Question 1

Which of the following is an argument against free trade?

Accepted Answer

A) Protecting infant industries 
B) Protecting against dumping 
C) Protecting domestic jobs 
D) All of the above 
A) Protecting infant industries 
B) Protecting against dumping 
C) Protecting domestic jobs 
D) All of the above

Question 2

The standard of living in a nation depends on

Accepted Answer

A) how well its economy functions relative to other countries. 
B) the size of the country,with larger nations always doing better than smaller ones. 
C) how well the economy functions within that country. 
D) whether or not its currency is adopted as the world's monetary standard. 
A) how well its economy functions relative to other countries. 
B) the size of the country,with larger nations always doing better than smaller ones. 
C) how well the economy functions within that country. 
D) whether or not its currency is adopted as the world's monetary standard.

Question 3

Consider a world with two countries and two goods.Under which of the following conditions does comparative advantage NOT exist?

Accepted Answer

A) One country can produce both goods more cheaply than the other country. 
B) One country has more productive resources or inputs than another country. 
C) The opportunity cost of producing each good is the same in each country. 
D) One country has an absolute advantage in producing one good while the other country has an absolute advantage in producing the other good. 
A) One country can produce both goods more cheaply than the other country. 
B) One country has more productive resources or inputs than another country. 
C) The opportunity cost of producing each good is the same in each country. 
D) One country has an absolute advantage in producing one good while the other country has an absolute advantage in producing the other good.

Question 4

Since 1950,the balance of trade for United States has

Accepted Answer

A) gone from a surplus to a deficit. 
B) gone from a deficit to a surplus. 
C) remained constant. 
D) gone from a small deficit to a larger deficit. 
A) gone from a surplus to a deficit. 
B) gone from a deficit to a surplus. 
C) remained constant. 
D) gone from a small deficit to a larger deficit.

Question 5

Assume that maximum feasible hourly productions levels if all resources are utilized in the United States are either 8 yards of fabric or 4 bushels of wheat.Maximum feasible production levels if all resources are utilized in Japan are either 3 yards of fabric or 6 bushels of wheat.Based on this information

Accepted Answer

A) beneficial trade is absolutely impossible between the two countries. 
B) the United States will benefit from trading but Japan will not. 
C) both nations will gain from specialization and trade,with the United States exporting wheat and Japan exporting fabric. 
D) both nations will gain from specialization and trade,with the United States exporting fabric and Japan exporting wheat. 
A) beneficial trade is absolutely impossible between the two countries. 
B) the United States will benefit from trading but Japan will not. 
C) both nations will gain from specialization and trade,with the United States exporting wheat and Japan exporting fabric. 
D) both nations will gain from specialization and trade,with the United States exporting fabric and Japan exporting wheat.

Question 6

The ability to produce a good at lower opportunity costs than another producer is known as

Accepted Answer

A) comparative advantage. 
B) marginal cost production. 
C) economies of scale. 
D) absolute advantage. 
A) comparative advantage. 
B) marginal cost production. 
C) economies of scale. 
D) absolute advantage.

Question 7

If the infant industry argument is used to protect an industry that has already matured,then

Accepted Answer

A) consumers lose because they will pay a price for a product that is above the world price. 
B) consumers lose because they will pay a price for a product,which is less than the world price. 
C) stockholders lose because the firm cannot compete with other firms. 
D) no one loses. 
A) consumers lose because they will pay a price for a product that is above the world price. 
B) consumers lose because they will pay a price for a product,which is less than the world price. 
C) stockholders lose because the firm cannot compete with other firms. 
D) no one loses.

Question 8

Maximum Feasible Hourly Production Rates of Either 
Computers or Bicycles Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll }

Product & United States & Mexico \
\hline Computers & 8 & 10 \
Bicycles & 4 & 2
\end{array}
\end{array}$$
-Refer to the above table.If opportunity costs are constant,then the United States and Mexico will produce goods in which they have a comparative advantage and trade at a rate of exchange of

Accepted Answer

A) 4 computers for 1 bicycle. 
B) 6 computers for 1 bicycle. 
C) 0.1 computer for 1 bicycle. 
D) 1 computer for 1 bicycle. 
A) 4 computers for 1 bicycle. 
B) 6 computers for 1 bicycle. 
C) 0.1 computer for 1 bicycle. 
D) 1 computer for 1 bicycle.

Question 9

The ability to produce a good or service at a lower opportunity cost than other producers is

Accepted Answer

A) absolute advantage. 
B) comparative advantage. 
C) opportunity advantage. 
D) special advantage. 
A) absolute advantage. 
B) comparative advantage. 
C) opportunity advantage. 
D) special advantage.

Question 10

Consider a world of two countries facing opportunity costs and producing only wheat and cloth.In one hour,residents of Country A can produce a maximum of either 1 unit of wheat or 0.5 unit of cloth,whereas residents of Country B can produce a maximum of either 0.3 unit of wheat or 0.4 unit of cloth.Country B should export

Accepted Answer

A) wheat and cloth; country A should not export anything. 
B) wheat and country A should export cloth. 
C) nothing and country A should export both wheat and cloth. 
D) cloth and country A should export wheat. 
A) wheat and cloth; country A should not export anything. 
B) wheat and country A should export cloth. 
C) nothing and country A should export both wheat and cloth. 
D) cloth and country A should export wheat.

Question 11

The Number of Worker Days to Produce One
Cuckoo Clock or Movie Using All Available Resources 
$$\begin{array}{l}
\begin{array} { l c c } 
&u.s&switzerland\
\text { Product } & \text { (Worker-Days) } & \text { (Worker-Days) } \
\hline \text { Cuckoo Clocks } & 8 & 6 \
\text { Movies } & 12 & 4
\end{array}
\end{array}$$
-Based on the data in the above table,then if opportunity costs are constant,the opportunity cost of producing one cuckoo clock in the United States is ________,and the opportunity cost of producing one cuckoo clock in Switzerland is ________.

Accepted Answer

A) 3 movies; 1.33 cuckoo clocks 
B) 0.33 movies; 0.67 cuckoo clocks 
C) 0.67 movie; 1.5 movies 
D) 1.5 movies; 0.67 movie 
A) 3 movies; 1.33 cuckoo clocks 
B) 0.33 movies; 0.67 cuckoo clocks 
C) 0.67 movie; 1.5 movies 
D) 1.5 movies; 0.67 movie

Question 12

Specialization and international trade lead to

Accepted Answer

A) an outward shift in the production possibilities curve. 
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 curve. 
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 13

The World Trade Organization

Accepted Answer

A) was established to settle trade disputes within the European Union. 
B) is another name for the IMF. 
C) was established to resolve disputes arising under world trade rules. 
D) increases world trade by providing interest rate subsidies to foreign borrowers who buy U.S.exports on credit. 
A) was established to settle trade disputes within the European Union. 
B) is another name for the IMF. 
C) was established to resolve disputes arising under world trade rules. 
D) increases world trade by providing interest rate subsidies to foreign borrowers who buy U.S.exports on credit.

Question 14

Maximum Feasible Hourly Production Rates (in Tons) of Either
 Pizzas or Donuts Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll }

Product & Country Alpha & Country Beta \
\hline Pizzas & 10 & 2 \
Donuts & 10 & 12
\end{array}
\end{array}$$
-Use the above table.Assuming constant opportunity costs,the opportunity cost of producing donuts in country Alpha is ________,and the opportunity cost of producing donuts in country Beta is ________ .

Accepted Answer

A) 1 donut; 0.17 donut 
B) 1 donut; 6 donuts 
C) 10 donuts; 12 pizzas 
D) 0.2 pizza; 1.67 donuts 
A) 1 donut; 0.17 donut 
B) 1 donut; 6 donuts 
C) 10 donuts; 12 pizzas 
D) 0.2 pizza; 1.67 donuts

Question 15

If there are two goods and two countries,then one country can have

Accepted Answer

A) an absolute advantage in only one good. 
B) an absolute advantage in both goods. 
C) a higher opportunity cost of producing both goods. 
D) a lower opportunity cost of producing both goods. 
A) an absolute advantage in only one good. 
B) an absolute advantage in both goods. 
C) a higher opportunity cost of producing both goods. 
D) a lower opportunity cost of producing both goods.

Question 16

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day.Ethel can either produce a maximum of eight pies or two cakes in a day.Ethel's opportunity cost to produce one cake is

Accepted Answer

A) one-half pie. 
B) two pies. 
C) six pies. 
D) four pies. 
A) one-half pie. 
B) two pies. 
C) six pies. 
D) four pies.

Question 17

Today,in the United States,exports are about

Accepted Answer

A) 90 percent of GDP. 
B) 12 percent of GDP. 
C) 28 percent of GDP. 
D) 4 percent of GDP. 
A) 90 percent of GDP. 
B) 12 percent of GDP. 
C) 28 percent of GDP. 
D) 4 percent of GDP.

Question 18

The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is

Accepted Answer

A) a basic argument for free trade. 
B) the infant industry argument. 
C) dumping. 
D) a voluntary restraint agreement. 
A) a basic argument for free trade. 
B) the infant industry argument. 
C) dumping. 
D) a voluntary restraint agreement.

Question 19

The selling of a good or service abroad at a price below production costs is

Accepted Answer

A) marginal cost selling. 
B) price discrimination. 
C) price differentiation. 
D) dumping. 
A) marginal cost selling. 
B) price discrimination. 
C) price differentiation. 
D) dumping.

Question 20

Which of the following is NOT a benefit of international trade?

Accepted Answer

A) It increases overall output. 
B) It results in a transmission of ideas. 
C) It promotes self-sufficiency. 
D) It results in the transmission of new processes. 
A) It increases overall output. 
B) It results in a transmission of ideas. 
C) It promotes self-sufficiency. 
D) It results in the transmission of new processes.

Which of the following is an argument against free trade?

The standard of living in a nation depends on

Consider a world with two countries and two goods.Under which of the following conditions does comparative advantage NOT exist?

Since 1950,the balance of trade for United States has

The ability to produce a good at lower opportunity costs than another producer is known as

If the infant industry argument is used to protect an industry that has already matured,then

The ability to produce a good or service at a lower opportunity cost than other producers is

Specialization and international trade lead to

The World Trade Organization

If there are two goods and two countries,then one country can have

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day.Ethel can either produce a maximum of eight pies or two cakes in a day.Ethel's opportunity cost to produce one cake is

Today,in the United States,exports are about

The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is

The selling of a good or service abroad at a price below production costs is

Which of the following is NOT a benefit of international trade?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

Filters

Exam 19: Comparative Advantage and the Open Economy

Which of the following is an argument against free trade?

The standard of living in a nation depends on

Consider a world with two countries and two goods.Under which of the following conditions does comparative advantage NOT exist?

Since 1950,the balance of trade for United States has

The ability to produce a good at lower opportunity costs than another producer is known as

If the infant industry argument is used to protect an industry that has already matured,then

The ability to produce a good or service at a lower opportunity cost than other producers is

Specialization and international trade lead to

The World Trade Organization

If there are two goods and two countries,then one country can have

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day.Ethel can either produce a maximum of eight pies or two cakes in a day.Ethel's opportunity cost to produce one cake is

Today,in the United States,exports are about

The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is

The selling of a good or service abroad at a price below production costs is

Which of the following is NOT a benefit of international trade?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

Filters