Question 1

All of the following are true EXCEPT

Accepted Answer

A) trade between two nations reduces their opportunity costs. 
B) trade makes nations dependent on each other. 
C) trade between nations will not benefit all citizens. 
D) the principle of comparative advantage does not apply to countries with limited resources. 
A) trade between two nations reduces their opportunity costs. 
B) trade makes nations dependent on each other. 
C) trade between nations will not benefit all citizens. 
D) the principle of comparative advantage does not apply to countries with limited resources.

Question 2

Which economist introduced the simple trade model and the concept of trade based on comparative advantage?

Accepted Answer

The answer of Which economist introduced the simple trade model...

Question 3

With trade,the slope of the Consumption Possibilities Curve (CPC)is equal to

Accepted Answer

A) the world price of the good on the horizontal axis. 
B) the world price of the good on the vertical axis. 
C) the opportunity cost of the good on the horizontal axis. 
D) the opportunity cost of the good on the vertical axis. 
A) the world price of the good on the horizontal axis. 
B) the world price of the good on the vertical axis. 
C) the opportunity cost of the good on the horizontal axis. 
D) the opportunity cost of the good on the vertical axis.

Question 4

A nation must have an absolute advantage in order to have a comparative advantage in producing a good or service.

Accepted Answer

A) True 
 B)False

Question 5

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the

Accepted Answer

A) opportunity cost of production is less in Japan. 
B) absolute cost of production is less in the United States. 
C) absolute cost of production is less in Japan. 
D) opportunity cost of production is less in the United States. 
A) opportunity cost of production is less in Japan. 
B) absolute cost of production is less in the United States. 
C) absolute cost of production is less in Japan. 
D) opportunity cost of production is less in the United States.

Question 6

Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,which of the following would NOT be a potential terms of trade?

Accepted Answer

A) 1 auto for 3 corn 
B) 1 auto for 4 corn 
C) 1 corn for 1/3 of an auto 
D) 1 corn for 1 auto 
A) 1 auto for 3 corn 
B) 1 auto for 4 corn 
C) 1 corn for 1/3 of an auto 
D) 1 corn for 1 auto

Question 7

If a nation is more productive than a trading partner,can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain.

Accepted Answer

The gains from trade do not rely on over

Question 8

Explain why government actions that make industries more competitive do not create comparative advantage.

Accepted Answer

Because governments spend resources in o

Question 9

The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.

Accepted Answer

A) True 
 B)False

Question 10

The gains from trade rely on overall productivity (absolute advantage).

Accepted Answer

A) True 
 B)False

Question 11

Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,then

Accepted Answer

A) the United States has a comparative advantage in corn production. 
B) Mexico has a comparative advantage in corn production. 
C) the United States cannot gain from trade with Mexico. 
D) the United States has a comparative advantage in auto production. 
A) the United States has a comparative advantage in corn production. 
B) Mexico has a comparative advantage in corn production. 
C) the United States cannot gain from trade with Mexico. 
D) the United States has a comparative advantage in auto production.

Question 12

Economic restructuring that takes place as a result of opening to trade with other countries

Accepted Answer

A) contradicts the idea of gains from trade. 
B) causes some trading activity to be zero sum. 
C) worsens the nation's allocation of resources. 
D) improves the nation's allocation of resources. 
A) contradicts the idea of gains from trade. 
B) causes some trading activity to be zero sum. 
C) worsens the nation's allocation of resources. 
D) improves the nation's allocation of resources.

Question 13

Based on Table 3.1,which country or countries has an absolute advantage and a comparative advantage in shoes?

Accepted Answer

A) Mexico has an absolute and comparative advantage in shoes. 
B) The United States has an absolute and comparative advantage in shoes. 
C) The United States has a comparative advantage, and Mexico has an absolute advantage in shoes. 
D) Mexico has a comparative advantage, and the United States has an absolute advantage in shoes. 
A) Mexico has an absolute and comparative advantage in shoes. 
B) The United States has an absolute and comparative advantage in shoes. 
C) The United States has a comparative advantage, and Mexico has an absolute advantage in shoes. 
D) Mexico has a comparative advantage, and the United States has an absolute advantage in shoes.

Question 14

When economists talk about the gains from trade they mean that

Accepted Answer

A) no one ever gets hurt by trade. 
B) the benefits of trade outweigh the losses. 
C) business firms benefit from trade but not necessarily individuals. 
D) trade increases government revenue through taxes on imports. 
E) economic restructuring is usually quick and painless. 
A) no one ever gets hurt by trade. 
B) the benefits of trade outweigh the losses. 
C) business firms benefit from trade but not necessarily individuals. 
D) trade increases government revenue through taxes on imports. 
E) economic restructuring is usually quick and painless.

Question 15

The graphs above show the production possibilities curves for the U.S.and Canada,which both produce cars and wheat.
Determine comparative advantage for each country,and then draw the CPC for each country,assuming that the world price of cars is 1.5 wheat.(Assume that wheat is measured in thousands of bushels.)How would the gains from trade change if the price of cars rose to 1.75 wheat?

Accepted Answer

In the U.S.,the opportunity cost of a ca

Question 16

Mercantilists perceived trade as a zero sum game.

Accepted Answer

A) True 
 B)False

Question 17

When did the Republic of Korea change its economic policies?

Accepted Answer

The answer of When did the Republic of Korea change...

Question 18

Certain kinds of tropical fruits are impossible to grow outdoors in the United States.Suppose,however,that in order to create jobs in Wyoming,the U.S.government offered extensive subsidies to firms to produce bananas.With the subsidies,firms could build greenhouses and offer the fruit at world prices.

Accepted Answer

A) The United States now has a comparative advantage in bananas. 
B) The United States has a comparative advantage, but is not competitive. 
C) The United States is competitive, but does not have a comparative advantage. 
D) The United States has a comparative advantage and is competitive. 
A) The United States now has a comparative advantage in bananas. 
B) The United States has a comparative advantage, but is not competitive. 
C) The United States is competitive, but does not have a comparative advantage. 
D) The United States has a comparative advantage and is competitive.

Question 19

The table above shows United States and United Kingdom production of wheat (bushels per hour)and cloth (yards per hour).
According to Adam Smith,which of the following is true?

Accepted Answer

A) The United States has an absolute advantage in the production of wheat. 
B) The United States has an absolute advantage in the production of cloth. 
C) There is no basis for trade between these countries. 
D) The United States will gain more from trade than the United Kingdom. 
A) The United States has an absolute advantage in the production of wheat. 
B) The United States has an absolute advantage in the production of cloth. 
C) There is no basis for trade between these countries. 
D) The United States will gain more from trade than the United Kingdom.

Question 20

If the world price for a good is above a nation's pre-trade equilibrium price,then the nation

Accepted Answer

A) will export the good. 
B) will import the good. 
C) will neither export nor import the good. 
D) cannot gain from trade. 
E) Both C and D. 
A) will export the good. 
B) will import the good. 
C) will neither export nor import the good. 
D) cannot gain from trade. 
E) Both C and D.

All of the following are true EXCEPT

Which economist introduced the simple trade model and the concept of trade based on comparative advantage?

With trade,the slope of the Consumption Possibilities Curve (CPC)is equal to

A nation must have an absolute advantage in order to have a comparative advantage in producing a good or service.

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the

Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,which of the following would NOT be a potential terms of trade?

If a nation is more productive than a trading partner,can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain.

Explain why government actions that make industries more competitive do not create comparative advantage.

The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.

The gains from trade rely on overall productivity (absolute advantage).

Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,then

Economic restructuring that takes place as a result of opening to trade with other countries

Based on Table 3.1,which country or countries has an absolute advantage and a comparative advantage in shoes?

When economists talk about the gains from trade they mean that

Mercantilists perceived trade as a zero sum game.

When did the Republic of Korea change its economic policies?

The table above shows United States and United Kingdom production of wheat (bushels per hour)and cloth (yards per hour). According to Adam Smith,which of the following is true?

If the world price for a good is above a nation's pre-trade equilibrium price,then the nation

The United States in a Global Economy

International Economic Institutions Since World War II

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

China and India in the World Economy

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Exam 3: Comparative Advantage and the Gains From Trade

All of the following are true EXCEPT

Which economist introduced the simple trade model and the concept of trade based on comparative advantage?

With trade,the slope of the Consumption Possibilities Curve (CPC)is equal to

A nation must have an absolute advantage in order to have a comparative advantage in producing a good or service.

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the

Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,which of the following would NOT be a potential terms of trade?

If a nation is more productive than a trading partner,can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain.

Explain why government actions that make industries more competitive do not create comparative advantage.

The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.

The gains from trade rely on overall productivity (absolute advantage).

Suppose Mexico can produce 5 autos or 10 corn.Suppose the United States can produce 4 autos or 20 corn.If opportunity costs are constant for both countries,then

Economic restructuring that takes place as a result of opening to trade with other countries

Based on Table 3.1,which country or countries has an absolute advantage and a comparative advantage in shoes?

When economists talk about the gains from trade they mean that

Mercantilists perceived trade as a zero sum game.

When did the Republic of Korea change its economic policies?

The table above shows United States and United Kingdom production of wheat (bushels per hour)and cloth (yards per hour). According to Adam Smith,which of the following is true?

If the world price for a good is above a nation's pre-trade equilibrium price,then the nation

The United States in a Global Economy

International Economic Institutions Since World War II

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

China and India in the World Economy

Filters