Question 1

When a nation begins to export a good,

Accepted Answer

A) the domestic price of that good falls 
B) less of that good is produced domestically 
C) the domestic producers are made better off 
D) the domestic consumers are made better off 
E) both domestic and foreign consumers will purchase more of it 
A) the domestic price of that good falls 
B) less of that good is produced domestically 
C) the domestic producers are made better off 
D) the domestic consumers are made better off 
E) both domestic and foreign consumers will purchase more of it

Question 2

The terms of trade

Accepted Answer

A) equal the equilibrium price in a competitive market 
B) equal a nation's imports minus its exports 
C) determine whether specialization according to comparative advantage is economically rational 
D) are equal to 1.0 in market equilibrium 
E) determine how the gains from international trade are distributed among countries 
A) equal the equilibrium price in a competitive market 
B) equal a nation's imports minus its exports 
C) determine whether specialization according to comparative advantage is economically rational 
D) are equal to 1.0 in market equilibrium 
E) determine how the gains from international trade are distributed among countries

Question 3

The terms of trade

Accepted Answer

A) equal the ratio of opportunity costs of production in two countries 
B) equal the ratio of marginal production costs in two countries 
C) is the quantity of one good that is exchanged for one unit of another good 
D) are determined by absolute advantage 
E) equal the ratio of average production costs in two countries 
A) equal the ratio of opportunity costs of production in two countries 
B) equal the ratio of marginal production costs in two countries 
C) is the quantity of one good that is exchanged for one unit of another good 
D) are determined by absolute advantage 
E) equal the ratio of average production costs in two countries

Question 4

For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?

Accepted Answer

A) The opportunity cost of producing watches is lower in Switzerland. 
B) The opportunity cost of producing cheese is lower in Switzerland. 
C) The opportunity cost of producing watches is the same in both countries. 
D) It is impossible to compare costs because the two countries are not the same size. 
E) In Germany,the cost of a pound of cheese is one watch. 
A) The opportunity cost of producing watches is lower in Switzerland. 
B) The opportunity cost of producing cheese is lower in Switzerland. 
C) The opportunity cost of producing watches is the same in both countries. 
D) It is impossible to compare costs because the two countries are not the same size. 
E) In Germany,the cost of a pound of cheese is one watch.

Question 5

Assume that Chile can produce one pound of coffee or 40 pillows in an hour,and that the United States can produce one pound of coffee or 20 pillows in an hour,

Accepted Answer

A) the terms of trade should be between 20 and 40 pillows per pound of coffee,and the United States should produce both coffee and pillows 
B) the terms of trade should be between 20 and 40 pillows per pound of coffee,and Chile should produce pillows 
C) the terms of trade should be between 20 and 40 pillows per pound of coffee,and Chile should produce coffee 
D) the terms of trade should exceed 40 pillows per pound of coffee,and Chile should produce coffee 
E) no trade will occur,since the United States does not have an absolute advantage in producing either good 
A) the terms of trade should be between 20 and 40 pillows per pound of coffee,and the United States should produce both coffee and pillows 
B) the terms of trade should be between 20 and 40 pillows per pound of coffee,and Chile should produce pillows 
C) the terms of trade should be between 20 and 40 pillows per pound of coffee,and Chile should produce coffee 
D) the terms of trade should exceed 40 pillows per pound of coffee,and Chile should produce coffee 
E) no trade will occur,since the United States does not have an absolute advantage in producing either good

Question 6

A tariff is

Accepted Answer

A) a law restricting the quantity of a good that may be imported 
B) a tax imposed on imports 
C) a penalty imposed on consumers for supplying goods to a market 
D) the terms of trade between two nations 
E) the ratio of opportunity costs in two nations 
A) a law restricting the quantity of a good that may be imported 
B) a tax imposed on imports 
C) a penalty imposed on consumers for supplying goods to a market 
D) the terms of trade between two nations 
E) the ratio of opportunity costs in two nations

Question 7

Protectionism arises because

Accepted Answer

A) people misunderstand the benefits of free trade 
B) trade generally harms some groups in society 
C) the costs of free trade outweigh the benefits for all groups in society 
D) the costs of trade for both exporting and importing nations outweigh the benefits 
E) of a lack of comparative advantage 
A) people misunderstand the benefits of free trade 
B) trade generally harms some groups in society 
C) the costs of free trade outweigh the benefits for all groups in society 
D) the costs of trade for both exporting and importing nations outweigh the benefits 
E) of a lack of comparative advantage

Question 8

If goods are produced abroad but consumed domestically,

Accepted Answer

A) those goods are termed imports 
B) international trade has not occurred 
C) the domestic economy is economically inefficient 
D) there are no gains from specialization 
E) those goods are termed exports 
A) those goods are termed imports 
B) international trade has not occurred 
C) the domestic economy is economically inefficient 
D) there are no gains from specialization 
E) those goods are termed exports

Question 9

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 statue is

Accepted Answer

A) 1/2 of a vase 
B) 1/8 of a vase 
C) 8 vases 
D) 16 vases 
E) 2 vases 
A) 1/2 of a vase 
B) 1/8 of a vase 
C) 8 vases 
D) 16 vases 
E) 2 vases

Question 10

A low-productivity country will tend to avoid free trade with a high-productivity country.The low-productivity country will be exploited and lose industries in which it has a comparative advantage.

Accepted Answer

A) True 
 B)False

Question 11

Objections to free trade

Accepted Answer

A) often come from those who are harmed by trade 
B) make no sense because everyone benefits from trade 
C) usually arise outside of the United States 
D) are not economically rational 
E) reflect a lack of understanding of the benefits of international trade 
A) often come from those who are harmed by trade 
B) make no sense because everyone benefits from trade 
C) usually arise outside of the United States 
D) are not economically rational 
E) reflect a lack of understanding of the benefits of international trade

Question 12

A country that has relatively large amounts of a particular resource at its disposal

Accepted Answer

A) will tend to have an absolute advantage 
B) will trade the resource for some good in which that country has an absolute advantage 
C) will tend to have a comparative advantage in goods that make heavy use of that resource 
D) will trade the resource for some good in which that country has a comparative advantage 
E) will tend to have a low exchange rate 
A) will tend to have an absolute advantage 
B) will trade the resource for some good in which that country has an absolute advantage 
C) will tend to have a comparative advantage in goods that make heavy use of that resource 
D) will trade the resource for some good in which that country has a comparative advantage 
E) will tend to have a low exchange rate

Question 13

Figure 16-6
  
-According to Figure 16-6,which of the following statements is correct?

Accepted Answer

A) Chile has the both the absolute and comparative advantage in the production of bicycles. 
B) India has both the absolute and comparative advantage in the production of bicycles. 
C) Chile has the absolute advantage in the production of wagons but India has the comparative advantage. 
D) India has the absolute advantage in the production of bicycles but Chile has the comparative advantage. 
E) India has the absolute advantage in the production of wagons but Chile has the comparative advantage. 
A) Chile has the both the absolute and comparative advantage in the production of bicycles. 
B) India has both the absolute and comparative advantage in the production of bicycles. 
C) Chile has the absolute advantage in the production of wagons but India has the comparative advantage. 
D) India has the absolute advantage in the production of bicycles but Chile has the comparative advantage. 
E) India has the absolute advantage in the production of wagons but Chile has the comparative advantage.

Question 14

Tariffs

Accepted Answer

A) benefit consumers by lowering prices 
B) harm producers by decreasing competition in the product market 
C) harm consumers by increasing the quantity of goods available 
D) skew the terms of trade in favor of importing nations 
E) benefit domestic producers because they can charge higher prices and sell more output 
A) benefit consumers by lowering prices 
B) harm producers by decreasing competition in the product market 
C) harm consumers by increasing the quantity of goods available 
D) skew the terms of trade in favor of importing nations 
E) benefit domestic producers because they can charge higher prices and sell more output

Question 15

Tariffs are government policies designed to encourage international trade.

Accepted Answer

A) True 
 B)False

Question 16

If Country A exports a good to Country B,who is made better off?

Accepted Answer

A) The producers in Country A and the consumers in Country B 
B) The consumers in Country A and the consumers in Country B 
C) The producers in Country A and the producers in Country B 
D) The consumers in Country A and the producers in Country B 
E) Only the consumers in Country A will benefit from this trade agreement 
A) The producers in Country A and the consumers in Country B 
B) The consumers in Country A and the consumers in Country B 
C) The producers in Country A and the producers in Country B 
D) The consumers in Country A and the producers in Country B 
E) Only the consumers in Country A will benefit from this trade agreement

Question 17

Given an opportunity cost of 10 bicycles per 1 sewing machine in Germany and 20 bicycles per 2 sewing machines in Hungary,

Accepted Answer

A) Neither country has a comparative advantage in the production of either good. 
B) Germany has a comparative advantage in the production of sewing machines. 
C) Germany has an absolute advantage in the production of sewing machines. 
D) Hungary has an absolute advantage in the production of bicycles. 
E) Hungary produces more bicycles than Germany does. 
A) Neither country has a comparative advantage in the production of either good. 
B) Germany has a comparative advantage in the production of sewing machines. 
C) Germany has an absolute advantage in the production of sewing machines. 
D) Hungary has an absolute advantage in the production of bicycles. 
E) Hungary produces more bicycles than Germany does.

Question 18

One factor that might lead to reduced trade or incomplete specialization is

Accepted Answer

A) absolute advantage 
B) comparative advantage 
C) government-enacted barriers to trade 
D) constant opportunity cost 
E) decreasing opportunity cost 
A) absolute advantage 
B) comparative advantage 
C) government-enacted barriers to trade 
D) constant opportunity cost 
E) decreasing opportunity cost

Question 19

Figure 16-3
Quantities of goods that can be produced in one day with available resources:
  
-In Figure 16-3,if Costa Rica and Panama have identical resources,then Panama has a(n)

Accepted Answer

A) absolute advantage only in producing bicycles 
B) comparative advantage in producing both bicycles and rugs 
C) absolute advantage only in producing rugs 
D) comparative advantage only in producing rugs 
E) absolute advantage in producing both rugs and bicycles 
A) absolute advantage only in producing bicycles 
B) comparative advantage in producing both bicycles and rugs 
C) absolute advantage only in producing rugs 
D) comparative advantage only in producing rugs 
E) absolute advantage in producing both rugs and bicycles

Question 20

If countries have different resource endowments,trade is usually not possible.

Accepted Answer

A) True 
 B)False

When a nation begins to export a good,

The terms of trade

The terms of trade

For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?

Assume that Chile can produce one pound of coffee or 40 pillows in an hour,and that the United States can produce one pound of coffee or 20 pillows in an hour,

A tariff is

Protectionism arises because

If goods are produced abroad but consumed domestically,

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 statue is

A low-productivity country will tend to avoid free trade with a high-productivity country.The low-productivity country will be exploited and lose industries in which it has a comparative advantage.

Objections to free trade

A country that has relatively large amounts of a particular resource at its disposal

Figure 16-6 -According to Figure 16-6,which of the following statements is correct?

Tariffs

Tariffs are government policies designed to encourage international trade.

If Country A exports a good to Country B,who is made better off?

Given an opportunity cost of 10 bicycles per 1 sewing machine in Germany and 20 bicycles per 2 sewing machines in Hungary,

One factor that might lead to reduced trade or incomplete specialization is

Figure 16-3 Quantities of goods that can be produced in one day with available resources: -In Figure 16-3,if Costa Rica and Panama have identical resources,then Panama has a(n)

If countries have different resource endowments,trade is usually not possible.

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

When a nation begins to export a good,

The terms of trade

The terms of trade

For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?

Assume that Chile can produce one pound of coffee or 40 pillows in an hour,and that the United States can produce one pound of coffee or 20 pillows in an hour,

A tariff is

Protectionism arises because

If goods are produced abroad but consumed domestically,

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 statue is

A low-productivity country will tend to avoid free trade with a high-productivity country.The low-productivity country will be exploited and lose industries in which it has a comparative advantage.

Objections to free trade

A country that has relatively large amounts of a particular resource at its disposal

Figure 16-6 -According to Figure 16-6,which of the following statements is correct?

Tariffs

Tariffs are government policies designed to encourage international trade.

If Country A exports a good to Country B,who is made better off?

Given an opportunity cost of 10 bicycles per 1 sewing machine in Germany and 20 bicycles per 2 sewing machines in Hungary,

One factor that might lead to reduced trade or incomplete specialization is

Figure 16-3 Quantities of goods that can be produced in one day with available resources: -In Figure 16-3,if Costa Rica and Panama have identical resources,then Panama has a(n)

If countries have different resource endowments,trade is usually not possible.

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