Question 1

What is the difference between imports and exports?

Accepted Answer

Imports are goods and services

Question 2

Article Summary
According to JP Morgan Chase, increased shipments of Chinese steel over the past two years has generated a wave of protectionism from countries around the globe. Decreasing domestic demand and slower economic growth have resulted in a large increase in steel exports from China, driving down global prices. The almost doubling of Chinese steel exports since 2013 has steel mills in areas ranging from South Africa to Europe to India to the United States pushing their governments for protectionist measures against the Chinese-produced steel.
Source: Jasmine Ng, " JPMorgan Says `Waves of Protectionism' Will Cap China Steel," Bloomberg.com, October 4, 2015.
-Refer to the Article Summary above.All else equal, if countries decide to enact protectionist measures against Chinese steel imports, the price of steel in those countries will ________ and the quantity of steel demanded in those countries will ________.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 3

Table 9-6
Output per hour Production and Production
of work Consumption without Trade with Trade
   
Denmark and Belize can produce both clocks and hats.Each country has a total of 200 available labor hours for the production of clocks and hats.Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.All of the following are terms of trade that could possibly benefit both countries except

Accepted Answer

A) 1 hat : 2 clocks 
B) 1 hat : 4 clocks 
C) 1 hat : 5 clocks 
D) 1 hat : 8 clocks 
A) 1 hat : 2 clocks 
B) 1 hat : 4 clocks 
C) 1 hat : 5 clocks 
D) 1 hat : 8 clocks

Question 4

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 5

Figure 9-5
   
Bragabong currently both produces and imports almonds.The government of Bragabong decides to restrict international trade in almonds by imposing a quota that allows imports of only 10 million kilos each year.Figure 9-5 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota.
-Use Figure 9-5 to answer questions a-j .
a.If there is no quota what is the domestic price of almonds and what is the quantity of almonds demanded by consumers?
b.If there is no quota how many kilos of almonds would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Bragabong?
e.If there is no quota what is the revenue received by foreign producers who supply almonds to Bragabong?
f.With a quota in place what is the price that consumers of Bragabong must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Bragabong? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Bragabong after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

Accepted Answer

a.Price without a quota = $3 per kilo; q

Question 6

Figure 9-2
   
Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2.With the tariff in place, the United States

Accepted Answer

A) imports 16 million pounds of rice. 
B) imports 9 million pounds of rice. 
C) imports 15 million pounds of rice. 
D) exports 31 million pounds of rice. 
A) imports 16 million pounds of rice. 
B) imports 9 million pounds of rice. 
C) imports 15 million pounds of rice. 
D) exports 31 million pounds of rice.

Question 7

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Accepted Answer

A) Bulgaria also has an absolute advantage in producing sandals relative to Finland. 
B) Bulgaria has a lower opportunity cost of producing sandals relative to Finland. 
C) Finland has an absolute disadvantage in producing sandals relative to Bulgaria. 
D) Labor costs are higher for sandal producers in Finland than in Bulgaria. 
A) Bulgaria also has an absolute advantage in producing sandals relative to Finland. 
B) Bulgaria has a lower opportunity cost of producing sandals relative to Finland. 
C) Finland has an absolute disadvantage in producing sandals relative to Bulgaria. 
D) Labor costs are higher for sandal producers in Finland than in Bulgaria.

Question 8

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy, similar to the original "Buy American" provision in the 2009 U.S.stimulus bill, is likely to cause

Accepted Answer

A) exporting countries to retaliate by placing trade barriers on Canadian imports. 
B) Canadian manufacturers to become more efficient. 
C) Canadian companies to pay lower prices for protected products. 
D) most countries to reduce their own trade barriers to be able to better compete with Canadian imports at home. 
A) exporting countries to retaliate by placing trade barriers on Canadian imports. 
B) Canadian manufacturers to become more efficient. 
C) Canadian companies to pay lower prices for protected products. 
D) most countries to reduce their own trade barriers to be able to better compete with Canadian imports at home.

Question 9

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries.This protectionism will cause the greatest harm to

Accepted Answer

A) Canadian manufacturers. 
B) the Canadian government. 
C) manufacturers who export to Canada. 
D) Canadian consumers. 
A) Canadian manufacturers. 
B) the Canadian government. 
C) manufacturers who export to Canada. 
D) Canadian consumers.

Question 10

Which of the following is the best example of a tariff?

Accepted Answer

A) a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A) a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 11

Figure 9-3
   
Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

Accepted Answer

A) C 
B) C + B 
C) A + B + C 
D) A + B + C + D 
A) C 
B) C + B 
C) A + B + C 
D) A + B + C + D

Question 12

How have U.S.imports and exports, as a fraction of GDP, changed from 1970 to the present?

Accepted Answer

Since 1950, both exports and imports hav

Question 13

Free trade refers to trade between countries without government restrictions.

Accepted Answer

A) True 
 B)False

Question 14

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Accepted Answer

A) True 
 B)False

Question 15

Table 9-6
Output per hour Production and Production
of work Consumption without Trade with Trade
   
Denmark and Belize can produce both clocks and hats.Each country has a total of 200 available labor hours for the production of clocks and hats.Table 9-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.Which country has an absolute advantage in producing clocks?

Accepted Answer

A) Denmark 
B) Belize 
C) both countries 
D) neither country 
A) Denmark 
B) Belize 
C) both countries 
D) neither country

Question 16

Table 9-1
   
Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 9-1.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 17

Figure 9-1
   
Figure 9-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Accepted Answer

A) 5 units 
B) 10 units 
C) 15 units 
D) 20 units 
A) 5 units 
B) 10 units 
C) 15 units 
D) 20 units

Question 18

One of the main sources of comparative advantage is internal economies.

Accepted Answer

A) True 
 B)False

Question 19

Table 9-3
   
Bryce and Tina are artisans who produce homemade candles and soap.Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 9-3.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Bryce has an absolute advantage in making candles and Tina has an absolute advantage in making soap. 
B) Bryce has an absolute advantage in making soap and Tina has an absolute advantage in making candles. 
C) Bryce has an absolute advantage in making soap. 
D) Tina has an absolute advantage in making candles. 
A) Bryce has an absolute advantage in making candles and Tina has an absolute advantage in making soap. 
B) Bryce has an absolute advantage in making soap and Tina has an absolute advantage in making candles. 
C) Bryce has an absolute advantage in making soap. 
D) Tina has an absolute advantage in making candles.

Question 20

Which of the following describes the infant industry argument for protectionism?

Accepted Answer

A) An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition. 
B) Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies. 
C) Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. 
D) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. 
A) An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition. 
B) Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies. 
C) Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. 
D) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.

What is the difference between imports and exports?

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

Figure 9-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.With the tariff in place, the United States

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy, similar to the original "Buy American" provision in the 2009 U.S.stimulus bill, is likely to cause

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries.This protectionism will cause the greatest harm to

Which of the following is the best example of a tariff?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

How have U.S.imports and exports, as a fraction of GDP, changed from 1970 to the present?

Free trade refers to trade between countries without government restrictions.

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

Figure 9-1 Figure 9-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

One of the main sources of comparative advantage is internal economies.

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap.Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3.Select the statement that accurately interprets the data in the table.

Which of the following describes the infant industry argument for protectionism?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 9: Comparative Advantage and the Gains From International Trade

What is the difference between imports and exports?

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

Figure 9-2 Suppose the U.S.government imposes a $0.40 per pound tariff on rice imports.Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.With the tariff in place, the United States

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy, similar to the original "Buy American" provision in the 2009 U.S.stimulus bill, is likely to cause

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries.This protectionism will cause the greatest harm to

Which of the following is the best example of a tariff?

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.What is the area of domestic producer surplus without a quota?

How have U.S.imports and exports, as a fraction of GDP, changed from 1970 to the present?

Free trade refers to trade between countries without government restrictions.

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

Figure 9-1 Figure 9-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

One of the main sources of comparative advantage is internal economies.

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap.Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3.Select the statement that accurately interprets the data in the table.

Which of the following describes the infant industry argument for protectionism?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters