trade is calculated by:

Accepted Answer

A)  (price of exports/price of imports) - 100. 
B)  (price of exports/price of imports) * 100. 
C)  (price of imports/price of exports) - 100. 
D)  (price of imports/price of exports) * 100. 
E)  None of the above 
A)  (price of exports/price of imports) - 100. 
B)  (price of exports/price of imports) * 100. 
C)  (price of imports/price of exports) - 100. 
D)  (price of imports/price of exports) * 100. 
E)  None of the above

Question 11

An improvement of a country's terms of trade caused by a change in international conditions always improves a country's overall welfare.

Accepted Answer

A) True 
 B)False

Question 12

If a large and a small country trade with one another the large country is likely to receive all of the gains from trade.

Accepted Answer

A) True 
 B)False

Question 13

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day.
-A price ratio of 1SB=2.9PB would be good for both countries, but better for Canada than Guatemala.

Accepted Answer

A) True 
 B)False

Question 14

Consider the data in the following table.
  
-Referring to the table above, the opportunity cost of producing a computer in Country A is:

Accepted Answer

A)  40 bushels of wheat. 
B)  30 bushels of wheat. 
C)  6 bushels of wheat. 
D)  4 bushels of wheat. 
E)  2 bushels of wheat. 
A)  40 bushels of wheat. 
B)  30 bushels of wheat. 
C)  6 bushels of wheat. 
D)  4 bushels of wheat. 
E)  2 bushels of wheat.

Question 15

According to the law of increasing costs:

Accepted Answer

A)  the more one is willing to pay for resources the larger the level of production. 
B)  increasing production of a good will cause the price of the good to rise. 
C)  in order to produce additional units of a good it is necessary to forego. increasingly larger amount of an alternative good. 
D)  in order to produce additional units of a good it is necessary to forego a constant amount of an alternative good. 
E)  constant returns to scale prevails. 
A)  the more one is willing to pay for resources the larger the level of production. 
B)  increasing production of a good will cause the price of the good to rise. 
C)  in order to produce additional units of a good it is necessary to forego. increasingly larger amount of an alternative good. 
D)  in order to produce additional units of a good it is necessary to forego a constant amount of an alternative good. 
E)  constant returns to scale prevails.

Question 16

Consider the data in the following table.
  
-Referring to the table above, Country B has a comparative advantage in the production of:

Accepted Answer

A)  computers. 
B)  wheat. 
C)  both computers and wheat. 
D)  neither computers nor wheat. 
E)  None of the above 
A)  computers. 
B)  wheat. 
C)  both computers and wheat. 
D)  neither computers nor wheat. 
E)  None of the above

Question 17

Consider the data in the following table.
  
-Referring to the table above, Country A has a comparative advantage in the production of:

Accepted Answer

A)  computers. 
B)  wheat. 
C)  both computers and wheat. 
D)  neither computers nor wheat. 
E)  None of the above 
A)  computers. 
B)  wheat. 
C)  both computers and wheat. 
D)  neither computers nor wheat. 
E)  None of the above

Question 18

If the terms of trade are not between the opportunity costs for the two countries, then the two countries will have no reason to trade.

Accepted Answer

A) True 
 B)False

Question 19

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day.
-The cost of skateboards in terms of peanut butter in Guatemala is 1SB=3PB.

Accepted Answer

A) True 
 B)False

Question 20

If the price difference for the same good in two countries is large enough, then only one country would gain from trade.

Accepted Answer

A) True 
 B)False

Constant costs leads countries engaging in trade to completely specialize in the production of the good that they export.

With free trade under constant costs:

An improvement of a country's terms of trade caused by a change in domestic conditions always improves a country's overall welfare

Given free trade, a large country tends to benefit the least from trade because:

What is the commodity terms of trade? Why is it sometimes used as a measure of changes in the gains from trade? Explain some of the problems associated with this sort of use.

Consider the data in the following table. -Referring to the table above, the opportunity cost of producing a computer in Country A is:

Countries that avoid trading with other countries are referred to as being in a state of autarky.

Given free trade, a small country tends to benefit the most from trade because:

The commodity terms of trade is calculated by:

An improvement of a country's terms of trade caused by a change in international conditions always improves a country's overall welfare.

If a large and a small country trade with one another the large country is likely to receive all of the gains from trade.

Consider the data in the following table. -Referring to the table above, the opportunity cost of producing a computer in Country A is:

According to the law of increasing costs:

Consider the data in the following table. -Referring to the table above, Country B has a comparative advantage in the production of:

Consider the data in the following table. -Referring to the table above, Country A has a comparative advantage in the production of:

If the terms of trade are not between the opportunity costs for the two countries, then the two countries will have no reason to trade.

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day. -The cost of skateboards in terms of peanut butter in Guatemala is 1SB=3PB.

If the price difference for the same good in two countries is large enough, then only one country would gain from trade.

Introduction: An Overview of the World Economy

Why Countries Trade

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters

Exam 3: Comparative Advantage and the Production Possibilities Frontier

Constant costs leads countries engaging in trade to completely specialize in the production of the good that they export.

With free trade under constant costs:

An improvement of a country's terms of trade caused by a change in domestic conditions always improves a country's overall welfare

Given free trade, a large country tends to benefit the least from trade because:

What is the commodity terms of trade? Why is it sometimes used as a measure of changes in the gains from trade? Explain some of the problems associated with this sort of use.

Consider the data in the following table. -Referring to the table above, the opportunity cost of producing a computer in Country A is:

Countries that avoid trading with other countries are referred to as being in a state of autarky.

Given free trade, a small country tends to benefit the most from trade because:

The commodity terms of trade is calculated by:

An improvement of a country's terms of trade caused by a change in international conditions always improves a country's overall welfare.

If a large and a small country trade with one another the large country is likely to receive all of the gains from trade.

Consider the data in the following table. -Referring to the table above, the opportunity cost of producing a computer in Country A is:

According to the law of increasing costs:

Consider the data in the following table. -Referring to the table above, Country B has a comparative advantage in the production of:

Consider the data in the following table. -Referring to the table above, Country A has a comparative advantage in the production of:

If the terms of trade are not between the opportunity costs for the two countries, then the two countries will have no reason to trade.

based on the following information. Suppose a worker in Canada can produce either 100 skateboards or 200 jars of peanut butter per day. A worker in Guatemala can produce 200 skateboards or 600 jars of peanut butter per day. -The cost of skateboards in terms of peanut butter in Guatemala is 1SB=3PB.

If the price difference for the same good in two countries is large enough, then only one country would gain from trade.

Introduction: An Overview of the World Economy

Why Countries Trade

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Capital Flows and the Developing Countries

Filters