Question 1

If protective import-restricting quota are imposed by a country, in the majority of cases that nation's consumers end up

Accepted Answer

A) paying a lower price for the good than they otherwise would. 
B) consuming more of the good than they otherwise would. 
C) having more consumption choices than they otherwise would. 
D) consuming less of the good than they otherwise would. 
A) paying a lower price for the good than they otherwise would. 
B) consuming more of the good than they otherwise would. 
C) having more consumption choices than they otherwise would. 
D) consuming less of the good than they otherwise would.

Question 2

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources
  
-Using the data in the above table and assuming constant opportunity costs, it is correct to state that

Accepted Answer

A) the United States has a comparative advantage in producing cloth. 
B) Mexico has an absolute advantage in producing both food and cloth. 
C) the United States has a comparative advantage in producing both food and cloth. 
D) Mexico has a comparative advantage in producing cloth. 
A) the United States has a comparative advantage in producing cloth. 
B) Mexico has an absolute advantage in producing both food and cloth. 
C) the United States has a comparative advantage in producing both food and cloth. 
D) Mexico has a comparative advantage in producing cloth.

Question 3

-Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in France is

Accepted Answer

A) 2 gallons of wine. 
B) 3 gallons of wine. 
C) 0.5 gallons of wine. 
D) 0.33 gallons of wine. 
A) 2 gallons of wine. 
B) 3 gallons of wine. 
C) 0.5 gallons of wine. 
D) 0.33 gallons of wine.

Question 4

In the long run, if imports increase, then exports

Accepted Answer

A) will not change. 
B) will decrease. 
C) will also increase. 
D) will become zero. 
A) will not change. 
B) will decrease. 
C) will also increase. 
D) will become zero.

Question 5

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is ________ units of Good Y for Chen and ________ units of Good Y for Holly.

Accepted Answer

A) 25; 100 
B) 0.5; 2.5 
C) 2; 0.4 
D) 100; 25 
A) 25; 100 
B) 0.5; 2.5 
C) 2; 0.4 
D) 100; 25

Question 6

For infant industry tariff protection to be valid requires that

Accepted Answer

A) the tariff must be allowed to last forever. 
B) only industries that currently are producing efficiently should be protected. 
C) government officials must predict which industries will eventually be able to compete with more established foreign producers. 
D) the industries protected must have substantial monopoly power in the absence of foreign competition. 
A) the tariff must be allowed to last forever. 
B) only industries that currently are producing efficiently should be protected. 
C) government officials must predict which industries will eventually be able to compete with more established foreign producers. 
D) the industries protected must have substantial monopoly power in the absence of foreign competition.

Question 7

Suppose that opportunity costs in India and Australia are constant. In India, maximum feasible hourly production rates are either 0.3 unit of cloth or 0.2 unit of food. In Australia, maximum feasible hourly production rates are either 0.5 unit of cloth or 0.5 unit of food. It is correct to state that

Accepted Answer

A) India has a comparative advantage in producing cloth. 
B) India has a comparative advantage in producing both cloth and wheat. 
C) India has no comparative advantage in producing cloth or wheat. 
D) Australia has a comparative advantage in producing cloth. 
A) India has a comparative advantage in producing cloth. 
B) India has a comparative advantage in producing both cloth and wheat. 
C) India has no comparative advantage in producing cloth or wheat. 
D) Australia has a comparative advantage in producing cloth.

Question 8

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good Y is ________ units of Good X for Chen and ________ units of Good X for Holly.

Accepted Answer

A) 50; 40 
B) 25; 10 
C) 2; 2/5 
D) 1/2; 2 1/2 
A) 50; 40 
B) 25; 10 
C) 2; 2/5 
D) 1/2; 2 1/2

Question 9

The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called

Accepted Answer

A) GATT. 
B) NAFTA. 
C) WTO. 
D) Bretton-Woods agreement. 
A) GATT. 
B) NAFTA. 
C) WTO. 
D) Bretton-Woods agreement.

Question 10

If protective import-restricting quota are imposed by a country, all of the following groups benefit EXCEPT

Accepted Answer

A) domestic producers in the affected industry. 
B) domestic consumers in the affected industry. 
C) employees of domestic producers in the affected industry. 
D) importers that are able to obtain the rights to sell imported items in the affected industry. 
A) domestic producers in the affected industry. 
B) domestic consumers in the affected industry. 
C) employees of domestic producers in the affected industry. 
D) importers that are able to obtain the rights to sell imported items in the affected industry.

Question 11

What is GATT and what happened to tariff rates as a result of GATT?

Accepted Answer

GATT is the General Agreement on Tariffs

Question 12

Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is

Accepted Answer

A) the infant industry argument. 
B) comparative advantage argument. 
C) dumping. 
D) a regional trade bloc. 
A) the infant industry argument. 
B) comparative advantage argument. 
C) dumping. 
D) a regional trade bloc.

Question 13

The European Union started out as a

Accepted Answer

A) regional trade agreement. 
B) union of nations with identical currency. 
C) union of nations where the same language was spoken. 
D) union of nations with identical tariffs. 
A) regional trade agreement. 
B) union of nations with identical currency. 
C) union of nations where the same language was spoken. 
D) union of nations with identical tariffs.

Question 14

Protection of new products from global competition is known as

Accepted Answer

A) the infant-industry argument. 
B) dumping. 
C) a quota. 
D) protection of domestic jobs. 
A) the infant-industry argument. 
B) dumping. 
C) a quota. 
D) protection of domestic jobs.

Question 15

The contention that domestic unions tend to want to restrict foreign competition with tariffs is

Accepted Answer

A) a national defense concern. 
B) the infant industry argument. 
C) dumping. 
D) to protect domestic jobs. 
A) a national defense concern. 
B) the infant industry argument. 
C) dumping. 
D) to protect domestic jobs.

Question 16

A country will specialize in the good for which

Accepted Answer

A) it has absolute advantage. 
B) it has moderate production costs. 
C) it can produce at minimum average cost. 
D) it has comparative advantage. 
A) it has absolute advantage. 
B) it has moderate production costs. 
C) it can produce at minimum average cost. 
D) it has comparative advantage.

Question 17

People who focus on the "competitiveness" of the United States are

Accepted Answer

A) focusing on the right thing if the United States is to stay a leading economic power. 
B) treating the United States as if it is a business firm. 
C) also focusing on the importance of education. 
D) correctly recognizing that trade is a zero-sum game. 
A) focusing on the right thing if the United States is to stay a leading economic power. 
B) treating the United States as if it is a business firm. 
C) also focusing on the importance of education. 
D) correctly recognizing that trade is a zero-sum game.

Question 18

The effect of a quota is to

Accepted Answer

A) increase quantity supplied and lower price. 
B) increase quantity supplied and increase price. 
C) increase demand for the good and increase price. 
D) reduce quantity supplied and raise price. 
A) increase quantity supplied and lower price. 
B) increase quantity supplied and increase price. 
C) increase demand for the good and increase price. 
D) reduce quantity supplied and raise price.

Question 19

-Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta specialize based on comparative advantage, then

Accepted Answer

A) Alpha should specialize in knives and Beta should specialize in forks. 
B) Alpha should specialize in forks and Beta should specialize in knives. 
C)  Alpha should specialize in producing both items. 
D) Beta should produce both items. 
A) Alpha should specialize in knives and Beta should specialize in forks. 
B) Alpha should specialize in forks and Beta should specialize in knives. 
C)  Alpha should specialize in producing both items. 
D) Beta should produce both items.

Question 20

Comparative advantage is defined as

Accepted Answer

A) producing all goods at lower opportunity costs than other countries can. 
B) producing more output of all goods than anyone else can. 
C) producing one good at a lower opportunity cost than another country can. 
D) the ability to produce more output from given inputs than anyone else can. 
A) producing all goods at lower opportunity costs than other countries can. 
B) producing more output of all goods than anyone else can. 
C) producing one good at a lower opportunity cost than another country can. 
D) the ability to produce more output from given inputs than anyone else can.

If protective import-restricting quota are imposed by a country, in the majority of cases that nation's consumers end up

Maximum Feasible Hourly Production Rates for Either Food or Cloth Using All Available Resources -Using the data in the above table and assuming constant opportunity costs, it is correct to state that

-Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in France is

In the long run, if imports increase, then exports

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is units of Good Y for Chen and units of Good Y for Holly.

For infant industry tariff protection to be valid requires that

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good Y is units of Good X for Chen and units of Good X for Holly.

The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called

If protective import-restricting quota are imposed by a country, all of the following groups benefit EXCEPT

What is GATT and what happened to tariff rates as a result of GATT?

Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is

The European Union started out as a

Protection of new products from global competition is known as

The contention that domestic unions tend to want to restrict foreign competition with tariffs is

A country will specialize in the good for which

People who focus on the "competitiveness" of the United States are

The effect of a quota is to

-Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta specialize based on comparative advantage, then

Comparative advantage is defined as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Exchange Rates and the Balance of Payments

Filters

Exam 18: Comparative Advantage and the Open Economy

If protective import-restricting quota are imposed by a country, in the majority of cases that nation's consumers end up

Maximum Feasible Hourly Production Rates for Either Food or Cloth Using All Available Resources -Using the data in the above table and assuming constant opportunity costs, it is correct to state that

-Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in France is

In the long run, if imports increase, then exports

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is ________ units of Good Y for Chen and ________ units of Good Y for Holly.

For infant industry tariff protection to be valid requires that

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good Y is ________ units of Good X for Chen and ________ units of Good X for Holly.

The international agreement signed in 1947 to promote world trade by reducing tariffs and other barriers to international trade was called

If protective import-restricting quota are imposed by a country, all of the following groups benefit EXCEPT

What is GATT and what happened to tariff rates as a result of GATT?

Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is

The European Union started out as a

Protection of new products from global competition is known as

The contention that domestic unions tend to want to restrict foreign competition with tariffs is

A country will specialize in the good for which

People who focus on the "competitiveness" of the United States are

The effect of a quota is to

-Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta specialize based on comparative advantage, then

Comparative advantage is defined as

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Exchange Rates and the Balance of Payments

Filters

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good X is units of Good Y for Chen and units of Good Y for Holly.

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, the opportunity cost of producing one unit of Good Y is units of Good X for Chen and units of Good X for Holly.