Question 1

A nation should only import those goods for which it has

Accepted Answer

A) lower opportunity costs than its trading partner 
B) higher opportunity costs than its trading partner 
C) zero transaction costs 
D) lower costs of production than its trading partner 
E) absolute advantage in production compared to its trading partner 
A) lower opportunity costs than its trading partner 
B) higher opportunity costs than its trading partner 
C) zero transaction costs 
D) lower costs of production than its trading partner 
E) absolute advantage in production compared to its trading partner B

Question 2

Politically,one reason trade restrictions are common is that

Accepted Answer

A) the many beneficiaries of free trade each gain a small amount whereas the few losers,lose enough to lobby for restrictions. 
B) the beneficiaries of free trade collectively gain a small amount whereas the few losers,collectively lose much more. 
C) the few beneficiaries of free trade each gain a large amount and the many losers,lose enough to lobby for restrictions. 
D) foreign corporations bribe politicians. 
A) the many beneficiaries of free trade each gain a small amount whereas the few losers,lose enough to lobby for restrictions. 
B) the beneficiaries of free trade collectively gain a small amount whereas the few losers,collectively lose much more. 
C) the few beneficiaries of free trade each gain a large amount and the many losers,lose enough to lobby for restrictions. 
D) foreign corporations bribe politicians. A

Question 3

When free international trade takes place,in accordance with a country's comparative advantage,

Accepted Answer

A) producers in export industries are likely to favor it because they sell a larger quantity at identical prices 
B) producers in export industries are likely to oppose it because they sell a larger quantity,which lowers prices in accordance with the laws of supply and demand 
C) producers in import industries are likely to favor it because they sell a larger quantity at only slightly depressed prices 
D) export industry workers are likely to favor it,import industry workers are likely to hate it 
E) consumers are likely to be of two minds: they hate the more expensive import goods,but they love the cheaper export goods 
A) producers in export industries are likely to favor it because they sell a larger quantity at identical prices 
B) producers in export industries are likely to oppose it because they sell a larger quantity,which lowers prices in accordance with the laws of supply and demand 
C) producers in import industries are likely to favor it because they sell a larger quantity at only slightly depressed prices 
D) export industry workers are likely to favor it,import industry workers are likely to hate it 
E) consumers are likely to be of two minds: they hate the more expensive import goods,but they love the cheaper export goods D

Question 4

One reason why there may be a bias against free trade is that

Accepted Answer

A) those harmed by trade have a powerful incentive to lobby against it 
B) people prefer domestically-produced goods to foreign-produced goods 
C) people prefer foreign-produced goods to domestically-produced goods 
D) the terms of trade are too low 
E) the exchange rate is too high 
A) those harmed by trade have a powerful incentive to lobby against it 
B) people prefer domestically-produced goods to foreign-produced goods 
C) people prefer foreign-produced goods to domestically-produced goods 
D) the terms of trade are too low 
E) the exchange rate is too high

Question 5

If the opportunity cost of a television set equals 20 cameras in China,but 10 cameras in Japan,then we know

Accepted Answer

A) all of the following 
B) that China has a comparative advantage in producing cameras 
C) that Japan has a comparative advantage in producing TV sets 
D) that Japan may well have an absolute disadvantage in producing both goods 
E) that market exchange of 1 TV set for 15 cameras would produce not only mutually beneficial trade,but would also split the gains from trade equally between the two countries 
A) all of the following 
B) that China has a comparative advantage in producing cameras 
C) that Japan has a comparative advantage in producing TV sets 
D) that Japan may well have an absolute disadvantage in producing both goods 
E) that market exchange of 1 TV set for 15 cameras would produce not only mutually beneficial trade,but would also split the gains from trade equally between the two countries

Question 6

In an Israeli factory,each worker can produce 2/5 of a shirt in an hour or 1/10 of a pair of pants in an hour.If there are 500 workers in the factory,what is opportunity cost of producing one shirt?

Accepted Answer

A) 1 pair of pants 
B) 4 pairs of pants 
C) 1/2 pair of pants 
D) 1/4 pair of pants 
E) 2 pairs of pants 
A) 1 pair of pants 
B) 4 pairs of pants 
C) 1/2 pair of pants 
D) 1/4 pair of pants 
E) 2 pairs of pants

Question 7

A quota is a

Accepted Answer

A) tax imposed on each unit of an exported good 
B) tax imposed on each unit of an imported good 
C) change in the terms of trade between two nations 
D) result of opportunity cost differentials between two nations 
E) restriction on the quantity of a good that may be imported 
A) tax imposed on each unit of an exported good 
B) tax imposed on each unit of an imported good 
C) change in the terms of trade between two nations 
D) result of opportunity cost differentials between two nations 
E) restriction on the quantity of a good that may be imported

Question 8

Economists generally oppose trade restrictions such as tariffs and quotas;however,if one these devices must be used,economists generally prefer tariffs to quotas.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that a nation has an absolute advantage in the production of all goods.In this instance,it

Accepted Answer

A) has no incentive to engage in international trade 
B) is producing at a point on its production possibilities frontier 
C) has no unemployment 
D) also has a comparative advantage in the production of those goods 
E) should specialize in producing the goods for which it has a lower opportunity cost than other countries 
A) has no incentive to engage in international trade 
B) is producing at a point on its production possibilities frontier 
C) has no unemployment 
D) also has a comparative advantage in the production of those goods 
E) should specialize in producing the goods for which it has a lower opportunity cost than other countries

Question 10

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one vase is

Accepted Answer

A) 2 statues 
B) 8 statues 
C) 1/2 of a statue 
D) 16 statues 
E) 1/16 of a statue 
A) 2 statues 
B) 8 statues 
C) 1/2 of a statue 
D) 16 statues 
E) 1/16 of a statue

Question 11

Figure 16-3
Quantities of goods that can be produced in one day with available resources:
  
-In Figure 15-3,the opportunity cost in Panama of producing one additional rug is

Accepted Answer

A) 4 bicycles 
B) 5 bicycles 
C) 1/4 of a bicycle 
D) 1/5 of a bicycle 
E) 2 bicycles 
A) 4 bicycles 
B) 5 bicycles 
C) 1/4 of a bicycle 
D) 1/5 of a bicycle 
E) 2 bicycles

Question 12

If Country A exports a good to Country B,the prices of the good in Country A will ______ and the prices of the good in Country B will ________.

Accepted Answer

A) increase;increase 
B) decrease;decrease 
C) increase;decrease 
D) decrease;increase 
E) stay the same;increase 
A) increase;increase 
B) decrease;decrease 
C) increase;decrease 
D) decrease;increase 
E) stay the same;increase

Question 13

Figure 16-2
Number of workers needed to produce one unit of each of the following goods:
  
-In Figure 16-2,what can be said regarding comparative advantage?

Accepted Answer

A) Colombia has a comparative advantage in producing radios. 
B) Korea has a comparative advantage in producing both radios and calculators. 
C) Korea has a comparative advantage in producing calculators. 
D) Colombia has a comparative advantage in producing calculators. 
E) Colombia has a comparative advantage in producing both radios and calculators. 
A) Colombia has a comparative advantage in producing radios. 
B) Korea has a comparative advantage in producing both radios and calculators. 
C) Korea has a comparative advantage in producing calculators. 
D) Colombia has a comparative advantage in producing calculators. 
E) Colombia has a comparative advantage in producing both radios and calculators.

Question 14

If the opportunity cost of production rises as more of a good is produced,

Accepted Answer

A) the terms of trade will be independent of opportunity costs 
B) the production possibilities curve will be a straight line 
C) a country will specialize in producing only those goods in which it has a comparative advantage 
D) a country should produce any good in which it has an absolute advantage 
E) a country may not specialize completely in the goods in which it has comparative advantage 
A) the terms of trade will be independent of opportunity costs 
B) the production possibilities curve will be a straight line 
C) a country will specialize in producing only those goods in which it has a comparative advantage 
D) a country should produce any good in which it has an absolute advantage 
E) a country may not specialize completely in the goods in which it has comparative advantage

Question 15

Which of the following statements about quotas is correct?

Accepted Answer

A) They benefit domestic consumers through lower prices. 
B) They benefit domestic producers through higher prices. 
C) They raise world output. 
D) They cause outward shifts in the domestic and foreign production possibilities frontiers. 
E) They benefit domestic producers through increased competition that stimulates innovation. 
A) They benefit domestic consumers through lower prices. 
B) They benefit domestic producers through higher prices. 
C) They raise world output. 
D) They cause outward shifts in the domestic and foreign production possibilities frontiers. 
E) They benefit domestic producers through increased competition that stimulates innovation.

Question 16

International trade based on the concept of comparative advantage allows trading partners to be better off than if they did not trade.

Accepted Answer

A) True 
 B)False

Question 17

A tax that is imposed on each unit of an imported good is known as a(n)

Accepted Answer

A) quota 
B) ad valorem quota 
C) implicit quota 
D) tariff 
E) subsidy 
A) quota 
B) ad valorem quota 
C) implicit quota 
D) tariff 
E) subsidy

Question 18

Once a nation has been producing a good or service for some time,

Accepted Answer

A) its supply curve for that product is vertical 
B) its supply curve for that product is horizontal at the world price 
C) it often develops a comparative advantage in producing that good or service 
D) its moves along its production possibilities frontier and produces more of it 
E) its production possibilities frontier shifts outward 
A) its supply curve for that product is vertical 
B) its supply curve for that product is horizontal at the world price 
C) it often develops a comparative advantage in producing that good or service 
D) its moves along its production possibilities frontier and produces more of it 
E) its production possibilities frontier shifts outward

Question 19

The United States imposes a quota on sugar imports

Accepted Answer

A) because sugar is considered unhealthy 
B) because sugar cannot be produced in the U.S. 
C) to avoid having to pay billions of dollars annually to support domestic sugar prices 
D) to avoid having to pay billions of dollars annually to support foreign sugar prices 
E) because a tariff would not be efficient 
A) because sugar is considered unhealthy 
B) because sugar cannot be produced in the U.S. 
C) to avoid having to pay billions of dollars annually to support domestic sugar prices 
D) to avoid having to pay billions of dollars annually to support foreign sugar prices 
E) because a tariff would not be efficient

Question 20

A tariff

Accepted Answer

A) is usually set by domestic producers of a good 
B) can be either a fixed dollar amount or a percentage of a good's value 
C) decreases domestic price for a good,holding all else constant 
D) improves economic efficiency in the importing nation 
E) improves economic efficiency in the exporting nation 
A) is usually set by domestic producers of a good 
B) can be either a fixed dollar amount or a percentage of a good's value 
C) decreases domestic price for a good,holding all else constant 
D) improves economic efficiency in the importing nation 
E) improves economic efficiency in the exporting nation

A nation should only import those goods for which it has

Politically,one reason trade restrictions are common is that

When free international trade takes place,in accordance with a country's comparative advantage,

One reason why there may be a bias against free trade is that

If the opportunity cost of a television set equals 20 cameras in China,but 10 cameras in Japan,then we know

In an Israeli factory,each worker can produce 2/5 of a shirt in an hour or 1/10 of a pair of pants in an hour.If there are 500 workers in the factory,what is opportunity cost of producing one shirt?

A quota is a

Economists generally oppose trade restrictions such as tariffs and quotas;however,if one these devices must be used,economists generally prefer tariffs to quotas.

Suppose that a nation has an absolute advantage in the production of all goods.In this instance,it

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one vase is

Figure 16-3 Quantities of goods that can be produced in one day with available resources: -In Figure 15-3,the opportunity cost in Panama of producing one additional rug is

If Country A exports a good to Country B,the prices of the good in Country A will and the prices of the good in Country B will __.

Figure 16-2 Number of workers needed to produce one unit of each of the following goods: -In Figure 16-2,what can be said regarding comparative advantage?

If the opportunity cost of production rises as more of a good is produced,

Which of the following statements about quotas is correct?

International trade based on the concept of comparative advantage allows trading partners to be better off than if they did not trade.

A tax that is imposed on each unit of an imported good is known as a(n)

Once a nation has been producing a good or service for some time,

The United States imposes a quota on sugar imports

A tariff

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Filters

Exam 17: Comparative Advantage and the Gains From International Trade

A nation should only import those goods for which it has

Politically,one reason trade restrictions are common is that

When free international trade takes place,in accordance with a country's comparative advantage,

One reason why there may be a bias against free trade is that

If the opportunity cost of a television set equals 20 cameras in China,but 10 cameras in Japan,then we know

In an Israeli factory,each worker can produce 2/5 of a shirt in an hour or 1/10 of a pair of pants in an hour.If there are 500 workers in the factory,what is opportunity cost of producing one shirt?

A quota is a

Economists generally oppose trade restrictions such as tariffs and quotas;however,if one these devices must be used,economists generally prefer tariffs to quotas.

Suppose that a nation has an absolute advantage in the production of all goods.In this instance,it

In a Mexican factory,each worker can produce 1/8 of a vase or 1/16 of a statue per hour.If there are 400 workers at the factory,the opportunity cost of one vase is

Figure 16-3 Quantities of goods that can be produced in one day with available resources: -In Figure 15-3,the opportunity cost in Panama of producing one additional rug is

If Country A exports a good to Country B,the prices of the good in Country A will ______ and the prices of the good in Country B will ________.

Figure 16-2 Number of workers needed to produce one unit of each of the following goods: -In Figure 16-2,what can be said regarding comparative advantage?

If the opportunity cost of production rises as more of a good is produced,

Which of the following statements about quotas is correct?

International trade based on the concept of comparative advantage allows trading partners to be better off than if they did not trade.

A tax that is imposed on each unit of an imported good is known as a(n)

Once a nation has been producing a good or service for some time,

The United States imposes a quota on sugar imports

A tariff

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Filters

If Country A exports a good to Country B,the prices of the good in Country A will and the prices of the good in Country B will __.