Question 1

Anti-globalisation and protectionism are both arguments against free trade.How do these two arguments differ?

Accepted Answer

The anti-globalisation argument against trade is relatively new.This argument includes the notion that free trade destroys the culture of many countries and that factories locating to low-income countries do not meet environmental or safety regulations that are imposed in high-income countries.The protectionism argument has been around for centuries.Protectionism is usually justified on the basis of one of the following four arguments: saving jobs,protecting high wages,protecting infant industries,and protecting national security.

Question 2

Table 19.6
Production and
Consumption Production
Without Trade with Trade
 $$\begin{array} { | l | l | l | l| l | } 
\hline & \text { Clerks } & \text { Hats } & \text { Clerks } & \text { Hats } \
\hline \text { Denmark } & 900 & 150 & 1200 & 0 \
\hline \text { Belize } & 150 & 100 & 0 & 400 \
\hline
\end{array}$$ Denmark and Belize can produce both clocks and hats. Table 19.6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19.6.All of the following are terms of trade that could possibly benefit both countries except _________.

Accepted Answer

A)  1/5 of a hat : 1 clock 
B)  1/3 of a hat : 1 clock 
C)  1/2 of a hat : 1 clock 
D)  3/4 of a hat : 1 clock 
A)  1/5 of a hat : 1 clock 
B)  1/3 of a hat : 1 clock 
C)  1/2 of a hat : 1 clock 
D)  3/4 of a hat : 1 clock D

Question 3

Tastes for products such as beer differ.As a result _________.

Accepted Answer

A)  we see countries specialising completely in the production of beer 
B)  consumers of beer have difficulty deciding what type of imported beer to buy 
C)  the quality of imported beer is less than it could be 
D)  different countries may each have a comparative advantage in producing different types of beer 
A)  we see countries specialising completely in the production of beer 
B)  consumers of beer have difficulty deciding what type of imported beer to buy 
C)  the quality of imported beer is less than it could be 
D)  different countries may each have a comparative advantage in producing different types of beer D

Question 4

What is the difference between imports and exports?

Accepted Answer

Imports are goods and services

Question 5

A tariff is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A) True 
 B)False

Question 6

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

Accepted Answer

A)  Absolute advantage 
B)  Specialisation 
C)  Autarky 
D)  Comparative advantage 
A)  Absolute advantage 
B)  Specialisation 
C)  Autarky 
D)  Comparative advantage

Question 7

The best example of a tariff from the list below is _________.

Accepted Answer

A)  a subsidy from the government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A)  a subsidy from the government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 8

Table 19.2
 $$\begin{array} { | l | l | l | } 
\hline & \text { Pies } & \text { Cakes } \
\hline \text { Sarita } & 15 & 25 \
\hline \text { Gabriel } & 12 & 16 \
\hline
\end{array}$$ Sarita and Gabriel own S&G Bakery. Table 19.2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day.
-Refer to Table 19.2.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Sarita has a comparative advantage in baking pies. 
B)  Gabriel has an absolute advantage in baking cakes. 
C)  Gabriel has a comparative advantage in baking pies. 
D)  Gabriel has a comparative advantage in baking pies and baking cakes. 
A)  Sarita has a comparative advantage in baking pies. 
B)  Gabriel has an absolute advantage in baking cakes. 
C)  Gabriel has a comparative advantage in baking pies. 
D)  Gabriel has a comparative advantage in baking pies and baking cakes.

Question 9

Table 19.4
Output per Hour of Work
 $$\begin{array} { | l | c | c | } 
\hline & \text { Handbags } & \text { Jackets } \
\hline \text { Cambodia } & 15 & 3 \
\hline \text { Thailand } & 24 & 6 \
\hline
\end{array}$$ Table 19.4 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand.
-Refer to Table 19.4.
a.Which country has an absolute advantage in the production of handbags and jackets?
b.Which country has a comparative advantage in the production of handbags?
c.Which country has a comparative advantage in the production of jackets?

Accepted Answer

a.Thailand has an absolute advantage in

Question 10

What is the main purpose of most tariffs and quotas?

Accepted Answer

A)  To raise revenue for the government 
B)  To reduce the prices consumers pay for goods and services 
C)  To reduce the foreign competition that domestic firms face 
D)  To improve the quality of goods and services imported into the country 
A)  To raise revenue for the government 
B)  To reduce the prices consumers pay for goods and services 
C)  To reduce the foreign competition that domestic firms face 
D)  To improve the quality of goods and services imported into the country

Question 11

Imports are goods and services bought domestically _________.

Accepted Answer

A)  but produced in other countries 
B)  and resold at a profit 
C)  and produced domestically 
D)  and not subject to tariffs 
A)  but produced in other countries 
B)  and resold at a profit 
C)  and produced domestically 
D)  and not subject to tariffs

Question 12

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is the case.

Accepted Answer

Three reasons outlined in the text are a

Question 13

Table 19.6
Production and
Consumption Production
Without Trade with Trade
 $$\begin{array} { | l | l | l | l| l | } 
\hline & \text { Clerks } & \text { Hats } & \text { Clerks } & \text { Hats } \
\hline \text { Denmark } & 900 & 150 & 1200 & 0 \
\hline \text { Belize } & 150 & 100 & 0 & 400 \
\hline
\end{array}$$ Denmark and Belize can produce both clocks and hats. Table 19.6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19.6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many hats will Denmark consume?

Accepted Answer

A)  150 
B)  180 
C)  270 
D)  400 
A)  150 
B)  180 
C)  270 
D)  400

Question 14

Table 19.3
 $$\begin{array} { | l | l | l | } 
\hline & \text { Candles } & \text { Soap } \
\hline \text { Bryce } & 150 & 450 \
\hline \text { Tina } & 200 & 450 \
\hline
\end{array}$$ Bryce and Tina are artisans who produce homemade candles and soap. Table 19.3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 19.3.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Tina has a comparative advantage in making candles. 
B)  Bryce has an absolute advantage in making soap. 
C)  Bryce has a comparative advantage in making candles. 
D)  Bryce has a comparative advantage in making candles and making soap. 
A)  Tina has a comparative advantage in making candles. 
B)  Bryce has an absolute advantage in making soap. 
C)  Bryce has a comparative advantage in making candles. 
D)  Bryce has a comparative advantage in making candles and making soap.

Question 15

Table 19.3
 $$\begin{array} { | l | l | l | } 
\hline & \text { Candles } & \text { Soap } \
\hline \text { Bryce } & 150 & 450 \
\hline \text { Tina } & 200 & 450 \
\hline
\end{array}$$ Bryce and Tina are artisans who produce homemade candles and soap. Table 19.3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 19.3.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Bryce has a greater opportunity cost than Tina for making candles. 
B)  Bryce's opportunity cost for making candles is less than Tina's. 
C)  Tina has a greater opportunity cost than Bryce for making candles. 
D)  Bryce's opportunity cost for making candles and making soap are both greater than Tina's. 
A)  Bryce has a greater opportunity cost than Tina for making candles. 
B)  Bryce's opportunity cost for making candles is less than Tina's. 
C)  Tina has a greater opportunity cost than Bryce for making candles. 
D)  Bryce's opportunity cost for making candles and making soap are both greater than Tina's.

Question 16

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Accepted Answer

A country can have an absolute advantage

Question 17

Table 19.1
 $$\begin{array} { | l | c | c | } 
\hline & \text { Bathing } & \text { Grooming } \
\hline \text { Linda } & 60 & 20 \
\hline \text { Sandy } & 50 & 25 \
\hline
\end{array}$$ Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 19.1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 19.1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Sandy has a greater opportunity cost than Linda for dog grooming. 
B)  Sandy's opportunity cost for dog grooming is less than Linda's. 
C)  Linda has a greater opportunity cost than Sandy for dog bathing. 
D)  Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's. 
A)  Sandy has a greater opportunity cost than Linda for dog grooming. 
B)  Sandy's opportunity cost for dog grooming is less than Linda's. 
C)  Linda has a greater opportunity cost than Sandy for dog bathing. 
D)  Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's.

Question 18

Trade only occurs if there are only winners,and no losers,as a result of the trade.

Accepted Answer

A) True 
 B)False

Question 19

What is a consequence of increasing marginal costs of producing digital music players in Japan?

Accepted Answer

A)  Japan will not export digital music players. 
B)  Japan will stop short of complete specialisation in the production of digital music players. 
C)  Japan will import digital music players from countries that don't experience increasing marginal costs. 
D)  Japan will likely impose trade restrictions on imported digital music players. 
A)  Japan will not export digital music players. 
B)  Japan will stop short of complete specialisation in the production of digital music players. 
C)  Japan will import digital music players from countries that don't experience increasing marginal costs. 
D)  Japan will likely impose trade restrictions on imported digital music players.

Question 20

Which of the following is used to describe an 'open' economy?

Accepted Answer

A)  One which has few or no barriers to international trade 
B)  One that exports a small proportion of its output 
C)  One that is open to technological ideas from other countries 
D)  One that is open to immigration from other countries 
A)  One which has few or no barriers to international trade 
B)  One that exports a small proportion of its output 
C)  One that is open to technological ideas from other countries 
D)  One that is open to immigration from other countries

Anti-globalisation and protectionism are both arguments against free trade.How do these two arguments differ?

Tastes for products such as beer differ.As a result _________.

What is the difference between imports and exports?

A tariff is a numerical limit on the quantity of a good that can be imported.

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

The best example of a tariff from the list below is _________.

Table 19.2 Pies Cakes Sarita 15 25 Gabriel 12 16 Sarita and Gabriel own S&G Bakery. Table 19.2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. -Refer to Table 19.2.Select the statement that accurately interprets the data in the table.

What is the main purpose of most tariffs and quotas?

Imports are goods and services bought domestically _________.

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is the case.

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Table 19.1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 19.1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 19.1.Select the statement that accurately interprets the data in the table.

Trade only occurs if there are only winners,and no losers,as a result of the trade.

What is a consequence of increasing marginal costs of producing digital music players in Japan?

Which of the following is used to describe an 'open' economy?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

Filters

Exam 19: Comparative Advantage and the Gains From International Trade

Anti-globalisation and protectionism are both arguments against free trade.How do these two arguments differ?

Tastes for products such as beer differ.As a result _________.

What is the difference between imports and exports?

A tariff is a numerical limit on the quantity of a good that can be imported.

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

The best example of a tariff from the list below is _________.

Table 19.2 Pies Cakes Sarita 15 25 Gabriel 12 16 Sarita and Gabriel own S&G Bakery. Table 19.2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. -Refer to Table 19.2.Select the statement that accurately interprets the data in the table.

What is the main purpose of most tariffs and quotas?

Imports are goods and services bought domestically _________.

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is the case.

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Table 19.1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 19.1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 19.1.Select the statement that accurately interprets the data in the table.

Trade only occurs if there are only winners,and no losers,as a result of the trade.

What is a consequence of increasing marginal costs of producing digital music players in Japan?

Which of the following is used to describe an 'open' economy?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

Filters