Question 1

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

Accepted Answer

A) True 
 B)False

Question 2

Table 9-6
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.All of the following are terms of trade that could possibly benefit both countries except

Accepted Answer

A)  1/5 of a hat : 1 clock 
B)  1/3 of a hat : 1 clock 
C)  1/2 of a hat : 1 clock 
D)  3/4 of a hat : 1 clock 
A)  1/5 of a hat : 1 clock 
B)  1/3 of a hat : 1 clock 
C)  1/2 of a hat : 1 clock 
D)  3/4 of a hat : 1 clock

Question 3

________ 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 4

The main purpose of most tariffs and quotas is to

Accepted Answer

A)  raise revenue for the government. 
B)  reduce the prices consumers pay for goods and services. 
C)  reduce the foreign competition that domestic firms face. 
D)  improve the quality of goods and services imported into the country. 
A)  raise revenue for the government. 
B)  reduce the prices consumers pay for goods and services. 
C)  reduce the foreign competition that domestic firms face. 
D)  improve the quality of goods and services imported into the country.

Question 5

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 6

A quota is the same as a voluntary export restraint.

Accepted Answer

A) True 
 B)False

Question 7

What are the four main sources of comparative advantage? Briefly explain each source and provide examples.

Accepted Answer

The 4 main sources cited are:
1.climate

Question 8

Table 9-6
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many hats will Belize consume?

Accepted Answer

A)  100 
B)  130 
C)  250 
D)  400 
A)  100 
B)  130 
C)  250 
D)  400

Question 9

What is dumping? Who benefits and who loses from dumping?

Accepted Answer

Dumping refers to selling a product for

Question 10

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 11

Twenty-seven countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Accepted Answer

A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association. 
A)  European Union. 
B)  United Federation of Europe. 
C)  Gruppo Euro. 
D)  European Free Trade Association.

Question 12

Which of the following is not an example of a trade restriction?

Accepted Answer

A)  tariffs 
B)  quotas and voluntary export restraints 
C)  legislation requiring that cars sold in a country have a 50 percent domestic content 
D)  consumer preferences for goods produced domestically 
A)  tariffs 
B)  quotas and voluntary export restraints 
C)  legislation requiring that cars sold in a country have a 50 percent domestic content 
D)  consumer preferences for goods produced domestically

Question 13

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.

Question 14

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 15

An economic principle that explains why countries produce different goods and services is

Accepted Answer

A)  absolute advantage. 
B)  trade as a percentage of GDP. 
C)  comparative advantage. 
D)  NAFTA. 
A)  absolute advantage. 
B)  trade as a percentage of GDP. 
C)  comparative advantage. 
D)  NAFTA.

Question 16

Table 9-6
Production and
Consumption Production
Without Trade With Trade
   Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many clocks will Belize gain compared to the "without trade" numbers?

Accepted Answer

A)  -100 
B)  100 
C)  120 
D)  250 
A)  -100 
B)  100 
C)  120 
D)  250

Question 17

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.With 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 18

When BMW,an German company,purchases a welding machine that was made in Toronto,the purchase is

Accepted Answer

A)  both a German and a Canadian import. 
B)  a German import and a Canadian export. 
C)  a German export and a Canadian import. 
D)  neither an export nor an import for either country. 
A)  both a German and a Canadian import. 
B)  a German import and a Canadian export. 
C)  a German export and a Canadian import. 
D)  neither an export nor an import for either country.

Question 19

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy,similar to the original "Buy American" provision in the 2009 U.S.stimulus bill,is likely to cause

Accepted Answer

A)  exporting countries to retaliate by placing trade barriers on Canadian imports. 
B)  Canadian manufacturers to become more efficient. 
C)  Canadian companies to pay lower prices for protected products. 
D)  most countries to reduce their own trade barriers to be able to better compete with Canadian imports at home. 
A)  exporting countries to retaliate by placing trade barriers on Canadian imports. 
B)  Canadian manufacturers to become more efficient. 
C)  Canadian companies to pay lower prices for protected products. 
D)  most countries to reduce their own trade barriers to be able to better compete with Canadian imports at home.

Question 20

Figure 9-4   Suppose the U.S. government imposes a $0.50 per pound tariff on sugar imports. Figure 9-4 shows the demand and supply curves for sugar and the impact of this tariff.
-Use Figure 9-4 to answer questions a-i.
a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic sugar producers with the tariff in place?
d.Calculate the value of producer surplus received by U.S.sugar producers with the tariff in place.
e.What is the quantity of sugar imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.

Accepted Answer

a.Price = $2.00 per pound; Quantity purc

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

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

The main purpose of most tariffs and quotas is to

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.

A quota is the same as a voluntary export restraint.

What are the four main sources of comparative advantage? Briefly explain each source and provide examples.

What is dumping? Who benefits and who loses from dumping?

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.

Twenty-seven countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Which of the following is not an example of a trade restriction?

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.

Which of the following statements is true?

An economic principle that explains why countries produce different goods and services 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.With the tariff in place,the United States consumes

When BMW,an German company,purchases a welding machine that was made in Toronto,the purchase is

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy,similar to the original "Buy American" provision in the 2009 U.S.stimulus bill,is likely to cause

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

Filters

Exam 9: Comparative Advantage and the Gains From International Trade

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

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

The main purpose of most tariffs and quotas is to

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.

A quota is the same as a voluntary export restraint.

What are the four main sources of comparative advantage? Briefly explain each source and provide examples.

What is dumping? Who benefits and who loses from dumping?

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.

Twenty-seven countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Which of the following is not an example of a trade restriction?

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.

Which of the following statements is true?

An economic principle that explains why countries produce different goods and services 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.With the tariff in place,the United States consumes

When BMW,an German company,purchases a welding machine that was made in Toronto,the purchase is

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries with a "Buy Canadian" provision.This policy,similar to the original "Buy American" provision in the 2009 U.S.stimulus bill,is likely to cause

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

Filters