Question 1

The intention of the "Buy American" provision in the 2009 stimulus bill was to

Accepted Answer

A)  increase jobs in the United States. 
B)  prevent foreign firms from dumping product in the United States. 
C)  insure that products used to build roads and bridges meet U.S. quality and safety standards. 
D)  save the government money by restricting the sale of more expensive foreign-made products. 
A)  increase jobs in the United States. 
B)  prevent foreign firms from dumping product in the United States. 
C)  insure that products used to build roads and bridges meet U.S. quality and safety standards. 
D)  save the government money by restricting the sale of more expensive foreign-made products.

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.Without the quota,the domestic price of peanuts equals the world price which is $2.00 per pound.What is the quantity of peanuts supplied by domestic producers in the absence of a quota?

Accepted Answer

A)  10 million pounds 
B)  28 million pounds 
C)  30 million pounds 
D)  40 million pounds 
A)  10 million pounds 
B)  28 million pounds 
C)  30 million pounds 
D)  40 million pounds

Question 3

Which of the following is the best example of a tariff?

Accepted Answer

A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 4

A situation in which a country does not trade with other countries is called

Accepted Answer

A)  autarky. 
B)  self-actualization. 
C)  autonomy. 
D)  independence. 
A)  autarky. 
B)  self-actualization. 
C)  autonomy. 
D)  independence.

Question 5

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 6

NAFTA refers to a 1994 agreement that eliminated most tariffs among which countries?

Accepted Answer

A)  Canada, the United Kingdom and Mexico 
B)  the United States, the United Kingdom and Mexico 
C)  the United States, Canada and Mexico 
D)  the United States, Mexico and Cuba 
A)  Canada, the United Kingdom and Mexico 
B)  the United States, the United Kingdom and Mexico 
C)  the United States, Canada and Mexico 
D)  the United States, Mexico and Cuba

Question 7

The selling of a product for a price below its cost of production is called

Accepted Answer

A)  fair competition. 
B)  dumping. 
C)  unfair competition. 
D)  operating at a loss. 
A)  fair competition. 
B)  dumping. 
C)  unfair competition. 
D)  operating at a loss.

Question 8

Imposing tariffs in cases of dumping

Accepted Answer

A)  is allowed under the WTO agreement. 
B)  is not allowed under the WTO agreement. 
C)  is not addressed by the WTO agreement. 
D)  has never occurred, even though it is allowed under the WTO agreement. 
A)  is allowed under the WTO agreement. 
B)  is not allowed under the WTO agreement. 
C)  is not addressed by the WTO agreement. 
D)  has never occurred, even though it is allowed under the WTO agreement.

Question 9

In the United States,imports and exports make up more than half of GDP.

Accepted Answer

A) True 
 B)False

Question 10

Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products.Why,then,do some people support protectionism?

Accepted Answer

A)  The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. 
B)  Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. 
C)  Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage. 
D)  Supporters of protectionism believe that free trade will lead to inflation. 
A)  The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. 
B)  Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. 
C)  Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage. 
D)  Supporters of protectionism believe that free trade will lead to inflation.

Question 11

If Canada has a comparative advantage relative to Mexico in the production of timber,then

Accepted Answer

A)  the explicit cost of production for timber is lower in Canada than in Mexico. 
B)  the opportunity cost of production for timber is lower in Canada than in Mexico. 
C)  the implicit costs of production for timber are lower in Canada than in Mexico. 
D)  the average cost of production for timber is lower in Canada than in Mexico. 
A)  the explicit cost of production for timber is lower in Canada than in Mexico. 
B)  the opportunity cost of production for timber is lower in Canada than in Mexico. 
C)  the implicit costs of production for timber are lower in Canada than in Mexico. 
D)  the average cost of production for timber is lower in Canada than in Mexico.

Question 12

U)S.firms that sell products in foreign markets protested the "Buy American" provision in the 2009 stimulus bill,arguing that if the United States restricted imports from foreign firms,

Accepted Answer

A)  foreign countries would likely retaliate by limiting U.S. exports. 
B)  foreign firms would stop selling all products in the United States. 
C)  U.S. firms would never be able to meet the increased demand for U.S.-produced goods. 
D)  eventually the government would demand price cuts from U.S. manufacturers. 
A)  foreign countries would likely retaliate by limiting U.S. exports. 
B)  foreign firms would stop selling all products in the United States. 
C)  U.S. firms would never be able to meet the increased demand for U.S.-produced goods. 
D)  eventually the government would demand price cuts from U.S. manufacturers.

Question 13

The "Buy American" provision in the 2009 stimulus package would require that stimulus money be spent only on U.S.-made goods.In the market for steel,the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 14

A tariff

Accepted Answer

A)  makes domestic consumers worse off. 
B)  makes both domestic producers and consumers worse off. 
C)  makes everyone better off. 
D)  makes domestic producers worse off. 
A)  makes domestic consumers worse off. 
B)  makes both domestic producers and consumers worse off. 
C)  makes everyone better off. 
D)  makes domestic producers worse off.

Question 15

One of the main sources of comparative advantage is internal economies.

Accepted Answer

A) True 
 B)False

Question 16

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.Without the tariff in place,the United States consumes

Accepted Answer

A)  9 million pounds of rice. 
B)  15 million pounds of rice. 
C)  31 million pounds of rice. 
D)  42 million pounds of rice. 
A)  9 million pounds of rice. 
B)  15 million pounds of rice. 
C)  31 million pounds of rice. 
D)  42 million pounds of rice.

Question 17

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Accepted Answer

A) True 
 B)False

Question 18

a.What is the World Trade Organization?
b.When was it established?
c.How many countries are members of the World Trade Organization?

Accepted Answer

a.The World Trade Organization (WTO)is a

Question 19

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 increase in domestic producer surplus as a result of the tariff is equal to the area

Accepted Answer

A)  C. 
B)  C + G. 
C)  A + C + G. 
D)  C + D + G + H + I. 
A)  C. 
B)  C + G. 
C)  A + C + G. 
D)  C + D + G + H + I.

Question 20

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

Exam 9: Comparative Advantage and the Gains From International Trade

The intention of the "Buy American" provision in the 2009 stimulus bill was to

Which of the following is the best example of a tariff?

A situation in which a country does not trade with other countries is called

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

NAFTA refers to a 1994 agreement that eliminated most tariffs among which countries?

The selling of a product for a price below its cost of production is called

Imposing tariffs in cases of dumping

In the United States,imports and exports make up more than half of GDP.

Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products.Why,then,do some people support protectionism?

If Canada has a comparative advantage relative to Mexico in the production of timber,then

U)S.firms that sell products in foreign markets protested the "Buy American" provision in the 2009 stimulus bill,arguing that if the United States restricted imports from foreign firms,

The "Buy American" provision in the 2009 stimulus package would require that stimulus money be spent only on U.S.-made goods.In the market for steel,the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

A tariff

One of the main sources of comparative advantage is internal economies.

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.Without the tariff in place,the United States consumes

The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

a.What is the World Trade Organization? b.When was it established? c.How many countries are members of the World Trade Organization?

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 increase in domestic producer surplus as a result of the tariff is equal to the area

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.

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

The "Buy American" provision in the 2009 stimulus package would require that stimulus money be spent only on U.S.-made goods.In the market for steel,the "Buy American" provision would the price of steel in the United States and the quantity of steel demanded in the United States.