Question 1

Since World War II,world trade has

Accepted Answer

A) decreased in importance as nations turn inward due to security concerns. 
B) increased,but not as dramatically as annual world real GDP has climbed. 
C) risen sharply,outpacing gains in annual world real GDP. 
D) increased in relative importance for most nations,but not for the United States. 
A) decreased in importance as nations turn inward due to security concerns. 
B) increased,but not as dramatically as annual world real GDP has climbed. 
C) risen sharply,outpacing gains in annual world real GDP. 
D) increased in relative importance for most nations,but not for the United States.

Question 2

Maximum Feasible Hourly Production Rates (in Tons) of Either
 Wine or Beef Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll } 
Product &Argentina & France \
\hline Wine (gallons)& 30 & 60 \
Beef (pounds) &10 & 30
\end{array}
\end{array}$$
-Use the above table.Assuming constant opportunity costs,if Argentina and France specialize based on comparative advantage,then they will trade if the rate of exchange

Accepted Answer

A) is 7 gallons of wine for 1 pound of beef,and Argentina imports beef. 
B) 0.25 gallons of wine for 1 pound of beef,and France imports beef. 
C) 0.25 pounds of beef for 1 gallon of wine,and Argentina imports wine. 
D) 0.4 pounds of beef for 1 gallon of wine,and France imports wine. 
A) is 7 gallons of wine for 1 pound of beef,and Argentina imports beef. 
B) 0.25 gallons of wine for 1 pound of beef,and France imports beef. 
C) 0.25 pounds of beef for 1 gallon of wine,and Argentina imports wine. 
D) 0.4 pounds of beef for 1 gallon of wine,and France imports wine.

Question 3

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

Product & United States & Mexico \
\hline Computers & 8 & 3 \
Bicycles & 2 & 6
\end{array}
\end{array}$$a
-Refer to the above table.Assuming that opportunity costs are constant,which of the following is a correct statement?

Accepted Answer

A) The United States has a comparative advantage in computers. 
B) The United States has a comparative advantage in bicycles. 
C) Mexico has a comparative advantage in computers. 
D) Mexico has a comparative advantage in both goods. 
A) The United States has a comparative advantage in computers. 
B) The United States has a comparative advantage in bicycles. 
C) Mexico has a comparative advantage in computers. 
D) Mexico has a comparative advantage in both goods.

Question 4

The importance of international trade in the U.S.economy

Accepted Answer

A) has been decreasing and is expected to continue to decrease. 
B) has been decreasing but is expected to start to increase. 
C) has been increasing and is expected to continue to increase. 
D) has been increasing but is expected to decrease in the future. 
A) has been decreasing and is expected to continue to decrease. 
B) has been decreasing but is expected to start to increase. 
C) has been increasing and is expected to continue to increase. 
D) has been increasing but is expected to decrease in the future.

Question 5

If costs a firm $10 to produce a good and the same good sells for $7 abroad,then this firm is engaging in

Accepted Answer

A) profit maximization. 
B) price discrimination. 
C) price differentiation. 
D) dumping. 
A) profit maximization. 
B) price discrimination. 
C) price differentiation. 
D) dumping.

Question 6

In the long run,imports are paid for by

Accepted Answer

A) investment. 
B) exports. 
C) dollars. 
D) gold or other universally accepted monies. 
A) investment. 
B) exports. 
C) dollars. 
D) gold or other universally accepted monies.

Question 7

$$\begin{array}{l}
\text { Maximum Feasible Hourly Production Rate }\
\begin{array} { l l c } 
\hline& \text { Chen } & \text { Holly } \
\hline \text { Units of Good X } & 50 & 40 \
\text { Units of Good Y } & 25 & 100\\hline
\end{array}
\end{array}$$
-According to the above table,which assumes that opportunity costs of producing goods X and Y are constant,the opportunity cost of producing one unit of Good X is ________ units of Good Y for Chen and ________ units of Good Y for Holly.

Accepted Answer

A) 25; 100 
B) 0.5; 2.5 
C) 2; 0.4 
D) 100; 25 
A) 25; 100 
B) 0.5; 2.5 
C) 2; 0.4 
D) 100; 25

Question 8

Quotas and tariffs both serve the purpose of

Accepted Answer

A) increasing foreign trade. 
B) restricting foreign trade. 
C) causing domestic producers to lose revenues. 
D) lowering prices on imported goods. 
A) increasing foreign trade. 
B) restricting foreign trade. 
C) causing domestic producers to lose revenues. 
D) lowering prices on imported goods.

Question 9

A group of nations that grants member special trade privileges is

Accepted Answer

A) World Trade Organization. 
B) European Union. 
C) General Agreement on Tariffs and Trade. 
D) North American Free Trade Agreement. 
A) World Trade Organization. 
B) European Union. 
C) General Agreement on Tariffs and Trade. 
D) North American Free Trade Agreement.

Question 10

If protective import-restricting quota are imposed by a country,in the majority of cases that nation's consumers end up

Accepted Answer

A) paying a lower price for the good than they otherwise would. 
B) consuming more of the good than they otherwise would. 
C) having more consumption choices than they otherwise would. 
D) consuming less of the good than they otherwise would. 
A) paying a lower price for the good than they otherwise would. 
B) consuming more of the good than they otherwise would. 
C) having more consumption choices than they otherwise would. 
D) consuming less of the good than they otherwise would.

Question 11

An import quota specifies

Accepted Answer

A) the amount of funds that can be paid for any imported good. 
B) the amount of taxes that must be paid on any imported good. 
C) the maximum amount of an item that may be imported during a specified period. 
D) the minimum amount of an item that may be imported during a specified period. 
A) the amount of funds that can be paid for any imported good. 
B) the amount of taxes that must be paid on any imported good. 
C) the maximum amount of an item that may be imported during a specified period. 
D) the minimum amount of an item that may be imported during a specified period.

Question 12

For infant industry tariff protection to be valid requires that

Accepted Answer

A) the tariff must be allowed to last forever. 
B) only industries that currently are producing efficiently should be protected. 
C) government officials must predict which industries will eventually be able to compete with more established foreign producers. 
D) the industries protected must have substantial monopoly power in the absence of foreign competition. 
A) the tariff must be allowed to last forever. 
B) only industries that currently are producing efficiently should be protected. 
C) government officials must predict which industries will eventually be able to compete with more established foreign producers. 
D) the industries protected must have substantial monopoly power in the absence of foreign competition.

Question 13

Maximum Feasible Hourly Production Rates for either
 Computers or Bicycles Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll} 
\hline Product & United States & Mexico \
\hline Computers & 8 & 2 \
Bicydes & 6 & 4 \
\hline
\end{array}
\end{array}$$
-According to the above table,if these two countries trade,

Accepted Answer

A) Mexico should export computers and the United States export bicycles. 
B) the United States should import computers and Mexico should import bicycles. 
C) the United States should export computers and Mexico should export bicycles. 
D) we cannot tell which country should export which good without knowing the amount of labor utilized in each country. 
A) Mexico should export computers and the United States export bicycles. 
B) the United States should import computers and Mexico should import bicycles. 
C) the United States should export computers and Mexico should export bicycles. 
D) we cannot tell which country should export which good without knowing the amount of labor utilized in each country.

Question 14

An assumption behind the infant industry argument for tariff protection is that

Accepted Answer

A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand. 
A) foreign competitors are selling output below average cost. 
B) the domestic industry will be facing an upward adjustment in its average cost. 
C) the domestic industry will eventually gain comparative advantage in producing the good. 
D) the market needs additional competition to satisfy consumer demand.

Question 15

Free trade policies may lead to

Accepted Answer

A) a decrease in world output. 
B) price increases in world markets. 
C) some labor sectors experiencing some short-term job loss. 
D) none of the above. 
A) a decrease in world output. 
B) price increases in world markets. 
C) some labor sectors experiencing some short-term job loss. 
D) none of the above.

Question 16

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

Accepted Answer

A) the open U.S.financial system. 
B) economic restructuring. 
C) investments in information technology. 
D) the decline of entrepreneurship. 
A) the open U.S.financial system. 
B) economic restructuring. 
C) investments in information technology. 
D) the decline of entrepreneurship.

Question 17

In order to obtain an efficient allocation of resources worldwide

Accepted Answer

A) countries that have a lot of resources should ship resources to countries that do not have a lot of resources. 
B) countries that have a lot of resources should not trade since poorer countries cannot compete. 
C) each country should produce the good they have a comparative advantage in and then trade. 
D) no trade among countries should occur. 
A) countries that have a lot of resources should ship resources to countries that do not have a lot of resources. 
B) countries that have a lot of resources should not trade since poorer countries cannot compete. 
C) each country should produce the good they have a comparative advantage in and then trade. 
D) no trade among countries should occur.

Question 18

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

Product & United States & Mexico \
\hline Computers & 8 & 3 \
Bicycles & 2 & 6
\end{array}
\end{array}$$a
-Refer to the above table.Assuming that opportunity costs are constant,the opportunity cost of producing a bicycle in the United States is equal to ________,and the opportunity cost of producing a bicycle in Mexico is ________.

Accepted Answer

A) 4 computers; 0.5 computer 
B) 0.25 computer; 2 computers 
C) 2.67 bicycles; 0.33 computers 
D) 0.375 computer; 3 bicycles 
A) 4 computers; 0.5 computer 
B) 0.25 computer; 2 computers 
C) 2.67 bicycles; 0.33 computers 
D) 0.375 computer; 3 bicycles

Question 19

Assume that U.S.producers can manufacture cookies at a lower opportunity cost than Mexican producers.If this is the case,

Accepted Answer

A) it will not be possible for Mexico to have an comparative advantage in the production of any other products. 
B) Mexico could still have the comparative advantage in cookie production. 
C) it would still be possible for Mexico to have a comparative advantage in trade for some other products. 
D) Mexico would have the comparative advantage in all products compared to the United States. 
A) it will not be possible for Mexico to have an comparative advantage in the production of any other products. 
B) Mexico could still have the comparative advantage in cookie production. 
C) it would still be possible for Mexico to have a comparative advantage in trade for some other products. 
D) Mexico would have the comparative advantage in all products compared to the United States.

Question 20

People who focus on the "competitiveness" of the United States are

Accepted Answer

A) focusing on the right thing if the United States is to stay a leading economic power. 
B) treating the United States as if it is a business firm. 
C) also focusing on the importance of education. 
D) correctly recognizing that trade is a zero-sum game. 
A) focusing on the right thing if the United States is to stay a leading economic power. 
B) treating the United States as if it is a business firm. 
C) also focusing on the importance of education. 
D) correctly recognizing that trade is a zero-sum game.

Since World War II,world trade has

Maximum Feasible Hourly Production Rates of Either Computers or Bicycles Using All Available Resources Product UnitedStates Mexico Computers 8 3 Bicycles 2 6 a -Refer to the above table.Assuming that opportunity costs are constant,which of the following is a correct statement?

The importance of international trade in the U.S.economy

If costs a firm $10 to produce a good and the same good sells for $7 abroad,then this firm is engaging in

In the long run,imports are paid for by

Quotas and tariffs both serve the purpose of

A group of nations that grants member special trade privileges is

If protective import-restricting quota are imposed by a country,in the majority of cases that nation's consumers end up

An import quota specifies

For infant industry tariff protection to be valid requires that

Maximum Feasible Hourly Production Rates for either Computers or Bicycles Using All Available Resources Product UnitedStates Mexico Computers 8 2 Bicydes 6 4 -According to the above table,if these two countries trade,

An assumption behind the infant industry argument for tariff protection is that

Free trade policies may lead to

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

In order to obtain an efficient allocation of resources worldwide

Assume that U.S.producers can manufacture cookies at a lower opportunity cost than Mexican producers.If this is the case,

People who focus on the "competitiveness" of the United States are

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

Since World War II,world trade has

Maximum Feasible Hourly Production Rates of Either Computers or Bicycles Using All Available Resources Product UnitedStates Mexico Computers 8 3 Bicycles 2 6 a -Refer to the above table.Assuming that opportunity costs are constant,which of the following is a correct statement?

The importance of international trade in the U.S.economy

If costs a firm $10 to produce a good and the same good sells for $7 abroad,then this firm is engaging in

In the long run,imports are paid for by

Quotas and tariffs both serve the purpose of

A group of nations that grants member special trade privileges is

If protective import-restricting quota are imposed by a country,in the majority of cases that nation's consumers end up

An import quota specifies

For infant industry tariff protection to be valid requires that

Maximum Feasible Hourly Production Rates for either Computers or Bicycles Using All Available Resources Product UnitedStates Mexico Computers 8 2 Bicydes 6 4 -According to the above table,if these two countries trade,

An assumption behind the infant industry argument for tariff protection is that

Free trade policies may lead to

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

In order to obtain an efficient allocation of resources worldwide

Assume that U.S.producers can manufacture cookies at a lower opportunity cost than Mexican producers.If this is the case,

People who focus on the "competitiveness" of the United States are

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