Question 1

The concept of ________ explains how trade between two countries can make each better off.

Accepted Answer

A) absolute advantage 
B) comparative advantage 
C) autarky 
D) trade barriers 
A) absolute advantage 
B) comparative advantage 
C) autarky 
D) trade barriers

Question 2

Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|c|c|}
\hline & \text { Swords } & \text { Belts } & &\text { Swords } & \text { Belts } && \text { Swords } & \text { Belts } \
\hline \text { Estonia } & 5 & 3 &&  100 & 40 && 200 & 0 \
\hline \text { Morocco } & 2 & 2 & & 60 & 60 && 0 & 120 \
\hline
\end{array}$
 Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 9-12 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 9-12.Prior to trade,what was the opportunity cost to produce 1 sword in Morocco?

Accepted Answer

A) 1/2 of a belt 
B) 1 belt 
C) 1.5 belts 
D) 2 belts 
A) 1/2 of a belt 
B) 1 belt 
C) 1.5 belts 
D) 2 belts

Question 3

What was the GATT,why was it established,and why and with what was it replaced?

Accepted Answer

By the end of World War II in 1945,gover

Question 4

Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|c|c|}
\hline & \text { Swords } & \text { Belts } & &\text { Swords } & \text { Belts } && \text { Swords } & \text { Belts } \
\hline \text { Estonia } & 5 & 3 &&  100 & 40 && 200 & 0 \
\hline \text { Morocco } & 2 & 2 & & 60 & 60 && 0 & 120 \
\hline
\end{array}$
 Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 9-12 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 9-12.If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded,how many swords will Estonia consume?

Accepted Answer

A) 75 
B) 100 
C) 125 
D) 200 
A) 75 
B) 100 
C) 125 
D) 200

Question 5

Imports are goods and services bought domestically but produced in other countries.

Accepted Answer

A) True 
 B)False

Question 6

Trade that is within a country or between countries is based on the principle of

Accepted Answer

A) absolute advantage. 
B) scarcity. 
C) competition. 
D) comparative advantage. 
A) absolute advantage. 
B) scarcity. 
C) competition. 
D) comparative advantage.

Question 7

A quota

Accepted Answer

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

Question 8

If Norwegian workers are more productive than Albanian workers,then trade between Norway and Albania

Accepted Answer

A) cannot take place because Norwegian goods and services will be less expensive than Albanian goods and services. 
B) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. 
C) cannot take place until Albanian workers become more productive. 
D) can take place only if Albania has an absolute advantage in producing a good or service Norwegian buyers want. 
A) cannot take place because Norwegian goods and services will be less expensive than Albanian goods and services. 
B) will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. 
C) cannot take place until Albanian workers become more productive. 
D) can take place only if Albania has an absolute advantage in producing a good or service Norwegian buyers want.

Question 9

Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|c|c|}
\hline & \text { Clocks } & \text { Hats } & & \text { Clocks } & \text { Hats } && \text { Clocks } & \text { Hats } \
\hline \text { Denmark } & 6 & 3 & & 900 & 150 & &1,200 & 0 \
\hline \text { Belize } & 1 & 2 & & 150 & 100& & 0 & 400 \
\hline
\end{array}$
 Denmark and Belize can produce both clocks and hats.Each country has a total of 200 available labor hours for the production of clocks and hats.Table 9-11 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 9-11.With trade,what is the total gain in clock production?

Accepted Answer

A) 150 
B) 300 
C) 2,100 
D) 2,250 
A) 150 
B) 300 
C) 2,100 
D) 2,250

Question 10

What does it mean for a country to have an absolute advantage in producing a product?

Accepted Answer

A country has an absolute adva

Question 11

Under autarky,consumer surplus is represented by the area

Accepted Answer

A) above the supply curve and below the equilibrium price. 
B) above the supply curve and below the demand curve. 
C) below the demand curve and above the equilibrium price. 
D) above the demand curve and below the supply curve. 
A) above the supply curve and below the equilibrium price. 
B) above the supply curve and below the demand curve. 
C) below the demand curve and above the equilibrium price. 
D) above the demand curve and below the supply curve.

Question 12

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 produces

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 13

Imposing trade barriers does all of the following except

Accepted Answer

A) reduces economic efficiency. 
B) lowers incomes. 
C) lowers domestic prices. 
D) invites retaliation from foreign governments. 
A) reduces economic efficiency. 
B) lowers incomes. 
C) lowers domestic prices. 
D) invites retaliation from foreign governments.

Question 14

Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5.The increase in domestic producer surplus as a result of the tariff is equal to

Accepted Answer

A) $11.25 million. 
B) $18 million. 
C) $32.5 million. 
D) $45 million. 
A) $11.25 million. 
B) $18 million. 
C) $32.5 million. 
D) $45 million.

Question 15

Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|c|c|}
\hline & \text { Swords } & \text { Belts } & &\text { Swords } & \text { Belts } && \text { Swords } & \text { Belts } \
\hline \text { Estonia } & 5 & 3 &&  100 & 40 && 200 & 0 \
\hline \text { Morocco } & 2 & 2 & & 60 & 60 && 0 & 120 \
\hline
\end{array}$
 Estonia and Morocco can produce both swords and belts.Each country has a total of 40 available labor hours for the production of swords and belts.Table 9-12 shows the output per hour of work,the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 9-12.Prior to trade,what was the opportunity cost to produce 1 sword in Estonia?

Accepted Answer

A) 1/3 of a belt 
B) 3/5 of a belt 
C) 1.67 belts 
D) 3 belts 
A) 1/3 of a belt 
B) 3/5 of a belt 
C) 1.67 belts 
D) 3 belts

Question 16

Which of the following statements is used to justify protectionism?

Accepted Answer

A) Free trade leads to higher prices for imported goods. 
B) Free trade increases employment by protecting domestic firms. 
C) A country should not rely on other countries for goods that are critical to its national defense. 
D) Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection. 
A) Free trade leads to higher prices for imported goods. 
B) Free trade increases employment by protecting domestic firms. 
C) A country should not rely on other countries for goods that are critical to its national defense. 
D) Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection.

Question 17

Trade only occurs if there are only winners,and no losers,as a result of the trade.

Accepted Answer

A) True 
 B)False

Question 18

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.If there was no quota,how many pounds of peanuts would be imported?

Accepted Answer

A) 16 million 
B) 24 million 
C) 30 million 
D) 40 million 
A) 16 million 
B) 24 million 
C) 30 million 
D) 40 million

Question 19

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.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Accepted Answer

A) $12 million 
B) $17.25 million 
C) $20 million 
D) $44 million 
A) $12 million 
B) $17.25 million 
C) $20 million 
D) $44 million

Question 20

Countries that engage in trade will tend to specialize in the production of goods and services in which they have ________ and will ________ these goods and services.

Accepted Answer

A) a comparative advantage;import 
B) an absolute advantage;export 
C) a comparative advantage;export 
D) an absolute advantage;import 
A) a comparative advantage;import 
B) an absolute advantage;export 
C) a comparative advantage;export 
D) an absolute advantage;import

Exam 9: Comparative Advantage and the Gains From International Trade

The concept of ________ explains how trade between two countries can make each better off.

What was the GATT,why was it established,and why and with what was it replaced?

Imports are goods and services bought domestically but produced in other countries.

Trade that is within a country or between countries is based on the principle of

A quota

If Norwegian workers are more productive than Albanian workers,then trade between Norway and Albania

What does it mean for a country to have an absolute advantage in producing a product?

Under autarky,consumer surplus is represented by the area

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 produces

Imposing trade barriers does all of the following except

Suppose the U.S.government imposes a $0.75 per pound tariff on coffee imports.Figure 9-5 shows the impact of this tariff. -Refer to Figure 9-5.The increase in domestic producer surplus as a result of the tariff is equal to

Which of the following statements is used to justify protectionism?

Trade only occurs if there are only winners,and no losers,as a result of the trade.

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.If there was no quota,how many pounds of peanuts would be imported?

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.What is the value of revenue to foreign producers who are granted permission to sell in the U.S.market when there is a quota?

Countries that engage in trade will tend to specialize in the production of goods and services in which they have ________ and will ________ these goods and services.

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

Countries that engage in trade will tend to specialize in the production of goods and services in which they have and will these goods and services.