Question 1

One of the main sources of comparative advantage is natural resources.

Accepted Answer

A) True 
 B)False

Question 2

Figure 9-4   Figure 9-4 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-4. Under autarky, the consumer surplus is area

Accepted Answer

A)  R. 
B)  S. 
C)  R + S + V. 
D)  S + V. 
A)  R. 
B)  S. 
C)  R + S + V. 
D)  S + V.

Question 3

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. Prior to trade, what was the opportunity cost to produce 1 belt in Estonia?

Accepted Answer

A)  1/2 of a sword 
B)  4/5 of a sword 
C)  1.25 swords 
D)  2 swords 
A)  1/2 of a sword 
B)  4/5 of a sword 
C)  1.25 swords 
D)  2 swords

Question 4

If a country has a comparative advantage in producing a product, it must also have an absolute advantage in producing that product.

Accepted Answer

A) True 
 B)False

Question 5

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 supplied by domestic producers?

Accepted Answer

A)  8 million pounds 
B)  10 million pounds 
C)  16 million pounds 
D)  18 million pounds 
A)  8 million pounds 
B)  10 million pounds 
C)  16 million pounds 
D)  18 million pounds

Question 6

How have U.S. imports and exports, as a fraction of GDP, changed from 1970 to the present?

Accepted Answer

Since 1950, both exports and imports hav

Question 7

If Japanese workers are more productive than French workers, then trade between Japan and France

Accepted Answer

A)  can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. 
B)  cannot take place because Japanese goods and services will be less expensive than French goods and services. 
C)  cannot take place until French workers become more productive. 
D)  will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. 
A)  can take place only if France has an absolute advantage in producing a good or service Japanese buyers want. 
B)  cannot take place because Japanese goods and services will be less expensive than French goods and services. 
C)  cannot take place until French workers become more productive. 
D)  will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.

Question 8

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

Accepted Answer

A)  Honduras also has an absolute advantage in producing bananas relative to Brazil. 
B)  Honduras has a lower opportunity cost of producing bananas relative to Brazil. 
C)  Brazil has an absolute disadvantage in producing bananas relative to Honduras. 
D)  Labor costs are higher for banana producers in Brazil than in Honduras. 
A)  Honduras also has an absolute advantage in producing bananas relative to Brazil. 
B)  Honduras has a lower opportunity cost of producing bananas relative to Brazil. 
C)  Brazil has an absolute disadvantage in producing bananas relative to Honduras. 
D)  Labor costs are higher for banana producers in Brazil than in Honduras.

Question 9

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

Accepted Answer

The anti-globalization argument against

Question 10

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Accepted Answer

A) True 
 B)False

Question 11

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

Accepted Answer

A)  Statistics show that trade restrictions actually do not save jobs. 
B)  Consumers pay a high cost for jobs saved through trade restrictions. 
C)  Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. 
D)  Trade restrictions benefit consumers in the short run but not in the long run. 
A)  Statistics show that trade restrictions actually do not save jobs. 
B)  Consumers pay a high cost for jobs saved through trade restrictions. 
C)  Trade restrictions have a limited impact because most Americans prefer domestic goods over imports. 
D)  Trade restrictions benefit consumers in the short run but not in the long run.

Question 12

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. If there was no quota, how many pounds of peanuts would be imported?

Accepted Answer

A)  16 million 
B)  24 million 
C)  30 million 
D)  40 million 
A)  16 million 
B)  24 million 
C)  30 million 
D)  40 million

Question 13

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 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 14

Figure 9-4   Figure 9-4 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. The market price falls to $24. What area represents consumer surplus?

Accepted Answer

A)  R + S 
B)  R + S + T + U 
C)  V + W + X + Y 
D)  R + S + V 
A)  R + S 
B)  R + S + T + U 
C)  V + W + X + Y 
D)  R + S + V

Question 15

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. Which country has an absolute advantage in producing hats?

Accepted Answer

A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country 
A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country

Question 16

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 a greater opportunity cost than Gabriel for baking cakes. 
B)  Sarita's opportunity cost for baking cakes is less than Gabriel's. 
C)  Gabriel has a greater opportunity cost than Sarita for baking pies. 
D)  Gabriel's opportunity cost for baking cakes and baking pies are both greater than Sarita's. 
A)  Sarita has a greater opportunity cost than Gabriel for baking cakes. 
B)  Sarita's opportunity cost for baking cakes is less than Gabriel's. 
C)  Gabriel has a greater opportunity cost than Sarita for baking pies. 
D)  Gabriel's opportunity cost for baking cakes and baking pies are both greater than Sarita's.

Question 17

What was the GATT, why was it established, and why and with what was it replaced?

Accepted Answer

By the end of World War II in 1945, gove

Question 18

Which of the following is not a source of comparative advantage?

Accepted Answer

A)  relative abundance of labor and capital 
B)  technology 
C)  climate and natural resources 
D)  a strong foreign currency exchange rate 
A)  relative abundance of labor and capital 
B)  technology 
C)  climate and natural resources 
D)  a strong foreign currency exchange rate

Question 19

Measuring the impact of a quota or tariff on the U.S. economy is an example of ________. Stating that a quota or tariff should be eliminated is an example of ________.

Accepted Answer

A)  statistical analysis; economic analysis 
B)  positive analysis; normative analysis 
C)  econometric analysis; protectionism 
D)  trade analysis; an opinion 
A)  statistical analysis; economic analysis 
B)  positive analysis; normative analysis 
C)  econometric analysis; protectionism 
D)  trade analysis; an opinion

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 an absolute advantage in making tacos and Austin has an absolute advantage in making empanadas. 
B)  Madison has an absolute advantage in making empanadas and Austin has an absolute advantage in making tacos. 
C)  Madison has an absolute advantage in making empanadas and tacos. 
D)  Austin has an absolute advantage in making empanadas and tacos. 
A)  Madison has an absolute advantage in making tacos and Austin has an absolute advantage in making empanadas. 
B)  Madison has an absolute advantage in making empanadas and Austin has an absolute advantage in making tacos. 
C)  Madison has an absolute advantage in making empanadas and tacos. 
D)  Austin has an absolute advantage in making empanadas and tacos.

Exam 9: Comparative Advantage and the Gains From International Trade

One of the main sources of comparative advantage is natural resources.

Figure 9-4 Figure 9-4 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-4. Under autarky, the consumer surplus is area

If a country has a comparative advantage in producing a product, it must also have an absolute advantage in producing that product.

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 supplied by domestic producers?

How have U.S. imports and exports, as a fraction of GDP, changed from 1970 to the present?

If Japanese workers are more productive than French workers, then trade between Japan and France

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

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

A voluntary export restraint is an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

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. If there was no quota, how many pounds of peanuts would be imported?

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.

Figure 9-4 Figure 9-4 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. The market price falls to $24. What area represents consumer surplus?

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.

What was the GATT, why was it established, and why and with what was it replaced?

Which of the following is not a source of comparative advantage?

Measuring the impact of a quota or tariff on the U.S. economy is an example of ________. Stating that a quota or tariff should be eliminated is an example of ________.

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

Filters

Measuring the impact of a quota or tariff on the U.S. economy is an example of . Stating that a quota or tariff should be eliminated is an example of .