Question 1

-Refer to the above table. Assuming that opportunity costs are constant, which of the following is a correct statement?

Accepted Answer

A) The United States has a comparative advantage in computers. 
B) The United States has a comparative advantage in bicycles. 
C) Mexico has a comparative advantage in computers. 
D) Mexico has a comparative advantage in both goods. 
A) The United States has a comparative advantage in computers. 
B) The United States has a comparative advantage in bicycles. 
C) Mexico has a comparative advantage in computers. 
D) Mexico has a comparative advantage in both goods.

Question 2

If there are two goods and two countries, then one country can have

Accepted Answer

A) an absolute advantage in only one good. 
B) an absolute advantage in both goods. 
C) a higher opportunity cost of producing both goods. 
D) a lower opportunity cost of producing both goods. 
A) an absolute advantage in only one good. 
B) an absolute advantage in both goods. 
C) a higher opportunity cost of producing both goods. 
D) a lower opportunity cost of producing both goods.

Question 3

Comparative advantage is defined as

Accepted Answer

A) the ability to produce more output of one good relative to another good than another country can. 
B) the ability to produce more output from given inputs of resources than others can. 
C) the ability to use more input of resources than others can. 
D) having a lower average fixed cost in the production of a good than does someone else. 
A) the ability to produce more output of one good relative to another good than another country can. 
B) the ability to produce more output from given inputs of resources than others can. 
C) the ability to use more input of resources than others can. 
D) having a lower average fixed cost in the production of a good than does someone else.

Question 4

Which of the following is NOT an example of a regional trade bloc?

Accepted Answer

A) the North American Free Trade Agreement 
B) the European Union 
C) the Asian-Pacific Trade Agreement 
D) Mercosur 
A) the North American Free Trade Agreement 
B) the European Union 
C) the Asian-Pacific Trade Agreement 
D) Mercosur

Question 5

Which of the following is counted as a benefit from international trade?

Accepted Answer

A) New production processes developed in one nation are transmitted to others. 
B) Intellectual property such as music and computer applications is introduced throughout the world. 
C) New goods have been introduced to other parts of the world. 
D) All of the above are benefits from international trade. 
A) New production processes developed in one nation are transmitted to others. 
B) Intellectual property such as music and computer applications is introduced throughout the world. 
C) New goods have been introduced to other parts of the world. 
D) All of the above are benefits from international trade.

Question 6

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

Accepted Answer

A) 0.33 pound of beef. 
B) 0.5 pound of beef. 
C) 2 pounds of beef. 
D) 3 pounds of beef. 
A) 0.33 pound of beef. 
B) 0.5 pound of beef. 
C) 2 pounds of beef. 
D) 3 pounds of beef.

Question 7

According to the Swiss Institute for Management Development, the top country in terms of productive efficiency is

Accepted Answer

A) Germany. 
B) Japan. 
C) Switzerland. 
D) the United States. 
A) Germany. 
B) Japan. 
C) Switzerland. 
D) the United States.

Question 8

When U.S. residents buy products that were made in Japan, then ultimately the Japanese want

Accepted Answer

A) yen. 
B) dollars. 
C) Japanese goods. 
D) goods, including U.S.-made goods. 
A) yen. 
B) dollars. 
C) Japanese goods. 
D) goods, including U.S.-made goods.

Question 9

A significant advantage to being a member of a trade bloc is

Accepted Answer

A) higher tariff collections from member countries. 
B) reduced or eliminated tariffs among member countries. 
C) reduced tariff rates only for the largest member countries. 
D) None of the above; there is no economic advantage to a trade bloc. 
A) higher tariff collections from member countries. 
B) reduced or eliminated tariffs among member countries. 
C) reduced tariff rates only for the largest member countries. 
D) None of the above; there is no economic advantage to a trade bloc.

Question 10

When one country "dumps" some of its products in another country, it

Accepted Answer

A) increases the aggregate level of employment in the importing country, thereby depressing that nation's market wages. 
B) also exports new technology to the importing nation and thereby indirectly boosts the importing nation's real GDP. 
C) sells its products abroad at a price lower than the price in the home market or lower than the cost of production. 
D) also exports pollution-causing technologies and thereby creates environmental hazards in the receiving country. 
A) increases the aggregate level of employment in the importing country, thereby depressing that nation's market wages. 
B) also exports new technology to the importing nation and thereby indirectly boosts the importing nation's real GDP. 
C) sells its products abroad at a price lower than the price in the home market or lower than the cost of production. 
D) also exports pollution-causing technologies and thereby creates environmental hazards in the receiving country.

Question 11

Suppose that opportunity costs are constant in both France and Germany. In France, maximum feasible hourly production levels are either 3 units of wheat or 5 units of wine. In Germany, maximum feasible hourly production levels are either 4 units of wheat or 10 units of wine. It is correct to state that

Accepted Answer

A) Germany has an comparative advantage in producing both wheat and wine. 
B) Germany has a comparative advantage in producing wine. 
C) France has a comparative advantage in producing both wheat and wine. 
D) France has a comparative advantage in producing wine. 
A) Germany has an comparative advantage in producing both wheat and wine. 
B) Germany has a comparative advantage in producing wine. 
C) France has a comparative advantage in producing both wheat and wine. 
D) France has a comparative advantage in producing wine.

Question 12

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

Question 13

The North American Free Trade Agreement and the European Union are examples of

Accepted Answer

A) defense treaties. 
B) regional trade blocs. 
C) labor agreements designed only for industrialized countries. 
D) agriculturally based economies. 
A) defense treaties. 
B) regional trade blocs. 
C) labor agreements designed only for industrialized countries. 
D) agriculturally based economies.

Question 14

A problem with the infant industry argument is that

Accepted Answer

A) it is too restrictive in targeting new industries to protect. 
B) it does not protect the most important new industries in a country. 
C) it is almost impossible to eliminate the tariff once the industry matures. 
D) it allows infant industries to mature so that tariffs can be eliminated. 
A) it is too restrictive in targeting new industries to protect. 
B) it does not protect the most important new industries in a country. 
C) it is almost impossible to eliminate the tariff once the industry matures. 
D) it allows infant industries to mature so that tariffs can be eliminated.

Question 15

Selling a good abroad below the price charged in the home market, or at a price below the cost of production is called

Accepted Answer

A) dumping. 
B) import substitution. 
C) a quota. 
D) a tariff. 
A) dumping. 
B) import substitution. 
C) a quota. 
D) a tariff.

Question 16

When nations specialize according to their comparative advantage

Accepted Answer

A) Total production and consumption in the world increase. 
B) Consumption rises in one country but must fall in all others. 
C) Total world production rises but total consumption in the world declines. 
D) none of the above 
A) Total production and consumption in the world increase. 
B) Consumption rises in one country but must fall in all others. 
C) Total world production rises but total consumption in the world declines. 
D) none of the above

Question 17

The infant-industry argument for tariff protection is that tariffs should be imposed to protect from competition

Accepted Answer

A) industries that are essential if a country is to become an industrial nation. 
B) industries needed for national defense. 
C) industries that cannot compete with foreign competitors at this point in time, but will be able to once they gain some size and experience. 
D) industries that can compete with foreign competitors at this point in time and are deemed essential by the government. 
A) industries that are essential if a country is to become an industrial nation. 
B) industries needed for national defense. 
C) industries that cannot compete with foreign competitors at this point in time, but will be able to once they gain some size and experience. 
D) industries that can compete with foreign competitors at this point in time and are deemed essential by the government.

Question 18

In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or inspect 20 parts in an hour.

Accepted Answer

A) Jane has a comparative advantage over Jim in both soldering and inspecting. 
B) Jane has a comparative advantage over Jim in soldering while Jim has a comparative advantage in inspecting. 
C) Jim has a comparative advantage over Jane in soldering while Jane has a comparative advantage in inspecting. 
D) Jim had a comparative advantage over Jane in both soldering and inspecting. 
A) Jane has a comparative advantage over Jim in both soldering and inspecting. 
B) Jane has a comparative advantage over Jim in soldering while Jim has a comparative advantage in inspecting. 
C) Jim has a comparative advantage over Jane in soldering while Jane has a comparative advantage in inspecting. 
D) Jim had a comparative advantage over Jane in both soldering and inspecting.

Question 19

U.S. automakers have an interest to make it more difficult for European competitors to locate assembly plants in Canada or Mexico and thereby ship finished automobiles to the United States duty-free. This is an example of

Accepted Answer

A) trade deflection. 
B) trade diversion. 
C) quotas. 
D) rules of origin. 
A) trade deflection. 
B) trade diversion. 
C) quotas. 
D) rules of origin.

Question 20

Groups of nations that grants members trade privileges are called

Accepted Answer

A) local trade protectionists. 
B) trade settlements. 
C) regional trade blocs. 
D) allies. 
A) local trade protectionists. 
B) trade settlements. 
C) regional trade blocs. 
D) allies.

-Refer to the above table. Assuming that opportunity costs are constant, which of the following is a correct statement?

If there are two goods and two countries, then one country can have

Comparative advantage is defined as

Which of the following is NOT an example of a regional trade bloc?

Which of the following is counted as a benefit from international trade?

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

According to the Swiss Institute for Management Development, the top country in terms of productive efficiency is

When U.S. residents buy products that were made in Japan, then ultimately the Japanese want

A significant advantage to being a member of a trade bloc is

When one country "dumps" some of its products in another country, it

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

The North American Free Trade Agreement and the European Union are examples of

A problem with the infant industry argument is that

Selling a good abroad below the price charged in the home market, or at a price below the cost of production is called

When nations specialize according to their comparative advantage

The infant-industry argument for tariff protection is that tariffs should be imposed to protect from competition

In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or inspect 20 parts in an hour.

U.S. automakers have an interest to make it more difficult for European competitors to locate assembly plants in Canada or Mexico and thereby ship finished automobiles to the United States duty-free. This is an example of

Groups of nations that grants members trade privileges are called

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

-Refer to the above table. Assuming that opportunity costs are constant, which of the following is a correct statement?

If there are two goods and two countries, then one country can have

Comparative advantage is defined as

Which of the following is NOT an example of a regional trade bloc?

Which of the following is counted as a benefit from international trade?

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

According to the Swiss Institute for Management Development, the top country in terms of productive efficiency is

When U.S. residents buy products that were made in Japan, then ultimately the Japanese want

A significant advantage to being a member of a trade bloc is

When one country "dumps" some of its products in another country, it

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

The North American Free Trade Agreement and the European Union are examples of

A problem with the infant industry argument is that

Selling a good abroad below the price charged in the home market, or at a price below the cost of production is called

When nations specialize according to their comparative advantage

The infant-industry argument for tariff protection is that tariffs should be imposed to protect from competition

In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or inspect 20 parts in an hour.

U.S. automakers have an interest to make it more difficult for European competitors to locate assembly plants in Canada or Mexico and thereby ship finished automobiles to the United States duty-free. This is an example of

Groups of nations that grants members trade privileges are called

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