Question 1

Exports are domestically produced goods and services

Accepted Answer

A)  sold to other countries. 
B)  sold to the government. 
C)  sold at home. 
D)  which are used to produce other goods and services. 
A)  sold to other countries. 
B)  sold to the government. 
C)  sold at home. 
D)  which are used to produce other goods and services.

Question 2

Table 9-11
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-11. 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

Question 3

Today, the United States charges an average tariff rate of less than 1.5 percent.

Accepted Answer

A) True 
 B)False

Question 4

Table 9-11
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-11. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Denmark gain compared to the "without trade" numbers?

Accepted Answer

A)  30 
B)  100 
C)  150 
D)  900 
A)  30 
B)  100 
C)  150 
D)  900

Question 5

Which of the following is the best example of a voluntary export restraint?

Accepted Answer

A)  a limit set by the Japanese government on the number of sports utility vehicles that the United States can import from Japan 
B)  a subsidy granted by the U.S. government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers 
C)  a tax placed on all sports utility vehicles sold in the domestic market 
D)  a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States 
A)  a limit set by the Japanese government on the number of sports utility vehicles that the United States can import from Japan 
B)  a subsidy granted by the U.S. government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers 
C)  a tax placed on all sports utility vehicles sold in the domestic market 
D)  a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States

Question 6

Table 9-9
Output Per Hour of Work
   Table 9-9 shows the output per hour of work for light bulbs and flash drives in Mexico and in Canada.
-Refer to Table 9-9. Fill in the following table with the opportunity costs of producing light bulbs and flash drives for Mexico and Canada.

Accepted Answer

The answer of Table 9-9
Output Per Hour of Work
 ...

Question 7

The United States has developed a comparative advantage in digital computers, airliners and many prescription drugs. The source of its comparative advantage in these products is

Accepted Answer

A)  a favorable climate. 
B)  technology. 
C)  abundant supplies of natural resources. 
D)  a strong central government. 
A)  a favorable climate. 
B)  technology. 
C)  abundant supplies of natural resources. 
D)  a strong central government.

Question 8

What are terms of trade?

Accepted Answer

Terms of trade refers to the r

Question 9

China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is

Accepted Answer

A)  superior process technology. 
B)  a large supply of unskilled workers and relatively little capital. 
C)  investment in capital used to produce toys. 
D)  a large supply of natural resources. 
A)  superior process technology. 
B)  a large supply of unskilled workers and relatively little capital. 
C)  investment in capital used to produce toys. 
D)  a large supply of natural resources.

Question 10

Table 9-3
   Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month.
-Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Accepted Answer

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

Question 11

Trade restrictions tend to preserve ________ in the protected industries and lead to ________ in other industries.

Accepted Answer

A)  almost all jobs; economic growth 
B)  well over half of the jobs; price decreases 
C)  relatively few jobs; job losses 
D)  no jobs; increased productivity 
A)  almost all jobs; economic growth 
B)  well over half of the jobs; price decreases 
C)  relatively few jobs; job losses 
D)  no jobs; increased productivity

Question 12

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that

Accepted Answer

A)  Australia also has an absolute advantage in producing surfboards relative to New Zealand. 
B)  Australia has a lower opportunity cost of producing surfboards relative to New Zealand. 
C)  New Zealand has an absolute disadvantage in producing surfboards relative to Australia. 
D)  Labor costs are higher for surfboard producers in New Zealand than in Australia. 
A)  Australia also has an absolute advantage in producing surfboards relative to New Zealand. 
B)  Australia has a lower opportunity cost of producing surfboards relative to New Zealand. 
C)  New Zealand has an absolute disadvantage in producing surfboards relative to Australia. 
D)  Labor costs are higher for surfboard producers in New Zealand than in Australia.

Question 13

Which of the following statements is true?

Accepted Answer

A)  All individuals in both countries are made better off as a result of international trade. 
B)  Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. 
C)  Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. 
D)  Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off. 
A)  All individuals in both countries are made better off as a result of international trade. 
B)  Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. 
C)  Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. 
D)  Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.

Question 14

Economists believe the most persuasive argument for protectionism is to

Accepted Answer

A)  save jobs. 
B)  protect high wages. 
C)  protect national security. 
D)  protect infant industries. 
A)  save jobs. 
B)  protect high wages. 
C)  protect national security. 
D)  protect infant industries.

Question 15

Which of the following statements about the importance of trade to the U.S. economy is true?

Accepted Answer

A)  Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product. 
B)  Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the second largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product. 
A)  Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product. 
B)  Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the second largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product.

Question 16

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

Accepted Answer

Three reasons outlined in the text are:

Question 17

Table 9-12
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. With trade, what is the total gain in sword production?

Accepted Answer

A)  50 
B)  100 
C)  200 
D)  350 
A)  50 
B)  100 
C)  200 
D)  350

Question 18

In the 1930s the United States charged an average tariff rate

Accepted Answer

A)  that was less than its average tariff rate in 2007. 
B)  that cut its exports to other countries by 50 percent. 
C)  that was less than 2 percent. 
D)  that exceeded 50 percent. 
A)  that was less than its average tariff rate in 2007. 
B)  that cut its exports to other countries by 50 percent. 
C)  that was less than 2 percent. 
D)  that exceeded 50 percent.

Question 19

The ratio at which a country can trade its exports for imports from other countries is called comparative advantage.

Accepted Answer

A) True 
 B)False

Question 20

Table 9-12
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. With trade, what is the total gain in belt production?

Accepted Answer

A)  30 
B)  80 
C)  120 
D)  210 
A)  30 
B)  80 
C)  120 
D)  210

Exam 9: Comparative Advantage and the Gains From International Trade

Exports are domestically produced goods and services

Today, the United States charges an average tariff rate of less than 1.5 percent.

Which of the following is the best example of a voluntary export restraint?

Table 9-9 Output Per Hour of Work Table 9-9 shows the output per hour of work for light bulbs and flash drives in Mexico and in Canada. -Refer to Table 9-9. Fill in the following table with the opportunity costs of producing light bulbs and flash drives for Mexico and Canada.

The United States has developed a comparative advantage in digital computers, airliners and many prescription drugs. The source of its comparative advantage in these products is

What are terms of trade?

China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is

Table 9-3 Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists the number of candles and bars of soap Bryce and Tina can each produce in one month. -Refer to Table 9-3. Select the statement that accurately interprets the data in the table.

Trade restrictions tend to preserve ________ in the protected industries and lead to ________ in other industries.

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia. We can conclude that

Which of the following statements is true?

Economists believe the most persuasive argument for protectionism is to

Which of the following statements about the importance of trade to the U.S. economy is true?

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

In the 1930s the United States charged an average tariff rate

The ratio at which a country can trade its exports for imports from other countries is called comparative advantage.

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

Filters

Trade restrictions tend to preserve in the protected industries and lead to in other industries.