Question 1

Which of the following is not an example of a trade restriction?

Accepted Answer

A)  tariffs 
B)  quotas and voluntary export restraints 
C)  legislation requiring that cars sold in a country have a 50 percent domestic content 
D)  consumer preferences for goods produced domestically 
A)  tariffs 
B)  quotas and voluntary export restraints 
C)  legislation requiring that cars sold in a country have a 50 percent domestic content 
D)  consumer preferences for goods produced domestically

Question 2

Table 9-1
   Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Sandy has a comparative advantage in dog grooming. 
B)  Linda has a comparative advantage in dog grooming. 
C)  Linda has a comparative advantage in dog grooming and dog bathing. 
D)  Sandy has a comparative advantage in dog bathing. 
A)  Sandy has a comparative advantage in dog grooming. 
B)  Linda has a comparative advantage in dog grooming. 
C)  Linda has a comparative advantage in dog grooming and dog bathing. 
D)  Sandy has a comparative advantage in dog bathing.

Question 3

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

Accepted Answer

A country can have a comparative advanta

Question 4

Table 9-5
   Madison and Austin own Cafe Ole'. Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour.
-Refer to Table 9-5. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Madison has a comparative advantage in making empanadas. 
B)  Austin has a comparative advantage in making tacos. 
C)  Madison has a comparative advantage in making empanadas and making tacos. 
D)  Madison has a comparative advantage in making tacos. 
A)  Madison has a comparative advantage in making empanadas. 
B)  Austin has a comparative advantage in making tacos. 
C)  Madison has a comparative advantage in making empanadas and making tacos. 
D)  Madison has a comparative advantage in making tacos.

Question 5

Over the past several decades there has been a rapid growth in international trade. This growth has been due to all except one of the following factors. Which factor has not contributed to the growth of international trade?

Accepted Answer

A)  the spread of reliable communications 
B)  a change in the tariffs charged on many goods 
C)  a reduction in shipping costs 
D)  favorable changes in government policies 
A)  the spread of reliable communications 
B)  a change in the tariffs charged on many goods 
C)  a reduction in shipping costs 
D)  favorable changes in government policies

Question 6

Figure 9-5   Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5. If the tariff was replaced by a quota which limited coffee imports to 20 million pounds, the amount of revenue received by coffee importers would equal

Accepted Answer

A)  $5 million. 
B)  $15 million. 
C)  $50 million. 
D)  $78 million. 
A)  $5 million. 
B)  $15 million. 
C)  $50 million. 
D)  $78 million.

Question 7

Table 9-4
   Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food. Rob and Bill spent one day each fishing and picking berries. The table lists the pounds of output Rob and Bill produced.
-Refer to Table 9-4. Use the table above to select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Bill has a greater opportunity cost than Rob for picking berries. 
B)  Bill's opportunity cost for catching fish is less than Rob's. 
C)  Rob has a greater opportunity cost than Bill for picking berries. 
D)  Bill's opportunity cost for picking berries and catching fish are both greater than Rob's. 
A)  Bill has a greater opportunity cost than Rob for picking berries. 
B)  Bill's opportunity cost for catching fish is less than Rob's. 
C)  Rob has a greater opportunity cost than Bill for picking berries. 
D)  Bill's opportunity cost for picking berries and catching fish are both greater than Rob's.

Question 8

Imposing tariffs in cases of dumping

Accepted Answer

A)  is allowed under the WTO agreement. 
B)  is not allowed under the WTO agreement. 
C)  is not addressed by the WTO agreement. 
D)  has never occurred, even though it is allowed under the WTO agreement. 
A)  is allowed under the WTO agreement. 
B)  is not allowed under the WTO agreement. 
C)  is not addressed by the WTO agreement. 
D)  has never occurred, even though it is allowed under the WTO agreement.

Question 9

Protectionism refers to the use of trade barriers to shield domestic firms from foreign competition.

Accepted Answer

A) True 
 B)False

Question 10

A tariff is a tax imposed by a government on

Accepted Answer

A)  exports. 
B)  services. 
C)  imports. 
D)  luxury items. 
A)  exports. 
B)  services. 
C)  imports. 
D)  luxury items.

Question 11

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States. Hansen

Accepted Answer

A)  is incorrect. Free trade raises living standards by increasing economic efficiency. 
B)  is right in asserting the need to protect high wages if the United States wishes to maintain its high standard of living. 
C)  is correct in arguing that the high wages of U.S. workers make it impossible to compete with workers in low-wage countries. 
D)  is advancing the anti-dumping argument for protectionism. 
A)  is incorrect. Free trade raises living standards by increasing economic efficiency. 
B)  is right in asserting the need to protect high wages if the United States wishes to maintain its high standard of living. 
C)  is correct in arguing that the high wages of U.S. workers make it impossible to compete with workers in low-wage countries. 
D)  is advancing the anti-dumping argument for protectionism.

Question 12

Table 9-6
   Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Mateo has a greater opportunity cost than Celeste for making saddles. 
B)  Mateo's opportunity cost for making saddles is less than Celeste's. 
C)  Celeste has a greater opportunity cost than Mateo for making saddles. 
D)  Mateo's opportunity cost for making saddles and making spurs are both greater than Celeste's. 
A)  Mateo has a greater opportunity cost than Celeste for making saddles. 
B)  Mateo's opportunity cost for making saddles is less than Celeste's. 
C)  Celeste has a greater opportunity cost than Mateo for making saddles. 
D)  Mateo's opportunity cost for making saddles and making spurs are both greater than Celeste's.

Question 13

The main purpose of most tariffs and quotas is to

Accepted Answer

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

Question 14

Twenty-seven countries in Europe have eliminated all tariffs with each other. This group of countries is known as the

Accepted Answer

A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association. 
A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association.

Question 15

Disagreements about whether the U.S. government should regulate international trade

Accepted Answer

A)  began during the Great Depression. 
B)  began after World War I when government officials no longer believed in isolationism. 
C)  date back to the beginning of the country. 
D)  did not occur until the end of the Mexican War in 1848. 
A)  began during the Great Depression. 
B)  began after World War I when government officials no longer believed in isolationism. 
C)  date back to the beginning of the country. 
D)  did not occur until the end of the Mexican War in 1848.

Question 16

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Accepted Answer

A)  marginal 
B)  explicit 
C)  opportunity 
D)  implicit 
A)  marginal 
B)  explicit 
C)  opportunity 
D)  implicit

Question 17

Figure 9-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3. With a quota in place, what is the quantity consumed in the domestic market?

Accepted Answer

A)  10 million pounds 
B)  28 million pounds 
C)  34 million pounds 
D)  40 million pounds 
A)  10 million pounds 
B)  28 million pounds 
C)  34 million pounds 
D)  40 million pounds

Question 18

Figure 9-1   Figure 9-1 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?

Accepted Answer

A)  5 units 
B)  10 units 
C)  15 units 
D)  20 units 
A)  5 units 
B)  10 units 
C)  15 units 
D)  20 units

Question 19

Table 9-2
   Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day.
-Refer to Table 9-2. Select the statement that accurately interprets the data in the table.

Accepted Answer

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

Question 20

Table 9-5
   Madison and Austin own Cafe Ole'. Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour.
-Refer to Table 9-5. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Madison has a greater opportunity cost than Austin for making tacos. 
B)  Madison's opportunity cost for making tacos is less than Austin's. 
C)  Austin has a greater opportunity cost than Madison for making empanadas. 
D)  Austin's opportunity cost for making tacos and making empanadas are both greater than Madison's. 
A)  Madison has a greater opportunity cost than Austin for making tacos. 
B)  Madison's opportunity cost for making tacos is less than Austin's. 
C)  Austin has a greater opportunity cost than Madison for making empanadas. 
D)  Austin's opportunity cost for making tacos and making empanadas are both greater than Madison's.

Exam 9: Comparative Advantage and the Gains From International Trade

Which of the following is not an example of a trade restriction?

Table 9-1 Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1. Select the statement that accurately interprets the data in the table.

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

Table 9-5 Madison and Austin own Cafe Ole'. Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 9-5. Select the statement that accurately interprets the data in the table.

Over the past several decades there has been a rapid growth in international trade. This growth has been due to all except one of the following factors. Which factor has not contributed to the growth of international trade?

Imposing tariffs in cases of dumping

Protectionism refers to the use of trade barriers to shield domestic firms from foreign competition.

A tariff is a tax imposed by a government on

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States. Hansen

Table 9-6 Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

The main purpose of most tariffs and quotas is to

Twenty-seven countries in Europe have eliminated all tariffs with each other. This group of countries is known as the

Disagreements about whether the U.S. government should regulate international trade

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3. With a quota in place, what is the quantity consumed in the domestic market?

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?

Table 9-2 Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. -Refer to Table 9-2. Select the statement that accurately interprets the data in the table.

Table 9-5 Madison and Austin own Cafe Ole'. Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 9-5. Select the statement that accurately interprets the data in the table.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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