Question 1

Suppose Japan exports cars to Russia and imports wine from France.This situation suggests

Accepted Answer

A) Japan has a comparative advantage relative to France in producing wine,and Russia has a comparative advantage to Japan in producing cars. 
B) Japan has a comparative advantage relative to Russia in producing cars,and France has a comparative advantage relative to Japan in producing wine. 
C) Japan has an absolute advantage relative to Russia in producing cars,and France has an absolute advantage relative to Japan in producing wine. 
D) Japan has an absolute advantage relative to France in producing wine,and Russia has an absolute advantage relative to Japan in producing cars. 
A) Japan has a comparative advantage relative to France in producing wine,and Russia has a comparative advantage to Japan in producing cars. 
B) Japan has a comparative advantage relative to Russia in producing cars,and France has a comparative advantage relative to Japan in producing wine. 
C) Japan has an absolute advantage relative to Russia in producing cars,and France has an absolute advantage relative to Japan in producing wine. 
D) Japan has an absolute advantage relative to France in producing wine,and Russia has an absolute advantage relative to Japan in producing cars. B

Question 2

Suppose Brazil has an absolute advantage over other countries in producing almonds,but other countries have a comparative advantage over Brazil in producing almonds.If trade in almonds is allowed,Brazil

Accepted Answer

A) will import almonds. 
B) will export almonds. 
C) will either import almonds or export almonds,but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing almonds. 
A) will import almonds. 
B) will export almonds. 
C) will either import almonds or export almonds,but it is not clear from the given information. 
D) would have nothing to gain either from exporting or importing almonds. A

Question 3

The nation of Isolani forbids international trade.In Isolani,you can exchange 1 car for 5 motorcycles.In other countries,you can exchange 1 car for 4 motorcycles.These facts indicate that

Accepted Answer

A) other countries have an absolute advantage,relative to Isolani,in producing cars. 
B) Isolani has a comparative advantage,relative to other countries,in producing cars. 
C) if Isolani were to allow trade,it would import motorcycles. 
D) the world price of motorcycles exceeds the price of motorcycles in Isolani. 
A) other countries have an absolute advantage,relative to Isolani,in producing cars. 
B) Isolani has a comparative advantage,relative to other countries,in producing cars. 
C) if Isolani were to allow trade,it would import motorcycles. 
D) the world price of motorcycles exceeds the price of motorcycles in Isolani. D

Question 4

What is the fundamental basis for trade among nations?

Accepted Answer

A) shortages or surpluses in nations that do not trade 
B) misguided economic policies 
C) absolute advantage 
D) comparative advantage 
A) shortages or surpluses in nations that do not trade 
B) misguided economic policies 
C) absolute advantage 
D) comparative advantage

Question 5

Costa Rica allows trade with the rest of the world.We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Accepted Answer

A) know whether Costa Rica imports or exports pharmaceuticals. 
B) compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed. 
C) compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed. 
D) All of the above are correct. 
A) know whether Costa Rica imports or exports pharmaceuticals. 
B) compare the world price of pharmaceuticals to the price of pharmaceuticals that would prevail in Costa Rica if trade with the rest of the world were not allowed. 
C) compare the quantity of pharmaceuticals consumed in Costa Rica with the quantity of pharmaceuticals that would be consumed in Costa Rica if trade with the rest of the world were not allowed. 
D) All of the above are correct.

Question 6

Assume,for Vietnam,that the domestic price of textiles without international trade is lower than the world price of textiles.This suggests that,in the production of textiles,

Accepted Answer

A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C) other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles. 
A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C) other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Question 7

Assume,for Vietnam,that the domestic price of textiles without international trade is higher than the world price of textiles.This suggests that,in the production of textiles,

Accepted Answer

A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C) other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles. 
A) Vietnam has a comparative advantage over other countries and Vietnam will import textiles. 
B) Vietnam has a comparative advantage over other countries and Vietnam will export textiles. 
C) other countries have a comparative advantage over Vietnam and Vietnam will import textiles. 
D) other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Question 8

Assume,for England,that the domestic price of wine without international trade is lower than the world price of wine.This suggests that,in the production of wine,

Accepted Answer

A) England has a comparative advantage over other countries and England will export wine. 
B) England has a comparative advantage over other countries and England will import wine. 
C) other countries have a comparative advantage over England and England will export wine. 
D) other countries have a comparative advantage over England and England will import wine. 
A) England has a comparative advantage over other countries and England will export wine. 
B) England has a comparative advantage over other countries and England will import wine. 
C) other countries have a comparative advantage over England and England will export wine. 
D) other countries have a comparative advantage over England and England will import wine.

Question 9

Assume,for Mexico,that the domestic price of oranges without international trade is lower than the world price of oranges.This suggests that,in the production of oranges,

Accepted Answer

A) Mexico has a comparative advantage over other countries and Mexico will export oranges. 
B) Mexico has a comparative advantage over other countries and Mexico will import oranges. 
C) other countries have a comparative advantage over Mexico and Mexico will export oranges. 
D) other countries have a comparative advantage over Mexico and Mexico will import oranges. 
A) Mexico has a comparative advantage over other countries and Mexico will export oranges. 
B) Mexico has a comparative advantage over other countries and Mexico will import oranges. 
C) other countries have a comparative advantage over Mexico and Mexico will export oranges. 
D) other countries have a comparative advantage over Mexico and Mexico will import oranges.

Question 10

The price of sugar that prevails in international markets is called the

Accepted Answer

A) export price of sugar. 
B) import price of sugar. 
C) comparative-advantage price of sugar. 
D) world price of sugar. 
A) export price of sugar. 
B) import price of sugar. 
C) comparative-advantage price of sugar. 
D) world price of sugar.

Question 11

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

Accepted Answer

A) the country will be an exporter of the good. 
B) the country will be an importer of the good. 
C) the country will be neither an exporter nor an importer of the good. 
D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither. 
A) the country will be an exporter of the good. 
B) the country will be an importer of the good. 
C) the country will be neither an exporter nor an importer of the good. 
D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.

Question 12

The principle of comparative advantage asserts that

Accepted Answer

A) not all countries can benefit from trade with other countries. 
B) the world price of a good will prevail in all countries,regardless of whether those countries allow international trade in that good. 
C) countries can become better off by exporting goods,but they cannot become better off by importing goods. 
D) countries can become better off by specializing in what they do best. 
A) not all countries can benefit from trade with other countries. 
B) the world price of a good will prevail in all countries,regardless of whether those countries allow international trade in that good. 
C) countries can become better off by exporting goods,but they cannot become better off by importing goods. 
D) countries can become better off by specializing in what they do best.

Question 13

Patterns of trade among nations are primarily determined by

Accepted Answer

A) cultural considerations. 
B) political considerations. 
C) comparative advantage. 
D) differences in the income elasticity of demand among nations. 
A) cultural considerations. 
B) political considerations. 
C) comparative advantage. 
D) differences in the income elasticity of demand among nations.

Question 14

Spain allows trade with the rest of the world.We know that Spain has a comparative advantage in producing olive oil if we know that

Accepted Answer

A) Spain imports olive oil. 
B) the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed. 
C) consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries were not allowed. 
D) All of the above are correct. 
A) Spain imports olive oil. 
B) the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed. 
C) consumer surplus in Spain would exceed producer surplus in Spain if trade with other countries were not allowed. 
D) All of the above are correct.

Question 15

For any country,if the world price of copper is lower than the domestic price of copper without trade,that country should

Accepted Answer

A) export copper. 
B) import copper. 
C) neither export nor import copper,since that country cannot gain from trade. 
D) neither export nor import copper,since that country already produces copper at a low cost compared to other countries. 
A) export copper. 
B) import copper. 
C) neither export nor import copper,since that country cannot gain from trade. 
D) neither export nor import copper,since that country already produces copper at a low cost compared to other countries.

Question 16

Assume,for Mexico,that the domestic price of beets without international trade is higher than the world price of beets.This suggests that,in the production of beets,

Accepted Answer

A) Mexico has a comparative advantage over other countries and Mexico will export beets. 
B) Mexico has a comparative advantage over other countries and Mexico will import beets. 
C) other countries have a comparative advantage over Mexico and Mexico will export beets. 
D) other countries have a comparative advantage over Mexico and Mexico will import beets. 
A) Mexico has a comparative advantage over other countries and Mexico will export beets. 
B) Mexico has a comparative advantage over other countries and Mexico will import beets. 
C) other countries have a comparative advantage over Mexico and Mexico will export beets. 
D) other countries have a comparative advantage over Mexico and Mexico will import beets.

Question 17

If the world price of apples is higher than Argentina's domestic price of apples without trade,then Argentina

Accepted Answer

A) should import apples. 
B) has a comparative advantage in apples. 
C) should produce just enough apples to meet its domestic demand. 
D) should refrain altogether from producing apples. 
A) should import apples. 
B) has a comparative advantage in apples. 
C) should produce just enough apples to meet its domestic demand. 
D) should refrain altogether from producing apples.

Question 18

For any country,if the world price of copper is higher than the domestic price of copper without trade,that country should

Accepted Answer

A) export copper,since that country has a comparative advantage in copper. 
B) import copper,since that country has a comparative advantage in copper. 
C) neither export nor import copper,since that country cannot gain from trade. 
D) neither export nor import copper,since that country already produces copper at a low cost compared to other countries. 
A) export copper,since that country has a comparative advantage in copper. 
B) import copper,since that country has a comparative advantage in copper. 
C) neither export nor import copper,since that country cannot gain from trade. 
D) neither export nor import copper,since that country already produces copper at a low cost compared to other countries.

Question 19

Assume,for England,that the domestic price of wine without international trade is higher than the world price of wine.This suggests that,in the production of wine,

Accepted Answer

A) England has a comparative advantage over other countries and England will export wine. 
B) England has a comparative advantage over other countries and England will import wine. 
C) other countries have a comparative advantage over England and England will export wine. 
D) other countries have a comparative advantage over England and England will import wine. 
A) England has a comparative advantage over other countries and England will export wine. 
B) England has a comparative advantage over other countries and England will import wine. 
C) other countries have a comparative advantage over England and England will export wine. 
D) other countries have a comparative advantage over England and England will import wine.

Question 20

Suppose Japan exports televisions to the United States and imports sugar from Argentina.This situation suggests

Accepted Answer

A) Japan has a comparative advantage relative to the United States in producing televisions,and Argentina has a comparative advantage relative to Japan in producing sugar. 
B) Japan has a comparative advantage relative to the United States in producing sugar,and Argentina has a comparative advantage relative to Japan in producing televisions. 
C) Japan has an absolute advantage relative to the United States in producing televisions,and Argentina has an absolute advantage relative to Japan in producing sugar. 
D) Japan has an absolute advantage relative to Argentina in producing sugar,and the United States has an absolute advantage relative to Japan in producing televisions. 
A) Japan has a comparative advantage relative to the United States in producing televisions,and Argentina has a comparative advantage relative to Japan in producing sugar. 
B) Japan has a comparative advantage relative to the United States in producing sugar,and Argentina has a comparative advantage relative to Japan in producing televisions. 
C) Japan has an absolute advantage relative to the United States in producing televisions,and Argentina has an absolute advantage relative to Japan in producing sugar. 
D) Japan has an absolute advantage relative to Argentina in producing sugar,and the United States has an absolute advantage relative to Japan in producing televisions.

Exam 9: Application International Trade: The Determinants of Trade

Suppose Japan exports cars to Russia and imports wine from France.This situation suggests

Suppose Brazil has an absolute advantage over other countries in producing almonds,but other countries have a comparative advantage over Brazil in producing almonds.If trade in almonds is allowed,Brazil

The nation of Isolani forbids international trade.In Isolani,you can exchange 1 car for 5 motorcycles.In other countries,you can exchange 1 car for 4 motorcycles.These facts indicate that

What is the fundamental basis for trade among nations?

Costa Rica allows trade with the rest of the world.We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we

Assume,for Vietnam,that the domestic price of textiles without international trade is lower than the world price of textiles.This suggests that,in the production of textiles,

Assume,for Vietnam,that the domestic price of textiles without international trade is higher than the world price of textiles.This suggests that,in the production of textiles,

Assume,for England,that the domestic price of wine without international trade is lower than the world price of wine.This suggests that,in the production of wine,

Assume,for Mexico,that the domestic price of oranges without international trade is lower than the world price of oranges.This suggests that,in the production of oranges,

The price of sugar that prevails in international markets is called the

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

The principle of comparative advantage asserts that

Patterns of trade among nations are primarily determined by

Spain allows trade with the rest of the world.We know that Spain has a comparative advantage in producing olive oil if we know that

For any country,if the world price of copper is lower than the domestic price of copper without trade,that country should

Assume,for Mexico,that the domestic price of beets without international trade is higher than the world price of beets.This suggests that,in the production of beets,

If the world price of apples is higher than Argentina's domestic price of apples without trade,then Argentina

For any country,if the world price of copper is higher than the domestic price of copper without trade,that country should

Assume,for England,that the domestic price of wine without international trade is higher than the world price of wine.This suggests that,in the production of wine,

Suppose Japan exports televisions to the United States and imports sugar from Argentina.This situation suggests

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A