Question 1

Many tariffs are the result of political pressures.

Accepted Answer

A) True 
 B)False  True

Question 2

The United States today is a high-tariff country relative to its past.

Accepted Answer

A) True 
 B)False  False

Question 3

Political barriers play no part in international trade.

Accepted Answer

A) True 
 B)False  False

Question 4

Use the following to answer questions :
Figure 18-6  
-In Figure 18-6, a $1.50 tariff given a world price of $1.00 would allow domestic suppliers to handle two-thirds of domestic demand.

Accepted Answer

A) True 
 B)False

Question 5

Under an import tariff, any fluctuation in domestic demand is felt directly by importers.

Accepted Answer

A) True 
 B)False

Question 6

If one of two countries has an absolute advantage in the production of every commodity, then:

Accepted Answer

A) there is no comparative advantage and therefore no trade. 
B) trade would be profitable for the inefficient country, but not for the efficient one. 
C) trade would be profitable for the efficient country, but not the inefficient one. 
D) total world production cannot be increased by specialization and trade. 
E) none of the above are true. 
A) there is no comparative advantage and therefore no trade. 
B) trade would be profitable for the inefficient country, but not for the efficient one. 
C) trade would be profitable for the efficient country, but not the inefficient one. 
D) total world production cannot be increased by specialization and trade. 
E) none of the above are true.

Question 7

Use the following to answer questions :
Figure 18-3  
-If the world price were $1.00 in Figure 18-3, what size quota would be required to a maintain domestic supply of 200 units?

Accepted Answer

A) 0 units. 
B) 50 units. 
C) 100 units. 
D) 150 units. 
E) 200 units. 
A) 0 units. 
B) 50 units. 
C) 100 units. 
D) 150 units. 
E) 200 units.

Question 8

If we are to demonstrate gains from trade in the theory of comparative advantage, it is necessary to assume that:

Accepted Answer

A) one country must have an absolute advantage in the production of both goods. 
B) one country cannot have an absolute advantage in the production of both goods. 
C) one country must be considerably larger than the other. 
D) a country must be relatively more efficient in the production of one of the goods. 
E) factors of production have to be free to move between countries. 
A) one country must have an absolute advantage in the production of both goods. 
B) one country cannot have an absolute advantage in the production of both goods. 
C) one country must be considerably larger than the other. 
D) a country must be relatively more efficient in the production of one of the goods. 
E) factors of production have to be free to move between countries.

Question 9

A prohibitive tariff is one that is so high that it chokes off all imports

Accepted Answer

A) True 
 B)False

Question 10

Trade promotes specialization.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer questions :
Figure 18-3  
-Which of the points labeled in Figure 18-3 could be considered to be a point of no trade?

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) E. 
A) A. 
B) B. 
C) C. 
D) D. 
E) E.

Question 12

Use the following to answer questions :
Figure 18-3  
-Utilizing Figure 18-3, what would be the smallest prohibitive tariff if the world price were $1.00?

Accepted Answer

A) $1.75. 
B) $2.25. 
C) $3.25. 
D) Over $4.00. 
E) A prohibitive tariff cannot be determined. 
A) $1.75. 
B) $2.25. 
C) $3.25. 
D) Over $4.00. 
E) A prohibitive tariff cannot be determined.

Question 13

The introduction of decreasing costs into the theory of comparative advantage:

Accepted Answer

A) makes it possible for trade to be mutually advantageous even if there are no pre-trade differences in comparative costs between two countries. 
B) reduces the gain from international trade. 
C) means, unlike the constant-cost case, that specialization will probably not be complete. 
D) may be an interesting theoretical abstraction, but has little relevance in explaining why specialization and trade have, in fact, occurred. 
E) would explain none of the above. 
A) makes it possible for trade to be mutually advantageous even if there are no pre-trade differences in comparative costs between two countries. 
B) reduces the gain from international trade. 
C) means, unlike the constant-cost case, that specialization will probably not be complete. 
D) may be an interesting theoretical abstraction, but has little relevance in explaining why specialization and trade have, in fact, occurred. 
E) would explain none of the above.

Question 14

In terms of comparative advantage, the most correct explanation of why bananas are imported into the U.S.is that

Accepted Answer

A) bananas cannot be produced in temperate climates. 
B) it would take too much irrigation to produce bananas in the United States. 
C) bananas can be produced only with more effort elsewhere. 
D) U.S.resources are better employed in producing commodities that are relatively more expensive to produce in other countries and relatively less expensive to produce in the U.S. 
E) bananas are in relatively low demand in the United States. 
A) bananas cannot be produced in temperate climates. 
B) it would take too much irrigation to produce bananas in the United States. 
C) bananas can be produced only with more effort elsewhere. 
D) U.S.resources are better employed in producing commodities that are relatively more expensive to produce in other countries and relatively less expensive to produce in the U.S. 
E) bananas are in relatively low demand in the United States.

Question 15

Use the following to answer questions :
Figure 18-5  
-In Figure 18-5, what quota is equivalent to a $1 tariff?

Accepted Answer

A) 0 units. 
B) 50 units. 
C) 100 units. 
D) 200 units. 
E) None of the above. 
A) 0 units. 
B) 50 units. 
C) 100 units. 
D) 200 units. 
E) None of the above.

Question 16

Use the following to answer questions :
Figure 18-2  
-Which of the following is a true statement in reference to Figure 18-2?

Accepted Answer

A) Country A exports wheat to Country B. 
B) Free trade harms Country B.since the price of wheat is greater than in equilibrium. 
C) A prohibitive tariff would lower the price of wheat in Country A. 
D) The diagram would require no modification if Country A improved its relative efficiency in wheat production. 
E) Free trade would lower the price of wheat in Country A. 
A) Country A exports wheat to Country B. 
B) Free trade harms Country B.since the price of wheat is greater than in equilibrium. 
C) A prohibitive tariff would lower the price of wheat in Country A. 
D) The diagram would require no modification if Country A improved its relative efficiency in wheat production. 
E) Free trade would lower the price of wheat in Country A.

Question 17

Use the following to answer questions :
Figure 18-2  
-Assume that length AC equals length ac in Figure 18-2 and that $5 = 2 pounds.Then, under free trade, Country A will:

Accepted Answer

A) produce OA and consume OC. 
B) consume OA and produce OC. 
C) produce OA and consume OA. 
D) produce OB and consume OB. 
E) produce OC and consume OC. 
A) produce OA and consume OC. 
B) consume OA and produce OC. 
C) produce OA and consume OA. 
D) produce OB and consume OB. 
E) produce OC and consume OC.

Question 18

Use the following to answer questions :
Figure 18-5  
-In Figure 18-5, which area represents the net loss in consumer surplus for a $1 tariff?

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) E. 
A) A. 
B) B. 
C) C. 
D) D. 
E) E.

Question 19

Use the following to answer questions :
Figure 18-1  
-Note that in Figure 18-1, the production possibilities frontier is closer to the origin for Europe than for the U.S.This is because:

Accepted Answer

A) it is assumed that there are more people in the United States. 
B) it is assumed that Europe has lower output in both industries. 
C) it is assumed that the citizens of the United States are generally much better off than their European counterparts. 
D) it is assumed that there is more inefficiency in Europe. 
E) it is assumed that American labor is less productive than European labor. 
A) it is assumed that there are more people in the United States. 
B) it is assumed that Europe has lower output in both industries. 
C) it is assumed that the citizens of the United States are generally much better off than their European counterparts. 
D) it is assumed that there is more inefficiency in Europe. 
E) it is assumed that American labor is less productive than European labor.

Question 20

Outsourcing refers to locating services or production processes abroad.

Accepted Answer

A) True 
 B)False

Many tariffs are the result of political pressures.

The United States today is a high-tariff country relative to its past.

Political barriers play no part in international trade.

Use the following to answer questions : Figure 18-6 -In Figure 18-6, a $1.50 tariff given a world price of $1.00 would allow domestic suppliers to handle two-thirds of domestic demand.

Under an import tariff, any fluctuation in domestic demand is felt directly by importers.

If one of two countries has an absolute advantage in the production of every commodity, then:

Use the following to answer questions : Figure 18-3 -If the world price were $1.00 in Figure 18-3, what size quota would be required to a maintain domestic supply of 200 units?

If we are to demonstrate gains from trade in the theory of comparative advantage, it is necessary to assume that:

A prohibitive tariff is one that is so high that it chokes off all imports

Trade promotes specialization.

Use the following to answer questions : Figure 18-3 -Which of the points labeled in Figure 18-3 could be considered to be a point of no trade?

Use the following to answer questions : Figure 18-3 -Utilizing Figure 18-3, what would be the smallest prohibitive tariff if the world price were $1.00?

The introduction of decreasing costs into the theory of comparative advantage:

In terms of comparative advantage, the most correct explanation of why bananas are imported into the U.S.is that

Use the following to answer questions : Figure 18-5 -In Figure 18-5, what quota is equivalent to a $1 tariff?

Use the following to answer questions : Figure 18-2 -Which of the following is a true statement in reference to Figure 18-2?

Use the following to answer questions : Figure 18-2 -Assume that length AC equals length ac in Figure 18-2 and that $5 = 2 pounds.Then, under free trade, Country A will:

Use the following to answer questions : Figure 18-5 -In Figure 18-5, which area represents the net loss in consumer surplus for a $1 tariff?

Use the following to answer questions : Figure 18-1 -Note that in Figure 18-1, the production possibilities frontier is closer to the origin for Europe than for the U.S.This is because:

Outsourcing refers to locating services or production processes abroad.

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

Filters

Exam 18: Overview of Macroeconomics

Many tariffs are the result of political pressures.

The United States today is a high-tariff country relative to its past.

Political barriers play no part in international trade.

Use the following to answer questions : Figure 18-6 -In Figure 18-6, a $1.50 tariff given a world price of $1.00 would allow domestic suppliers to handle two-thirds of domestic demand.

Under an import tariff, any fluctuation in domestic demand is felt directly by importers.

If one of two countries has an absolute advantage in the production of every commodity, then:

Use the following to answer questions : Figure 18-3 -If the world price were $1.00 in Figure 18-3, what size quota would be required to a maintain domestic supply of 200 units?

If we are to demonstrate gains from trade in the theory of comparative advantage, it is necessary to assume that:

A prohibitive tariff is one that is so high that it chokes off all imports

Trade promotes specialization.

Use the following to answer questions : Figure 18-3 -Which of the points labeled in Figure 18-3 could be considered to be a point of no trade?

Use the following to answer questions : Figure 18-3 -Utilizing Figure 18-3, what would be the smallest prohibitive tariff if the world price were $1.00?

The introduction of decreasing costs into the theory of comparative advantage:

In terms of comparative advantage, the most correct explanation of why bananas are imported into the U.S.is that

Use the following to answer questions : Figure 18-5 -In Figure 18-5, what quota is equivalent to a $1 tariff?

Use the following to answer questions : Figure 18-2 -Which of the following is a true statement in reference to Figure 18-2?

Use the following to answer questions : Figure 18-2 -Assume that length AC equals length ac in Figure 18-2 and that $5 = 2 pounds.Then, under free trade, Country A will:

Use the following to answer questions : Figure 18-5 -In Figure 18-5, which area represents the net loss in consumer surplus for a $1 tariff?

Use the following to answer questions : Figure 18-1 -Note that in Figure 18-1, the production possibilities frontier is closer to the origin for Europe than for the U.S.This is because:

Outsourcing refers to locating services or production processes abroad.

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Imperfect Competition and Monopoly

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

Filters