Question 1

The United States is a leading exporter of wheat.What explains the comparative advantage of the United States in wheat production?

Accepted Answer

A)  positive externalities 
B)  investment by multinational firms such as Archer-Daniels-Midland and the Tyson Foods Inc. 
C)  climate and soil conditions in the United States which are well-suited for wheat production 
D)  a large supply of unskilled labor 
A)  positive externalities 
B)  investment by multinational firms such as Archer-Daniels-Midland and the Tyson Foods Inc. 
C)  climate and soil conditions in the United States which are well-suited for wheat production 
D)  a large supply of unskilled labor

Question 2

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 domestic consumers purchase and what quantity would be imported?

Accepted Answer

A)  28 million pounds of which 18 million pounds would be imported 
B)  40 million pounds of which 12 million pounds would be imported 
C)  40 million pounds of which 30 million pounds would be imported 
D)  40 million pounds all of which would be imported 
A)  28 million pounds of which 18 million pounds would be imported 
B)  40 million pounds of which 12 million pounds would be imported 
C)  40 million pounds of which 30 million pounds would be imported 
D)  40 million pounds all of which would be imported

Question 3

In the 1930s,the United States charged an average tariff rate ________.Today,the rate is ________.

Accepted Answer

A)  of 100 percent; 20 percent 
B)  above 50 percent; less than 2 percent 
C)  of less than 10 percent; over 40 percent 
D)  of 17 percent; 33 percent 
A)  of 100 percent; 20 percent 
B)  above 50 percent; less than 2 percent 
C)  of less than 10 percent; over 40 percent 
D)  of 17 percent; 33 percent

Question 4

Which of the following describes the infant industry argument for protectionism?

Accepted Answer

A)  An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition. 
B)  Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies. 
C)  Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. 
D)  Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. 
A)  An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition. 
B)  Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies. 
C)  Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field. 
D)  Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.

Question 5

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 6

What is autarky?

Accepted Answer

Autarky is a situati

Question 7

In 1995 ________,which was established in 1948,was replaced by ________.

Accepted Answer

A)  the GATT; the WTO 
B)  the WTO; NAFTA 
C)  the Smoot-Hawley Tariff; the GATT 
D)  NAFTA; the Smoot-Hawley Tariff 
A)  the GATT; the WTO 
B)  the WTO; NAFTA 
C)  the Smoot-Hawley Tariff; the GATT 
D)  NAFTA; the Smoot-Hawley Tariff

Question 8

________ raised average tariff rates by over 50 percent in the United States in 1930.

Accepted Answer

A)  The GATT 
B)  The WTO 
C)  NAFTA 
D)  The Smoot-Hawley Tariff 
A)  The GATT 
B)  The WTO 
C)  NAFTA 
D)  The Smoot-Hawley Tariff

Question 9

Figure 9-1  
 Figure 9-1 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-1.Under autarky,the deadweight loss is

Accepted Answer

A)  $0. 
B)  $15. 
C)  $30. 
D)  $40. 
A)  $0. 
B)  $15. 
C)  $30. 
D)  $40.

Question 10

Figure 9-2

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Accepted Answer

A)  B + D + E + F. 
B)  D + E + F. 
C)  C + D + E + F. 
D)  B. 
A)  B + D + E + F. 
B)  D + E + F. 
C)  C + D + E + F. 
D)  B.

Question 11

Today,the United States charged an average tariff rate

Accepted Answer

A)  that is more than its average tariff rate in 1930. 
B)  which is greater than any other high-income country. 
C)  of less than 2 percent. 
D)  that exceeds 50 percent. 
A)  that is more than its average tariff rate in 1930. 
B)  which is greater than any other high-income country. 
C)  of less than 2 percent. 
D)  that exceeds 50 percent.

Question 12

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

Accepted Answer

A)  The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. 
B)  People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote. 
C)  Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. 
D)  The benefits from free trade are less than the costs. 
A)  The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. 
B)  People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote. 
C)  Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. 
D)  The benefits from free trade are less than the costs.

Question 13

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 14

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 greater opportunity cost than Linda for dog grooming. 
B)  Sandy's opportunity cost for dog grooming is less than Linda's. 
C)  Linda has a greater opportunity cost than Sandy for dog bathing. 
D)  Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's. 
A)  Sandy has a greater opportunity cost than Linda for dog grooming. 
B)  Sandy's opportunity cost for dog grooming is less than Linda's. 
C)  Linda has a greater opportunity cost than Sandy for dog bathing. 
D)  Sandy's opportunity cost for dog grooming and dog bathing are both greater than Linda's.

Question 15

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 16

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries.This protectionism will cause the greatest harm to

Accepted Answer

A)  Canadian manufacturers. 
B)  the Canadian government. 
C)  manufacturers who export to Canada. 
D)  Canadian consumers. 
A)  Canadian manufacturers. 
B)  the Canadian government. 
C)  manufacturers who export to Canada. 
D)  Canadian consumers.

Question 17

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is

Accepted Answer

A)  false since it ignores the workers who lose their jobs as result of international trade. 
B)  false since not all countries participate in international trade. 
C)  true because it refers to countries; individuals may be losers as a result of international trade. 
D)  true because all consumers and workers benefit from international trade. 
A)  false since it ignores the workers who lose their jobs as result of international trade. 
B)  false since not all countries participate in international trade. 
C)  true because it refers to countries; individuals may be losers as a result of international trade. 
D)  true because all consumers and workers benefit from international trade.

Question 18

Caterpillar's sales were severely affected by the decline in the U.S.housing market that began in 2006.Sales in the United States declined by ________ between 2006 and 2008,and export sales ________ during the same time period.

Accepted Answer

A)  more than half; increased by enough to make 2008 a record sales year 
B)  almost 90 percent; remained virtually unchanged 
C)  almost 90 percent; declined by half 
D)  more than half; declined by a similar percentage 
A)  more than half; increased by enough to make 2008 a record sales year 
B)  almost 90 percent; remained virtually unchanged 
C)  almost 90 percent; declined by half 
D)  more than half; declined by a similar percentage

Question 19

Japan has developed a comparative advantage in designing and producing automobiles.The source of its comparative advantage in these products is

Accepted Answer

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

Question 20

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.The market price falls to $18.What are the values of consumer surplus and domestic producer surplus?

Accepted Answer

A)  Consumer surplus = $270; producer surplus = $40. 
B)  Consumer surplus = $320; producer surplus = $40. 
C)  Consumer surplus = $320; producer surplus = $360.. 
D)  Consumer surplus = $305; producer surplus = $320. 
A)  Consumer surplus = $270; producer surplus = $40. 
B)  Consumer surplus = $320; producer surplus = $40. 
C)  Consumer surplus = $320; producer surplus = $360.. 
D)  Consumer surplus = $305; producer surplus = $320.

Exam 9: Comparative Advantage and the Gains From International Trade

The United States is a leading exporter of wheat.What explains the comparative advantage of the United States in wheat production?

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 domestic consumers purchase and what quantity would be imported?

In the 1930s,the United States charged an average tariff rate ________.Today,the rate is ________.

Which of the following describes the infant industry argument for protectionism?

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

What is autarky?

In 1995 ________,which was established in 1948,was replaced by ________.

________ raised average tariff rates by over 50 percent in the United States in 1930.

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1.Under autarky,the deadweight loss is

Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Today,the United States charged an average tariff rate

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

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.

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.

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 ________.

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries.This protectionism will cause the greatest harm to

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is

Caterpillar's sales were severely affected by the decline in the U.S.housing market that began in 2006.Sales in the United States declined by ________ between 2006 and 2008,and export sales ________ during the same time period.

Japan has developed a comparative advantage in designing and producing automobiles.The source of its comparative advantage in these products is

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.The market price falls to $18.What are the values of consumer surplus and domestic producer surplus?

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

In the 1930s,the United States charged an average tariff rate .Today,the rate is .

In 1995 ,which was established in 1948,was replaced by .

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 .

Caterpillar's sales were severely affected by the decline in the U.S.housing market that began in 2006.Sales in the United States declined by between 2006 and 2008,and export sales during the same time period.