Question 1

Levying a tariff on an imported good

Accepted Answer

A) shifts the demand curve down for the good. 
B) shifts the supply curve up for the good. 
C) Both A and B. 
D) Not enough information to determine. 
A) shifts the demand curve down for the good. 
B) shifts the supply curve up for the good. 
C) Both A and B. 
D) Not enough information to determine.

Question 2

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

Accepted Answer

A) The Vietnamese factory has an comparative advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) The Australian factory has a comparative advantage in the production of transmissions. 
A) The Vietnamese factory has an comparative advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) The Australian factory has a comparative advantage in the production of transmissions.

Question 3

The welfare loss from an import quota is greater than that of an equivalent tariff because

Accepted Answer

A) tariff revenues can be used to society's benefit. 
B) the loss in consumer surplus is not as large. 
C) domestic producers gain more from a quota than from a tariff. 
D) tariff revenues represent an additional deadweight loss. 
A) tariff revenues can be used to society's benefit. 
B) the loss in consumer surplus is not as large. 
C) domestic producers gain more from a quota than from a tariff. 
D) tariff revenues represent an additional deadweight loss.

Question 4

The ability to produce a good at a lower opportunity cost than someone else is called

Accepted Answer

A) competitive production. 
B) comparative advantage. 
C) selective advantage. 
D) absolute advantage. 
A) competitive production. 
B) comparative advantage. 
C) selective advantage. 
D) absolute advantage.

Question 5

A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of

Accepted Answer

A) production associated loss and inefficiency loss. 
B) productive consumption loss and protection loss. 
C) consumption distortion loss and production distortion loss. 
D) consumer misperception loss and taxation loss. 
A) production associated loss and inefficiency loss. 
B) productive consumption loss and protection loss. 
C) consumption distortion loss and production distortion loss. 
D) consumer misperception loss and taxation loss.

Question 6

Small countries might produce more of a particular good than their domestic citizens can consume

Accepted Answer

A) if they are willing to take a loss on the goods produced. 
B) if there are increasing returns to scale and export of the surplus is possible. 
C) when arbitrage is possible. 
D) if they are producing seasonal products. 
A) if they are willing to take a loss on the goods produced. 
B) if there are increasing returns to scale and export of the surplus is possible. 
C) when arbitrage is possible. 
D) if they are producing seasonal products.

Question 7

The transfer price between subsidiaries that maximizes profit for the parent company

Accepted Answer

A) is the marginal cost of the producing subsidiary. 
B) is the monopoly price of the producing subsidiary. 
C) cannot be determined in the absence of non-production cost considerations such as taxes. 
D) is the price that minimizes the purchasing subsidiary's marginal cost. 
A) is the marginal cost of the producing subsidiary. 
B) is the monopoly price of the producing subsidiary. 
C) cannot be determined in the absence of non-production cost considerations such as taxes. 
D) is the price that minimizes the purchasing subsidiary's marginal cost.

Question 8

The North American Free Trade Agreement is an example of

Accepted Answer

A) a beggar-thy-neighbor trade policy. 
B) a preferential trade arrangement. 
C) a multinational quota system. 
D) a general agreement on tariffs and trade. 
A) a beggar-thy-neighbor trade policy. 
B) a preferential trade arrangement. 
C) a multinational quota system. 
D) a general agreement on tariffs and trade.

Question 9

A trade policy that allows a country to gain at the expense of other countries is called

Accepted Answer

A) countervailing duty policy. 
B) a beggar-thy-neighbor policy. 
C) an antitrust policy. 
D) a dumping policy. 
A) countervailing duty policy. 
B) a beggar-thy-neighbor policy. 
C) an antitrust policy. 
D) a dumping policy.

Question 10

When a country opens up to free trade

Accepted Answer

A) winners and losers are created. 
B) comparative advantage dictates that the country focus on production of some goods and services at the expense of others. 
C) the gains outweigh the losses. 
D) All of the above. 
A) winners and losers are created. 
B) comparative advantage dictates that the country focus on production of some goods and services at the expense of others. 
C) the gains outweigh the losses. 
D) All of the above.

Question 11

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. Currently 10 units are imported. The loss from shifting production from foreign to domestic producers equals

Accepted Answer

A) c + e. 
B) i. 
C) e. 
D) a + c + d + e. 
A) c + e. 
B) i. 
C) e. 
D) a + c + d + e.

Question 12

The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses). If the exchange rate is 1.50 $/€ then

Accepted Answer

A) the U.S. has a comparative advantage in the production of beer. 
B) neither country has a comparative advantage in the production of beer. 
C) the U.S. has a comparative advantage in the production of pizza. 
D) the U.S. has a comparative advantage in the production of beer and pizza. 
A) the U.S. has a comparative advantage in the production of beer. 
B) neither country has a comparative advantage in the production of beer. 
C) the U.S. has a comparative advantage in the production of pizza. 
D) the U.S. has a comparative advantage in the production of beer and pizza.

Question 13

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

Accepted Answer

A) The Vietnamese factory has an absolute advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies. 
A) The Vietnamese factory has an absolute advantage producing both engines and transmissions. 
B) The Australian factory has an absolute advantage in the production of transmissions. 
C) The Vietnamese factory has a comparative advantage in the production of transmissions. 
D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies.

Question 14

A firm that buys goods that it would normally produce internally from an international company is using

Accepted Answer

A) transfer pricing. 
B) insourcing. 
C) international outsourcing. 
D) domestic outsourcing. 
A) transfer pricing. 
B) insourcing. 
C) international outsourcing. 
D) domestic outsourcing.

Question 15

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

Accepted Answer

A) 10 units. 
B) 20 units. 
C) 30 units. 
D) 40 units. 
A) 10 units. 
B) 20 units. 
C) 30 units. 
D) 40 units.

Question 16

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. Currently 10 units are imported. The Consumption distortion loss is equal to

Accepted Answer

A) c+e. 
B) c. 
C) c+g+i. 
D) a + c + d + e. 
A) c+e. 
B) c. 
C) c+g+i. 
D) a + c + d + e.

Question 17

If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 20 rand/US$, then

Accepted Answer

A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop. 
B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop. 
C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise. 
D) there is no arbitrage opportunity. 
A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop. 
B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop. 
C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise. 
D) there is no arbitrage opportunity.

Question 18

The cost of lobbying for an import quota in a perfectly competitive market

Accepted Answer

A) increases the welfare loss of the quota. 
B) decreases the deadweight loss of the quota. 
C) shifts the supply curve of the good to the left. 
D) increases the consumer surplus. 
A) increases the welfare loss of the quota. 
B) decreases the deadweight loss of the quota. 
C) shifts the supply curve of the good to the left. 
D) increases the consumer surplus.

Question 19

Your U.S.-based company is selling parts to a company in Bangladesh. If the Bangladeshi company purchases a futures contract

Accepted Answer

A) the Bangladeshi company bears the exchange rate risk. 
B) your company bears the exchange rate risk. 
C) the companies share in the exchange rate risk. 
D) there is no exchange rate risk. 
A) the Bangladeshi company bears the exchange rate risk. 
B) your company bears the exchange rate risk. 
C) the companies share in the exchange rate risk. 
D) there is no exchange rate risk.

Question 20

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Accepted Answer

A) increases consumer surplus. 
B) increases total welfare. 
C) increases the deadweight loss. 
D) None of the above. 
A) increases consumer surplus. 
B) increases total welfare. 
C) increases the deadweight loss. 
D) None of the above.

Levying a tariff on an imported good

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

The welfare loss from an import quota is greater than that of an equivalent tariff because

The ability to produce a good at a lower opportunity cost than someone else is called

A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of

Small countries might produce more of a particular good than their domestic citizens can consume

The transfer price between subsidiaries that maximizes profit for the parent company

The North American Free Trade Agreement is an example of

A trade policy that allows a country to gain at the expense of other countries is called

When a country opens up to free trade

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. Currently 10 units are imported. The loss from shifting production from foreign to domestic producers equals

The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses). If the exchange rate is 1.50 $/€ then

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

A firm that buys goods that it would normally produce internally from an international company is using

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. Currently 10 units are imported. The Consumption distortion loss is equal to

If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 20 rand/US$, then

The cost of lobbying for an import quota in a perfectly competitive market

Your U.S.-based company is selling parts to a company in Bangladesh. If the Bangladeshi company purchases a futures contract

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Filters

Exam 17: Global Business

Levying a tariff on an imported good

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

The welfare loss from an import quota is greater than that of an equivalent tariff because

The ability to produce a good at a lower opportunity cost than someone else is called

A ban on imports, a tariff, or a quota raise the price to domestic consumers creates a deadweight loss. This loss is composed of

Small countries might produce more of a particular good than their domestic citizens can consume

The transfer price between subsidiaries that maximizes profit for the parent company

The North American Free Trade Agreement is an example of

A trade policy that allows a country to gain at the expense of other countries is called

When a country opens up to free trade

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. Currently 10 units are imported. The loss from shifting production from foreign to domestic producers equals

The U.S. can produce pizza for $7.50 each and barrels of beer for $37.50 each, and Germany can produce pizza for €5 each and barrels of beer for €15 each (€ is the symbol for the euro, the currency Germany uses). If the exchange rate is 1.50 $/€ then

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

A firm that buys goods that it would normally produce internally from an international company is using

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

-The above figure shows the market for rice in Japan. S2 represents the domestic supply curve, and S1 represents the world supply curve. Currently 10 units are imported. The Consumption distortion loss is equal to

If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 20 rand/US$, then

The cost of lobbying for an import quota in a perfectly competitive market

Your U.S.-based company is selling parts to a company in Bangladesh. If the Bangladeshi company purchases a futures contract

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Filters