Question 1

A country will specialize in that good in which

Accepted Answer

A) it has absolute advantage. 
B) it has a moderate cost of production. 
C) it can produce at minimum average cost. 
D) it has comparative advantage. 
A) it has absolute advantage. 
B) it has a moderate cost of production. 
C) it can produce at minimum average cost. 
D) it has comparative advantage.

Question 2

When one country "dumps" some of its products in another country,it

Accepted Answer

A) creates an environmental hazard in the receiving country. 
B) sells its products abroad at a price lower than it costs to produce the goods. 
C) increases the aggregate level of employment in the receiving country. 
D) indirectly reduces its national income. 
A) creates an environmental hazard in the receiving country. 
B) sells its products abroad at a price lower than it costs to produce the goods. 
C) increases the aggregate level of employment in the receiving country. 
D) indirectly reduces its national income.

Question 3

According to international trade theory

Accepted Answer

A) trade is based on absolute advantage. 
B) comparative advantage is based on absolute advantage. 
C) every country has a comparative advantage in something. 
D) less developed countries cannot trade successfully with developed countries. 
A) trade is based on absolute advantage. 
B) comparative advantage is based on absolute advantage. 
C) every country has a comparative advantage in something. 
D) less developed countries cannot trade successfully with developed countries.

Question 4

An assumption behind the infant industry argument for tariff protection is that

Accepted Answer

A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand. 
A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand.

Question 5

In general,lower imports-to-GDP ratios are more likely,the

Accepted Answer

A) smaller the country. 
B) larger the country. 
C) richer the country. 
D) more agricultural the country. 
A) smaller the country. 
B) larger the country. 
C) richer the country. 
D) more agricultural the country.

Question 6

With the aid of diagrams explain the effect of a tariff on American-made computer software

Accepted Answer

A complete descripti

Question 7

The basic proposition in international trade is that

Accepted Answer

A) trade is determined by absolute advantage. 
B) in the long run,imports are paid for by exports. 
C) everyone is made better off by free trade. 
D) fair trade is more important than free trade. 
A) trade is determined by absolute advantage. 
B) in the long run,imports are paid for by exports. 
C) everyone is made better off by free trade. 
D) fair trade is more important than free trade.

Question 8

Assume that the United States could produce all products at a lower per unit cost compared to Canada.If this were the case,

Accepted Answer

A) it would still be possible for Canada to have an absolute advantage in the production of some products. 
B) Canada could not have a comparative advantage in any product. 
C) it would still be possible for Canada to have a comparative advantage in trade for some products. 
D) Canada would have a comparative advantage to the United States in all products. 
A) it would still be possible for Canada to have an absolute advantage in the production of some products. 
B) Canada could not have a comparative advantage in any product. 
C) it would still be possible for Canada to have a comparative advantage in trade for some products. 
D) Canada would have a comparative advantage to the United States in all products.

Question 9

Dumping occurs when,in a foreign market,a good is sold

Accepted Answer

A) below its cost of production. 
B) at a discount below the list price. 
C) below its nominal price. 
D) at a price above the equilibrium price. 
A) below its cost of production. 
B) at a discount below the list price. 
C) below its nominal price. 
D) at a price above the equilibrium price.

Question 10

If country A exports good X to country B,and country B exports good Y to country A,it is most likely that

Accepted Answer

A) A has an absolute advantage in the production of good X. 
B) B has a comparative advantage in the production of good Y. 
C) the opportunity cost of domestic production of good Y for country A is lowered with trade. 
D) B is producing less of good Y than in the no-trade case. 
A) A has an absolute advantage in the production of good X. 
B) B has a comparative advantage in the production of good Y. 
C) the opportunity cost of domestic production of good Y for country A is lowered with trade. 
D) B is producing less of good Y than in the no-trade case.

Question 11

Consider a world of two countries producing only wheat and cloth.If country A uses 1 unit of labour to produce 1 unit of wheat and 2 units of labour to produce 1 unit of cloth,while B uses 3 units of labour per unit of wheat and 4 units of labour per unit of cloth,A should export

Accepted Answer

A) wheat and cloth,and B should not export anything. 
B) wheat,and B should export cloth. 
C) nothing,and B should export wheat and cloth. 
D) cloth,and B should export wheat. 
A) wheat and cloth,and B should not export anything. 
B) wheat,and B should export cloth. 
C) nothing,and B should export wheat and cloth. 
D) cloth,and B should export wheat.

Question 12

An import quota specifies

Accepted Answer

A) the amount of money that can be charged to any imported good. 
B) the amount of taxes that must be paid on any imported good. 
C) the maximum amount of a commodity that may be imported during a specified period. 
D) the minimum amount of a commodity that may be imported during a specified period. 
A) the amount of money that can be charged to any imported good. 
B) the amount of taxes that must be paid on any imported good. 
C) the maximum amount of a commodity that may be imported during a specified period. 
D) the minimum amount of a commodity that may be imported during a specified period.

Question 13

Restricting imports usually leads to

Accepted Answer

A) a country producing beyond its production possibilities frontier. 
B) a country consuming even further beyond its production possibilities frontier. 
C) a reduction in exports and employment. 
D) a higher per capita level of real consumption. 
A) a country producing beyond its production possibilities frontier. 
B) a country consuming even further beyond its production possibilities frontier. 
C) a reduction in exports and employment. 
D) a higher per capita level of real consumption.

Question 14

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with an absolute advantage gains." Do you agree or disagree with this statement.Explain fully.

Accepted Answer

Disagree.Absolute advantage occurs when

Question 15

Dumping is

Accepted Answer

A) international price discrimination. 
B) international monopolistic pricing. 
C) collusive behaviour among producers in different countries. 
D) selling goods produced with government approval. 
A) international price discrimination. 
B) international monopolistic pricing. 
C) collusive behaviour among producers in different countries. 
D) selling goods produced with government approval.

Question 16

When the principle of comparative advantage is used to guide trade,then a country will

Accepted Answer

A) specialize only in that good with the highest opportunity cost. 
B) specialize only in goods with the lowest opportunity costs. 
C) specialize only in that good where production is less per worker-hour than another country. 
D) specialize only in that good where production costs are more than average total costs. 
A) specialize only in that good with the highest opportunity cost. 
B) specialize only in goods with the lowest opportunity costs. 
C) specialize only in that good where production is less per worker-hour than another country. 
D) specialize only in that good where production costs are more than average total costs.

Question 17

In India 3 units of labour are needed to produce 1 unit of cloth and 5 units of labour are needed to produce 1 unit of food;in Australia 2 units of labour are needed to produce 1 unit of cloth and 2 units of labour are needed to produce 1 unit of food.It is correct to state that

Accepted Answer

A) India has a comparative advantage in producing cloth. 
B) India has an absolute advantage in producing cloth. 
C) India has no comparative advantage with cloth or wheat. 
D) Australia has a comparative advantage in producing cloth. 
A) India has a comparative advantage in producing cloth. 
B) India has an absolute advantage in producing cloth. 
C) India has no comparative advantage with cloth or wheat. 
D) Australia has a comparative advantage in producing cloth.

Question 18

Specialization and international trade lead to

Accepted Answer

A) an outward shift in the production possibilities frontier. 
B) an inward shift in the consumption possibilities frontier. 
C) a lower opportunity cost of domestic production of all goods. 
D) an enhanced level of consumption. 
A) an outward shift in the production possibilities frontier. 
B) an inward shift in the consumption possibilities frontier. 
C) a lower opportunity cost of domestic production of all goods. 
D) an enhanced level of consumption.

Question 19

Specialization in trade will be economically efficient if it is based upon

Accepted Answer

A) national security needs. 
B) absolute advantage. 
C) comparative advantage. 
D) government regulations. 
A) national security needs. 
B) absolute advantage. 
C) comparative advantage. 
D) government regulations.

Question 20

What do you think are the main benefits of China's membership in the WTO?

Accepted Answer

The WTO's benefits for China are long-te

A country will specialize in that good in which

When one country "dumps" some of its products in another country,it

According to international trade theory

An assumption behind the infant industry argument for tariff protection is that

In general,lower imports-to-GDP ratios are more likely,the

With the aid of diagrams explain the effect of a tariff on American-made computer software

The basic proposition in international trade is that

Assume that the United States could produce all products at a lower per unit cost compared to Canada.If this were the case,

Dumping occurs when,in a foreign market,a good is sold

If country A exports good X to country B,and country B exports good Y to country A,it is most likely that

Consider a world of two countries producing only wheat and cloth.If country A uses 1 unit of labour to produce 1 unit of wheat and 2 units of labour to produce 1 unit of cloth,while B uses 3 units of labour per unit of wheat and 4 units of labour per unit of cloth,A should export

An import quota specifies

Restricting imports usually leads to

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with an absolute advantage gains." Do you agree or disagree with this statement.Explain fully.

Dumping is

When the principle of comparative advantage is used to guide trade,then a country will

In India 3 units of labour are needed to produce 1 unit of cloth and 5 units of labour are needed to produce 1 unit of food;in Australia 2 units of labour are needed to produce 1 unit of cloth and 2 units of labour are needed to produce 1 unit of food.It is correct to state that

Specialization and international trade lead to

Specialization in trade will be economically efficient if it is based upon

What do you think are the main benefits of China's membership in the WTO?

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Exchange Rates and the Balance of Payments

Filters

Exam 16: Comparative Advantage and the Open Economy

A country will specialize in that good in which

When one country "dumps" some of its products in another country,it

According to international trade theory

An assumption behind the infant industry argument for tariff protection is that

In general,lower imports-to-GDP ratios are more likely,the

With the aid of diagrams explain the effect of a tariff on American-made computer software

The basic proposition in international trade is that

Assume that the United States could produce all products at a lower per unit cost compared to Canada.If this were the case,

Dumping occurs when,in a foreign market,a good is sold

If country A exports good X to country B,and country B exports good Y to country A,it is most likely that

Consider a world of two countries producing only wheat and cloth.If country A uses 1 unit of labour to produce 1 unit of wheat and 2 units of labour to produce 1 unit of cloth,while B uses 3 units of labour per unit of wheat and 4 units of labour per unit of cloth,A should export

An import quota specifies

Restricting imports usually leads to

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with an absolute advantage gains." Do you agree or disagree with this statement.Explain fully.

Dumping is

When the principle of comparative advantage is used to guide trade,then a country will

In India 3 units of labour are needed to produce 1 unit of cloth and 5 units of labour are needed to produce 1 unit of food;in Australia 2 units of labour are needed to produce 1 unit of cloth and 2 units of labour are needed to produce 1 unit of food.It is correct to state that

Specialization and international trade lead to

Specialization in trade will be economically efficient if it is based upon

What do you think are the main benefits of China's membership in the WTO?

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Exchange Rates and the Balance of Payments

Filters