Question 1

If the opportunity cost of production for two goods is different between two countries,then

Accepted Answer

A)  trade cannot benefit either country. 
B)  only one country can be made better off by trade. 
C)  mutually beneficial trade is possible. 
D)  trade will only benefit both countries if one can lower its opportunity costs. 
A)  trade cannot benefit either country. 
B)  only one country can be made better off by trade. 
C)  mutually beneficial trade is possible. 
D)  trade will only benefit both countries if one can lower its opportunity costs.

Question 2

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

Accepted Answer

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

Question 3

A tariff is

Accepted Answer

A)  a limit placed on the quantity of goods that can be imported into a country. 
B)  a tax imposed by a government on goods imported into a country. 
C)  a subsidy granted to importers of a vital input. 
D)  a health and safety restriction imposed on an imported product. 
A)  a limit placed on the quantity of goods that can be imported into a country. 
B)  a tax imposed by a government on goods imported into a country. 
C)  a subsidy granted to importers of a vital input. 
D)  a health and safety restriction imposed on an imported product.

Question 4

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.What is the area that represents the deadweight loss as a result of the quota?

Accepted Answer

A)  G + H 
B)  G + H + I + J 
C)  E + I + J + M 
D)  E + M 
A)  G + H 
B)  G + H + I + J 
C)  E + I + J + M 
D)  E + M

Question 5

If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada,which of the following would explain this pattern of trade?

Accepted Answer

A)  Mexico has a lower opportunity cost of producing bacon than Mexico and Mexico has a comparative advantage in producing fishing poles. 
B)  The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico. 
C)  Mexico must have an absolute advantage in producing fishing poles and Canada must have an absolute advantage in bacon. 
D)  Mexico has a higher opportunity cost of producing fishing poles than Canada, and Canada has a higher opportunity cost of producing bacon. 
A)  Mexico has a lower opportunity cost of producing bacon than Mexico and Mexico has a comparative advantage in producing fishing poles. 
B)  The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico. 
C)  Mexico must have an absolute advantage in producing fishing poles and Canada must have an absolute advantage in bacon. 
D)  Mexico has a higher opportunity cost of producing fishing poles than Canada, and Canada has a higher opportunity cost of producing bacon.

Question 6

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 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 largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product.

Question 7

A tariff is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A) True 
 B)False

Question 8

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 tariff revenue collected by the government equals the area

Accepted Answer

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

Question 9

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 happens to the market price and what is the quantity of imports?

Accepted Answer

A)  The price equals $24 and imports equal 20 units. 
B)  The price falls to $24 and imports equal 5 units. 
C)  The price falls to $18 and imports equal 15 units. 
D)  The price equals $18 and imports equals 10 units. 
A)  The price equals $24 and imports equal 20 units. 
B)  The price falls to $24 and imports equal 5 units. 
C)  The price falls to $18 and imports equal 15 units. 
D)  The price equals $18 and imports equals 10 units.

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

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

Question 12

In 2010,________ of Caterpillar's sales were outside the United States.

Accepted Answer

A)  only 12 percent 
B)  more than two-thirds 
C)  less than half 
D)  95 percent 
A)  only 12 percent 
B)  more than two-thirds 
C)  less than half 
D)  95 percent

Question 13

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.What is the area that represents revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Accepted Answer

A)  I + J 
B)  E + I + J + M 
C)  I + J + K+ L 
D)  G + H + I + J 
A)  I + J 
B)  E + I + J + M 
C)  I + J + K+ L 
D)  G + H + I + J

Question 14

The process of countries becoming more open to foreign trade and investment is known as

Accepted Answer

A)  autarky. 
B)  foreign exchange. 
C)  globalization. 
D)  protectionism. 
A)  autarky. 
B)  foreign exchange. 
C)  globalization. 
D)  protectionism.

Question 15

Free trade ________ living standards by ________ economic efficiency.

Accepted Answer

A)  raises; increasing 
B)  lowers; decreasing 
C)  raises; equalizing 
D)  lowers; eliminating 
A)  raises; increasing 
B)  lowers; decreasing 
C)  raises; equalizing 
D)  lowers; eliminating

Question 16

Which of the following statements is true?

Accepted Answer

A)  Japan is more dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of Belgium. 
C)  France is the leading exporting country, accounting for 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops. 
A)  Japan is more dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of Belgium. 
C)  France is the leading exporting country, accounting for 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops.

Question 17

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

Accepted Answer

A)  Absolute advantage 
B)  Specialization 
C)  Autarky 
D)  Comparative advantage 
A)  Absolute advantage 
B)  Specialization 
C)  Autarky 
D)  Comparative advantage

Question 18

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)  Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B)  Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C)  Sandy has an absolute advantage in dog bathing and dog grooming. 
D)  Linda has an absolute advantage in dog bathing and dog grooming. 
A)  Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B)  Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C)  Sandy has an absolute advantage in dog bathing and dog grooming. 
D)  Linda has an absolute advantage in dog bathing and dog grooming.

Question 19

Table 9-2
Output Per Hour of Work
  
 Table 9-2 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand.
-Refer to Table 9-2.Fill in the following table with the opportunity costs of producing handbags and jackets for Cambodia and Thailand.

Accepted Answer

The answer of Table 9-2
Output Per Hour of Work
 ...

Question 20

Many people assume that if child workers in developing countries weren't working in factories,they would be in school.In fact,children in developing countries

Accepted Answer

A)  split their time evenly between work and school. 
B)  usually have few good alternatives to work. 
C)  are only allowed to work if they have attended school up to age 15. 
D)  who work are relatively rare, as most do attend school full time. 
A)  split their time evenly between work and school. 
B)  usually have few good alternatives to work. 
C)  are only allowed to work if they have attended school up to age 15. 
D)  who work are relatively rare, as most do attend school full time.

Exam 9: Comparative Advantage and the Gains From International Trade

If the opportunity cost of production for two goods is different between two countries,then

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

A tariff is

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.What is the area that represents the deadweight loss as a result of the quota?

If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada,which of the following would explain this pattern of trade?

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

A tariff is a numerical limit on the quantity of a good that can be imported.

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 tariff revenue collected by the government equals the area

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 happens to the market price and what is the quantity of imports?

A tariff is a tax imposed by a government on

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.

In 2010,________ of Caterpillar's sales were outside the United States.

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.What is the area that represents revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

The process of countries becoming more open to foreign trade and investment is known as

Free trade ________ living standards by ________ economic efficiency.

Which of the following statements is true?

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

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.

Table 9-2 Output Per Hour of Work Table 9-2 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand. -Refer to Table 9-2.Fill in the following table with the opportunity costs of producing handbags and jackets for Cambodia and Thailand.

Many people assume that if child workers in developing countries weren't working in factories,they would be in school.In fact,children in developing countries

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

Free trade living standards by economic efficiency.