Question 1

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

Accepted Answer

A) they do not want to offend their employers who want them. 
B) politicians lobby to convince workers the restrictions will make them better off. 
C) they believe the restrictions will protect their jobs. 
D) they don't understand that the restrictions will threaten their jobs. 
A) they do not want to offend their employers who want them. 
B) politicians lobby to convince workers the restrictions will make them better off. 
C) they believe the restrictions will protect their jobs. 
D) they don't understand that the restrictions will threaten their jobs.

Question 2

The simple trade model demonstrates that countries can expand consumption by specializing in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialization in production.State three reasons why this is case.

Accepted Answer

Three reasons outlined in the text are:

Question 3

Figure 7.2
   
Suppose the Canadian government imposes a $0.40 per pound tariff on rice imports. Figure 7.2 shows the impact of this tariff.
-Refer to Figure 7.2.If the tariff was replaced by a quota which limited rice imports to 16 thousand kilograms, the amount of revenue received by rice importers would equal

Accepted Answer

A) $6.4 thousand. 
B) $9.6 thousand. 
C) $16 thousand. 
D) $19.8 thousand. 
A) $6.4 thousand. 
B) $9.6 thousand. 
C) $16 thousand. 
D) $19.8 thousand.

Question 4

Exports are domestically produced goods and services

Accepted Answer

A) sold to other countries. 
B) sold to the government. 
C) sold at home. 
D) which are used to produce other goods and services. 
A) sold to other countries. 
B) sold to the government. 
C) sold at home. 
D) which are used to produce other goods and services.

Question 5

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

Accepted Answer

A) a large supply of natural resources. 
B) a large supply of unskilled workers and relatively little capital. 
C) investment in capital used to produce clothing. 
D) superior process technology. 
A) a large supply of natural resources. 
B) a large supply of unskilled workers and relatively little capital. 
C) investment in capital used to produce clothing. 
D) superior process technology.

Question 6

If Japanese workers are more productive than French workers, then trade between Japan and France

Accepted Answer

A) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. 
B) cannot take place because Japanese goods and services will be less expensive than French goods and services. 
C) cannot take place until French workers become more productive. 
D) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. 
A) can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. 
B) cannot take place because Japanese goods and services will be less expensive than French goods and services. 
C) cannot take place until French workers become more productive. 
D) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.

Question 7

Disagreements about whether the Canadian government should regulate international trade

Accepted Answer

A) began during the Great Depression. 
B) began after World War I when government officials no longer believed in isolationism. 
C) date back to before Canada was a country. 
D) did not occur until the American War of Independence. 
A) began during the Great Depression. 
B) began after World War I when government officials no longer believed in isolationism. 
C) date back to before Canada was a country. 
D) did not occur until the American War of Independence.

Question 8

Which of the following statements is true?

Accepted Answer

A) Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B) China plays little role in global trade. 
C) Most of the leading exporting countries are high-income countries. 
D) All sectors of the Canadian economy are affected equally by international trade. 
A) Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs. 
B) China plays little role in global trade. 
C) Most of the leading exporting countries are high-income countries. 
D) All sectors of the Canadian economy are affected equally by international trade.

Question 9

If the opportunity cost of production for two goods is different between two countries, then

Accepted Answer

A) trade cannot benefit either country. 
B) only one country can be made better off by trade. 
C) mutually beneficial trade is possible. 
D) trade will only benefit both countries if one can lower its opportunity costs. 
A) trade cannot benefit either country. 
B) only one country can be made better off by trade. 
C) mutually beneficial trade is possible. 
D) trade will only benefit both countries if one can lower its opportunity costs.

Question 10

Figure 7.1
   
Figure 7.1 shows Canadian demand and supply for leather footwear.
-Refer to Figure 7.1.Suppose the government allows imports of leather footwear into the United States.What happens to the market price and what is the quantity of imports?

Accepted Answer

A) The price equals $24 and imports equal 20 units. 
B) The price falls to $24 and imports equal 5 units. 
C) The price falls to $18 and imports equal 15 units. 
D) The price equals $18 and imports equal 10 units. 
A) The price equals $24 and imports equal 20 units. 
B) The price falls to $24 and imports equal 5 units. 
C) The price falls to $18 and imports equal 15 units. 
D) The price equals $18 and imports equal 10 units.

Question 11

Figure 7.2
   
Suppose the Canadian government imposes a $0.40 per pound tariff on rice imports. Figure 7.2 shows the impact of this tariff.
-Refer to Figure 7.2.As a result of the tariff, domestic producers increase their quantity supplied by

Accepted Answer

A) 31 thousand kilograms of rice. 
B) 22 thousand kilograms of rice. 
C) 15 thousand kilograms of rice. 
D) 6 thousand kilograms of rice. 
A) 31 thousand kilograms of rice. 
B) 22 thousand kilograms of rice. 
C) 15 thousand kilograms of rice. 
D) 6 thousand kilograms of rice.

Question 12

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Accepted Answer

A) a non-tariff trade barrier. 
B) an export quota. 
C) an import quota. 
D) a voluntary export restraint. 
A) a non-tariff trade barrier. 
B) an export quota. 
C) an import quota. 
D) a voluntary export restraint.

Question 13

Table 7.1
 $\begin{array}{|c|c|c|} 
\hline& \text { Bathing } & \text { Grooming } \
\hline \text { Linda } & 60 & 20 \
\hline \text { Sandy } & 50 & 25 \
\hline
\end{array}$ 
Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 7.1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 7.1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Sandy has a greater opportunity cost than Linda for dog grooming. 
B) Sandy's opportunity cost for dog grooming is less than Linda's. 
C) Linda has a greater opportunity cost than Sandy for dog bathing. 
D) Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's. 
A) Sandy has a greater opportunity cost than Linda for dog grooming. 
B) Sandy's opportunity cost for dog grooming is less than Linda's. 
C) Linda has a greater opportunity cost than Sandy for dog bathing. 
D) Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's.

Question 14

Free trade ________ living standards by ________ economic efficiency.

Accepted Answer

A) raises; increasing 
B) lowers; decreasing 
C) raises; equalizing 
D) lowers; eliminating 
A) raises; increasing 
B) lowers; decreasing 
C) raises; equalizing 
D) lowers; eliminating

Question 15

Under many trade agreements signed between countries, countries are allowed to impose tariffs on imports if foreign firms are selling products below their production cost.This is exactly what occurred when the United States raised the tariff on wire hangers imported from China.This tariff

Accepted Answer

A) increased wages in the Chinese wire hanger industry and increased imports of Chinese wire hangers to the United States. 
B) decreased imports of chinese wire hangers to the United States and increased exports of U.S. wire hangers to China. 
C) saved some jobs in the U.S. wire hanger industry, but increased costs and possibly cost jobs in the U.S. dry cleaning industry. 
D) increased costs in the Chinese wire hanger industry and decreased costs in the U.S. wire hanger industry. 
A) increased wages in the Chinese wire hanger industry and increased imports of Chinese wire hangers to the United States. 
B) decreased imports of chinese wire hangers to the United States and increased exports of U.S. wire hangers to China. 
C) saved some jobs in the U.S. wire hanger industry, but increased costs and possibly cost jobs in the U.S. dry cleaning industry. 
D) increased costs in the Chinese wire hanger industry and decreased costs in the U.S. wire hanger industry.

Question 16

Figure 7.3
   
Assume that the Canadian government limits the import of peanuts.
-Refer to Figure 7.3.With a quota in place, what is the quantity consumed in the domestic market and how much of this is supplied by domestic producers?

Accepted Answer

A) Domestic consumption equals 28 thousand kilograms of which 18 thousand kilograms are produced by domestic producers. 
B) Domestic consumption equals 40 thousand kilograms of which 22 thousand kilograms are produced by domestic producers. 
C) Domestic consumption equals 34 thousand kilograms of which 16 thousand kilograms are produced by domestic producers. 
D) Domestic consumption equals 34 thousand kilograms of which 18 thousand kilograms are produced by domestic producers. 
A) Domestic consumption equals 28 thousand kilograms of which 18 thousand kilograms are produced by domestic producers. 
B) Domestic consumption equals 40 thousand kilograms of which 22 thousand kilograms are produced by domestic producers. 
C) Domestic consumption equals 34 thousand kilograms of which 16 thousand kilograms are produced by domestic producers. 
D) Domestic consumption equals 34 thousand kilograms of which 18 thousand kilograms are produced by domestic producers.

Question 17

An economic principle that explains why countries produce different goods and services is

Accepted Answer

A) absolute advantage. 
B) trade as a percentage of GDP. 
C) comparative advantage. 
D) NAFTA. 
A) absolute advantage. 
B) trade as a percentage of GDP. 
C) comparative advantage. 
D) NAFTA.

Question 18

Whenever a buyer and a seller agree to trade,

Accepted Answer

A) the agreement is made based on absolute advantage. 
B) they must have identical opportunity costs in producing their respective products. 
C) one party will always be worse off. 
D) both must believe they will be made better off. 
A) the agreement is made based on absolute advantage. 
B) they must have identical opportunity costs in producing their respective products. 
C) one party will always be worse off. 
D) both must believe they will be made better off.

Question 19

Bay Street, in Toronto, is the heart of the Canadian financial system, where banks, brokerage houses, other financial firms, and the Toronto Stock Exchange are all located.What is the reason for Toronto's comparative advantage in the financial market?

Accepted Answer

A) the development of superior information technology 
B) an abundant supply of skilled labour 
C) Toronto has a central location in the country 
D) external economies 
A) the development of superior information technology 
B) an abundant supply of skilled labour 
C) Toronto has a central location in the country 
D) external economies

Question 20

Figure 7.3
   
Assume that the Canadian government limits the import of peanuts.
-Refer to Figure 7.3.What is the area of consumer surplus after the imposition of the quota?

Accepted Answer

A) A + G + H 
B) G + H + E + I+ J + M 
C) G + H 
D) A 
A) A + G + H 
B) G + H + E + I+ J + M 
C) G + H 
D) A

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

The simple trade model demonstrates that countries can expand consumption by specializing in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialization in production.State three reasons why this is case.

Exports are domestically produced goods and services

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

If Japanese workers are more productive than French workers, then trade between Japan and France

Disagreements about whether the Canadian government should regulate international trade

Which of the following statements is true?

If the opportunity cost of production for two goods is different between two countries, then

Figure 7.1 Figure 7.1 shows Canadian demand and supply for leather footwear. -Refer to Figure 7.1.Suppose the government allows imports of leather footwear into the United States.What happens to the market price and what is the quantity of imports?

Figure 7.2 Suppose the Canadian government imposes a $0.40 per pound tariff on rice imports. Figure 7.2 shows the impact of this tariff. -Refer to Figure 7.2.As a result of the tariff, domestic producers increase their quantity supplied by

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Table 7.1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 7.1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 7.1.Select the statement that accurately interprets the data in the table.

Free trade living standards by economic efficiency.

Under many trade agreements signed between countries, countries are allowed to impose tariffs on imports if foreign firms are selling products below their production cost.This is exactly what occurred when the United States raised the tariff on wire hangers imported from China.This tariff

Figure 7.3 Assume that the Canadian government limits the import of peanuts. -Refer to Figure 7.3.With a quota in place, what is the quantity consumed in the domestic market and how much of this is supplied by domestic producers?

An economic principle that explains why countries produce different goods and services is

Whenever a buyer and a seller agree to trade,

Bay Street, in Toronto, is the heart of the Canadian financial system, where banks, brokerage houses, other financial firms, and the Toronto Stock Exchange are all located.What is the reason for Toronto's comparative advantage in the financial market?

Figure 7.3 Assume that the Canadian government limits the import of peanuts. -Refer to Figure 7.3.What is the area of consumer surplus after the imposition of the quota?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 7: Comparative Advantage and the Gains From International Trade

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

The simple trade model demonstrates that countries can expand consumption by specializing in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialization in production.State three reasons why this is case.

Exports are domestically produced goods and services

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

If Japanese workers are more productive than French workers, then trade between Japan and France

Disagreements about whether the Canadian government should regulate international trade

Which of the following statements is true?

If the opportunity cost of production for two goods is different between two countries, then

Figure 7.1 Figure 7.1 shows Canadian demand and supply for leather footwear. -Refer to Figure 7.1.Suppose the government allows imports of leather footwear into the United States.What happens to the market price and what is the quantity of imports?

Figure 7.2 Suppose the Canadian government imposes a $0.40 per pound tariff on rice imports. Figure 7.2 shows the impact of this tariff. -Refer to Figure 7.2.As a result of the tariff, domestic producers increase their quantity supplied by

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Table 7.1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 7.1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 7.1.Select the statement that accurately interprets the data in the table.

Free trade ________ living standards by ________ economic efficiency.

Under many trade agreements signed between countries, countries are allowed to impose tariffs on imports if foreign firms are selling products below their production cost.This is exactly what occurred when the United States raised the tariff on wire hangers imported from China.This tariff

Figure 7.3 Assume that the Canadian government limits the import of peanuts. -Refer to Figure 7.3.With a quota in place, what is the quantity consumed in the domestic market and how much of this is supplied by domestic producers?

An economic principle that explains why countries produce different goods and services is

Whenever a buyer and a seller agree to trade,

Bay Street, in Toronto, is the heart of the Canadian financial system, where banks, brokerage houses, other financial firms, and the Toronto Stock Exchange are all located.What is the reason for Toronto's comparative advantage in the financial market?

Figure 7.3 Assume that the Canadian government limits the import of peanuts. -Refer to Figure 7.3.What is the area of consumer surplus after the imposition of the quota?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Free trade living standards by economic efficiency.