Question 1

Tariffs are government policies designed to encourage international trade.

Accepted Answer

A) True 
 B)False

Question 2

If Egypt can produce 3 silver candlesticks or 120 small silver cups in an hour and Turkey can produce 4 silver candlesticks or 160 small silver cups in an hour then

Accepted Answer

A)  neither country would gain by trading 
B)  the terms of trade or 40 silver cups per one silver candlestick and Egypt should only produce silver cups. 
C)  the terms of trade or 40 silver cups per one silver candlestick and Turkey should only produce silver cups. 
D)  the terms of trade or 40 silver cups per one silver candlestick and Egypt should only produce candlesticks. 
E)  the terms of trade or 40 silver cups per one silver candlestick and Turkey should only produce candlesticks. 
A)  neither country would gain by trading 
B)  the terms of trade or 40 silver cups per one silver candlestick and Egypt should only produce silver cups. 
C)  the terms of trade or 40 silver cups per one silver candlestick and Turkey should only produce silver cups. 
D)  the terms of trade or 40 silver cups per one silver candlestick and Egypt should only produce candlesticks. 
E)  the terms of trade or 40 silver cups per one silver candlestick and Turkey should only produce candlesticks.

Question 3

-What can be said regarding absolute advantage in production for the two countries shown in Figure 16-1?

Accepted Answer

A)  Colombia has an absolute advantage in producing both calculators and radios. 
B)  Korea has an absolute advantage only in producing calculators. 
C)  Korea has an absolute advantage in producing both radios and calculators. 
D)  Neither country has an absolute advantage in producing radios. 
E)  Colombia has an absolute advantage only in producing calculators. 
A)  Colombia has an absolute advantage in producing both calculators and radios. 
B)  Korea has an absolute advantage only in producing calculators. 
C)  Korea has an absolute advantage in producing both radios and calculators. 
D)  Neither country has an absolute advantage in producing radios. 
E)  Colombia has an absolute advantage only in producing calculators.

Question 4

The United States does not impose tariffs or quotas;however,many of its trading partners do have these trade restrictions.

Accepted Answer

A) True 
 B)False

Question 5

A tax that is imposed on each unit of an imported good is known as a(n)

Accepted Answer

A)  quota 
B)  ad valorem quota 
C)  implicit quota 
D)  tariff 
E)  subsidy 
A)  quota 
B)  ad valorem quota 
C)  implicit quota 
D)  tariff 
E)  subsidy

Question 6

Which of the following factors does not help explain incomplete specialization by countries that trade in accordance with comparative advantage?

Accepted Answer

A)  There may be high transportation costs for perishable products or human services. 
B)  The economies of trading partners may be of vastly different sizes. 
C)  Opportunity costs of production may not be constant,but may vary with the volume of production. 
D)  Governments may impose all kinds of barriers to free international trade,such as tariffs and quotas. 
E)  The cost of making trade deals may have become extremely low because of the existence of the World Trade Organization. 
A)  There may be high transportation costs for perishable products or human services. 
B)  The economies of trading partners may be of vastly different sizes. 
C)  Opportunity costs of production may not be constant,but may vary with the volume of production. 
D)  Governments may impose all kinds of barriers to free international trade,such as tariffs and quotas. 
E)  The cost of making trade deals may have become extremely low because of the existence of the World Trade Organization.

Question 7

If Japan can produce each unit of steel using fewer resources than Canada uses,

Accepted Answer

A)  Canada has an absolute advantage in steel production 
B)  Japan has a comparative advantage in steel production 
C)  Canada has a comparative advantage in steel production 
D)  Canada may have an absolute advantage in producing steel 
E)  Japan has an absolute advantage in steel production 
A)  Canada has an absolute advantage in steel production 
B)  Japan has a comparative advantage in steel production 
C)  Canada has a comparative advantage in steel production 
D)  Canada may have an absolute advantage in producing steel 
E)  Japan has an absolute advantage in steel production

Question 8

If a nation begins to export a good,

Accepted Answer

A)  the domestic price of that good will decrease 
B)  that country will typically erect barriers to trade 
C)  domestic producers of the good will be harmed 
D)  domestic consumers of the good will be harmed 
E)  both domestic consumers and domestic producers will benefit 
A)  the domestic price of that good will decrease 
B)  that country will typically erect barriers to trade 
C)  domestic producers of the good will be harmed 
D)  domestic consumers of the good will be harmed 
E)  both domestic consumers and domestic producers will benefit

Question 9

Consider the following table on output producible per 100 labor hours:   Which of the following statements is correct?

Accepted Answer

A)  All of the following are correct. 
B)  France has a comparative advantage in producing computers. 
C)  Italy's opportunity cost is 4 units of wine per computer. 
D)  France produces more computers than Italy does. 
E)  France produces more wine than Italy does. 
A)  All of the following are correct. 
B)  France has a comparative advantage in producing computers. 
C)  Italy's opportunity cost is 4 units of wine per computer. 
D)  France produces more computers than Italy does. 
E)  France produces more wine than Italy does.

Question 10

In general,a society will benefit more,the more interdependent it is.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that for each automobile Japan produces it must forego producing 40 computers.The United States must forego producing 80 computers for each automobile it produces.Which of the following is true?

Accepted Answer

A)  Japan has a comparative advantage in producing computers. 
B)  the U.S.has a comparative advantage in producing computers. 
C)  the U.S.has a comparative advantage in producing automobiles. 
D)  the U.S.has an absolute advantage in producing automobiles. 
E)  the opportunity cost of producing computers is the same for Japan and the U.S. 
A)  Japan has a comparative advantage in producing computers. 
B)  the U.S.has a comparative advantage in producing computers. 
C)  the U.S.has a comparative advantage in producing automobiles. 
D)  the U.S.has an absolute advantage in producing automobiles. 
E)  the opportunity cost of producing computers is the same for Japan and the U.S.

Question 12

If Country A exports a good to Country B,the prices of the good in Country A will ______ and the prices of the good in Country B will ________.

Accepted Answer

A)  increase;increase 
B)  decrease;decrease 
C)  increase;decrease 
D)  decrease;increase 
E)  stay the same;increase 
A)  increase;increase 
B)  decrease;decrease 
C)  increase;decrease 
D)  decrease;increase 
E)  stay the same;increase

Question 13

Economists generally oppose trade restrictions such as tariffs and quotas;however,if one these devices must be used,economists generally prefer tariffs to quotas.

Accepted Answer

A) True 
 B)False

Question 14

Once a nation has been producing a good or service for some time,

Accepted Answer

A)  its supply curve for that product is vertical 
B)  its supply curve for that product is horizontal at the world price 
C)  it often develops a comparative advantage in producing that good or service 
D)  its moves along its production possibilities frontier and produces more of it 
E)  its production possibilities frontier shifts outward 
A)  its supply curve for that product is vertical 
B)  its supply curve for that product is horizontal at the world price 
C)  it often develops a comparative advantage in producing that good or service 
D)  its moves along its production possibilities frontier and produces more of it 
E)  its production possibilities frontier shifts outward

Question 15

A nation's comparative advantage

Accepted Answer

A)  can almost always be traced to its natural resources 
B)  is often based on its natural resources 
C)  is often based on barriers to international trade 
D)  is reflected in the shape of its demand curve for imported goods 
E)  is a result of increasing marginal returns 
A)  can almost always be traced to its natural resources 
B)  is often based on its natural resources 
C)  is often based on barriers to international trade 
D)  is reflected in the shape of its demand curve for imported goods 
E)  is a result of increasing marginal returns

Question 16

One advantage of a tariff over a quota,from the perspective of the nation imposing it,is that a tariff

Accepted Answer

A)  decreases the domestic price 
B)  increases the foreign price 
C)  increases the quantity of imports 
D)  decreases the quality of imports 
E)  raises tax revenue 
A)  decreases the domestic price 
B)  increases the foreign price 
C)  increases the quantity of imports 
D)  decreases the quality of imports 
E)  raises tax revenue

Question 17

A nation has a comparative advantage in producing a good if it has a lower opportunity cost of producing that good than other countries have.

Accepted Answer

A) True 
 B)False

Question 18

If countries begin to specialize according to comparative advantage,a more efficient use of resources occurs.As a result,the world output of at least one good increases,with no decrease in the output of any other good.

Accepted Answer

A) True 
 B)False

Question 19

If free international trade is compromised by the imposition of an import quota or tariff,

Accepted Answer

A)  all of the following are true 
B)  import-competing producers in the country that imposes the tariff or quota will be able to sell a larger quantity at higher prices 
C)  consumers of import goods will obtain a larger quantity at lower prices 
D)  workers in export industries will find more jobs 
E)  consumers of export goods will obtain a larger quantity,although only at higher prices 
A)  all of the following are true 
B)  import-competing producers in the country that imposes the tariff or quota will be able to sell a larger quantity at higher prices 
C)  consumers of import goods will obtain a larger quantity at lower prices 
D)  workers in export industries will find more jobs 
E)  consumers of export goods will obtain a larger quantity,although only at higher prices

Question 20

Consider the following table on labor hours needed per unit of output:   Ignoring nonlabor inputs,which of the following statements is correct?

Accepted Answer

A)  All of the following are correct. 
B)  The opportunity cost of a computer equals 1/4 unit of wine in Italy. 
C)  The opportunity cost of a computer equals 1/2 unit of wine in France. 
D)  Italy has a comparative advantage in computers. 
E)  Italy has a comparative advantage in wine. 
A)  All of the following are correct. 
B)  The opportunity cost of a computer equals 1/4 unit of wine in Italy. 
C)  The opportunity cost of a computer equals 1/2 unit of wine in France. 
D)  Italy has a comparative advantage in computers. 
E)  Italy has a comparative advantage in wine.

Exam 16: Comparative Advantage and the Gains From International Trade

Tariffs are government policies designed to encourage international trade.

If Egypt can produce 3 silver candlesticks or 120 small silver cups in an hour and Turkey can produce 4 silver candlesticks or 160 small silver cups in an hour then

-What can be said regarding absolute advantage in production for the two countries shown in Figure 16-1?

The United States does not impose tariffs or quotas;however,many of its trading partners do have these trade restrictions.

A tax that is imposed on each unit of an imported good is known as a(n)

Which of the following factors does not help explain incomplete specialization by countries that trade in accordance with comparative advantage?

If Japan can produce each unit of steel using fewer resources than Canada uses,

If a nation begins to export a good,

Consider the following table on output producible per 100 labor hours: Which of the following statements is correct?

In general,a society will benefit more,the more interdependent it is.

Suppose that for each automobile Japan produces it must forego producing 40 computers.The United States must forego producing 80 computers for each automobile it produces.Which of the following is true?

If Country A exports a good to Country B,the prices of the good in Country A will ______ and the prices of the good in Country B will ________.

Economists generally oppose trade restrictions such as tariffs and quotas;however,if one these devices must be used,economists generally prefer tariffs to quotas.

Once a nation has been producing a good or service for some time,

A nation's comparative advantage

One advantage of a tariff over a quota,from the perspective of the nation imposing it,is that a tariff

A nation has a comparative advantage in producing a good if it has a lower opportunity cost of producing that good than other countries have.

If countries begin to specialize according to comparative advantage,a more efficient use of resources occurs.As a result,the world output of at least one good increases,with no decrease in the output of any other good.

If free international trade is compromised by the imposition of an import quota or tariff,

Consider the following table on labor hours needed per unit of output: Ignoring nonlabor inputs,which of the following statements is correct?

What Is Economics

Scarcity,choice,and Economic Systems

Scarcity, choice, and Economic Systems: Part A

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

Perfect Competition: Part A

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

labor Markets: Part A

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

What Macroeconomics Tries to Explain

Production, income, and Employment

The Price Level and Inflation

The Classical Long-Run Model

Part A: The Classical Model in an Open Economy

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-Run Macro Model

Fiscal Policy

Money,banks,and the Federal Reserve

The Money Market and Monetary Policy

Feedback Effects From GDP to the Money Market

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Appendix-finding Equilibrium GDP Algebraically

Appendix: Capital and Leverage

Filters

If Country A exports a good to Country B,the prices of the good in Country A will and the prices of the good in Country B will __.