Question 1

Dumping is considered a practice that seriously harms domestic producers because

Accepted Answer

A) the quality of the dumped good is superior to that of the importing country. 
B) it allows the exporting country to use poor quality materials. 
C) it establishes a price that cannot be met by domestic producers. 
D) it discriminates between wealthy and poor countries. 
A) the quality of the dumped good is superior to that of the importing country. 
B) it allows the exporting country to use poor quality materials. 
C) it establishes a price that cannot be met by domestic producers. 
D) it discriminates between wealthy and poor countries.

Question 2

The effects of a tariff are

Accepted Answer

A) reduced quantity supplied overall, reduced quantity supplied by domestic producers, and a lower price. 
B) reduced quantity supplied overall, increased quantity supplied by domestic producers, and a higher price. 
C) reduced quantity supplied overall, decreased quantity supplied by domestic producers, and a lower price. 
D) identical to the effects of a quota, except that the price of the good is higher. 
A) reduced quantity supplied overall, reduced quantity supplied by domestic producers, and a lower price. 
B) reduced quantity supplied overall, increased quantity supplied by domestic producers, and a higher price. 
C) reduced quantity supplied overall, decreased quantity supplied by domestic producers, and a lower price. 
D) identical to the effects of a quota, except that the price of the good is higher.

Question 3

Given two economic systems, A and B, if economy A has a comparative advantage in the production of widgets, then

Accepted Answer

A) the inputs necessary to produce widgets in economy A cost less than in economy B. 
B) economy A must give up less of all other goods to produce widgets than economy B. 
C) economy A is less efficient in the production of some goods than economy B. 
D) economy A would not benefit from the specialization of production. 
A) the inputs necessary to produce widgets in economy A cost less than in economy B. 
B) economy A must give up less of all other goods to produce widgets than economy B. 
C) economy A is less efficient in the production of some goods than economy B. 
D) economy A would not benefit from the specialization of production.

Question 4

The General Agreement on Tariffs and Trade is an international agreement

Accepted Answer

A) that outlaws all tariffs but permits quotas. 
B) to encourage world trade by lowering tariffs and other trade barriers. 
C) to encourage world trade by lending resources to developing countries. 
D) between the United States and Japan that has never been ratified, resulting in several trade wars with Japan. 
A) that outlaws all tariffs but permits quotas. 
B) to encourage world trade by lowering tariffs and other trade barriers. 
C) to encourage world trade by lending resources to developing countries. 
D) between the United States and Japan that has never been ratified, resulting in several trade wars with Japan.

Question 5

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Ethel's opportunity cost to produce one cake is

Accepted Answer

A) one-half pie. 
B) two pies. 
C) six pies. 
D) four pies. 
A) one-half pie. 
B) two pies. 
C) six pies. 
D) four pies.

Question 6

The argument that trade in high-tech equipment can facilitate the implementation of advanced military technology in countries that may become strategic opponents later on is the

Accepted Answer

A) national security argument. 
B) infant industry argument. 
C) protecting domestic jobs argument. 
D) environmental and safety argument. 
A) national security argument. 
B) infant industry argument. 
C) protecting domestic jobs argument. 
D) environmental and safety argument.

Question 7

Specialization allows for

Accepted Answer

A) more consumption for all trading partners. 
B) more consumption for the trading partner with the comparative advantage. 
C) more consumption for the trading partner with the absolute advantage. 
D) equal consumption among trading partners. 
A) more consumption for all trading partners. 
B) more consumption for the trading partner with the comparative advantage. 
C) more consumption for the trading partner with the absolute advantage. 
D) equal consumption among trading partners.

Question 8

Since 1950, the balance of trade for United States has

Accepted Answer

A) gone from a surplus to a deficit. 
B) gone from a deficit to a surplus. 
C) remained constant. 
D) gone from a small deficit to a larger deficit. 
A) gone from a surplus to a deficit. 
B) gone from a deficit to a surplus. 
C) remained constant. 
D) gone from a small deficit to a larger deficit.

Question 9

In the long run, imports will most likely be paid for with

Accepted Answer

A) exports. 
B) the sale of real and financial assets. 
C) the extension of credit. 
D) higher domestic unemployment. 
A) exports. 
B) the sale of real and financial assets. 
C) the extension of credit. 
D) higher domestic unemployment.

Question 10

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of

Accepted Answer

A) Good X. 
B) Good Y. 
C) both goods. 
D) neither good. 
A) Good X. 
B) Good Y. 
C) both goods. 
D) neither good.

Question 11

Dumping is defined as

Accepted Answer

A) selling a good abroad at prices above the costs of the firms in the foreign countries. 
B) exporting goods that are of inferior quality. 
C) selling a good abroad at prices below its cost of production or below the price charged in the home market. 
D) exporting goods that are sources of pollution. 
A) selling a good abroad at prices above the costs of the firms in the foreign countries. 
B) exporting goods that are of inferior quality. 
C) selling a good abroad at prices below its cost of production or below the price charged in the home market. 
D) exporting goods that are sources of pollution.

Question 12

The ability to produce a good at lower opportunity costs than another producer is known as

Accepted Answer

A) comparative advantage. 
B) marginal cost production. 
C) economies of scale. 
D) absolute advantage. 
A) comparative advantage. 
B) marginal cost production. 
C) economies of scale. 
D) absolute advantage.

Question 13

-Use the above table. If these two countries, Alpha and Beta, specialize based on comparative advantage

Accepted Answer

A) Alpha will specialize in cookies, and Beta will specialize in coffee production. 
B) Alpha will specialize in producing both items. 
C) Beta will specialize in producing both items. 
D) Alpha will specialize in coffee, and Beta will specialize in cookies. 
A) Alpha will specialize in cookies, and Beta will specialize in coffee production. 
B) Alpha will specialize in producing both items. 
C) Beta will specialize in producing both items. 
D) Alpha will specialize in coffee, and Beta will specialize in cookies.

Question 14

An assumption behind the infant industry argument for tariff protection is that

Accepted Answer

A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand. 
A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand.

Question 15

The ability to produce the same quantity of a good or service using fewer units of labor is known as

Accepted Answer

A) competitive dominance. 
B) productive dominance. 
C) comparative advantage. 
D) absolute advantage. 
A) competitive dominance. 
B) productive dominance. 
C) comparative advantage. 
D) absolute advantage.

Question 16

A quota is

Accepted Answer

A) a government-imposed restriction on the quantity of a specific good that can be imported into a country. 
B) a tariff imposed on goods that are dumped into the home country. 
C) a tariff imposed on goods that are subsidized by their domestic governments and exported to other countries. 
D) a tariff based on the value of the imported good. 
A) a government-imposed restriction on the quantity of a specific good that can be imported into a country. 
B) a tariff imposed on goods that are dumped into the home country. 
C) a tariff imposed on goods that are subsidized by their domestic governments and exported to other countries. 
D) a tariff based on the value of the imported good.

Question 17

A tariff is

Accepted Answer

A) a subsidy on domestically produced goods. 
B) the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. 
C) a tax on imported goods. 
D) a government imposed restriction on the quantity of a specific good that can be imported into the country and sold. 
A) a subsidy on domestically produced goods. 
B) the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. 
C) a tax on imported goods. 
D) a government imposed restriction on the quantity of a specific good that can be imported into the country and sold.

Question 18

-Refer to the above table. Assuming constant opportunity costs

Accepted Answer

A) neither country will be willing to engage in trade at any rate of exchange of product A for product B. 
B) both countries will be willing to engage in trade at a rate of exchange of 0.3 unit of product A for 1 unit of product B. 
C) both countries will be willing to engage in trade at a rate of exchange of 3 units of product A for 1 unit of product B. 
D) both countries will be willing to engage in trade at a rate of exchange of 1.5 unit of product A for 1 unit of product B. 
A) neither country will be willing to engage in trade at any rate of exchange of product A for product B. 
B) both countries will be willing to engage in trade at a rate of exchange of 0.3 unit of product A for 1 unit of product B. 
C) both countries will be willing to engage in trade at a rate of exchange of 3 units of product A for 1 unit of product B. 
D) both countries will be willing to engage in trade at a rate of exchange of 1.5 unit of product A for 1 unit of product B.

Question 19

The successor to GATT in 1995 is

Accepted Answer

A) the World Agreement on Tariff and Trade. 
B) the World Trade Organization. 
C) the World Trade Agreement. 
D) the World Trade and Tariff Organization. 
A) the World Agreement on Tariff and Trade. 
B) the World Trade Organization. 
C) the World Trade Agreement. 
D) the World Trade and Tariff Organization.

Question 20

Restricting imports usually leads to

Accepted Answer

A) a country producing beyond its production possibilities frontier. 
B) a country consuming even further beyond its production possibilities frontier. 
C) a reduction in exports and employment. 
D) a higher per capita level of real consumption. 
A) a country producing beyond its production possibilities frontier. 
B) a country consuming even further beyond its production possibilities frontier. 
C) a reduction in exports and employment. 
D) a higher per capita level of real consumption.

Dumping is considered a practice that seriously harms domestic producers because

The effects of a tariff are

Given two economic systems, A and B, if economy A has a comparative advantage in the production of widgets, then

The General Agreement on Tariffs and Trade is an international agreement

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Ethel's opportunity cost to produce one cake is

The argument that trade in high-tech equipment can facilitate the implementation of advanced military technology in countries that may become strategic opponents later on is the

Specialization allows for

Since 1950, the balance of trade for United States has

In the long run, imports will most likely be paid for with

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of

Dumping is defined as

The ability to produce a good at lower opportunity costs than another producer is known as

-Use the above table. If these two countries, Alpha and Beta, specialize based on comparative advantage

An assumption behind the infant industry argument for tariff protection is that

The ability to produce the same quantity of a good or service using fewer units of labor is known as

A quota is

A tariff is

-Refer to the above table. Assuming constant opportunity costs

The successor to GATT in 1995 is

Restricting imports usually leads to

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

Dumping is considered a practice that seriously harms domestic producers because

The effects of a tariff are

Given two economic systems, A and B, if economy A has a comparative advantage in the production of widgets, then

The General Agreement on Tariffs and Trade is an international agreement

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Ethel's opportunity cost to produce one cake is

The argument that trade in high-tech equipment can facilitate the implementation of advanced military technology in countries that may become strategic opponents later on is the

Specialization allows for

Since 1950, the balance of trade for United States has

In the long run, imports will most likely be paid for with

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of

Dumping is defined as

The ability to produce a good at lower opportunity costs than another producer is known as

-Use the above table. If these two countries, Alpha and Beta, specialize based on comparative advantage

An assumption behind the infant industry argument for tariff protection is that

The ability to produce the same quantity of a good or service using fewer units of labor is known as

A quota is

A tariff is

-Refer to the above table. Assuming constant opportunity costs

The successor to GATT in 1995 is

Restricting imports usually leads to

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