Question 1

If Canada has a comparative advantage relative to Mexico in the production of timber,then

Accepted Answer

A) the explicit cost of production for timber is lower in Canada than in Mexico. 
B) the opportunity cost of production for timber is lower in Canada than in Mexico. 
C) the implicit costs of production for timber are higher in Canada than in Mexico. 
D) the average cost of production for timber is lower in Canada than in Mexico. 
A) the explicit cost of production for timber is lower in Canada than in Mexico. 
B) the opportunity cost of production for timber is lower in Canada than in Mexico. 
C) the implicit costs of production for timber are higher in Canada than in Mexico. 
D) the average cost of production for timber is lower in Canada than in Mexico.

Question 2

Output Per Hour of Work
 $$\begin{array} { | l | c | c | } 
\hline & \text { Light Bulbs } & \text { Flash Drives } \
\hline \text { Mexico } & 20 & 5 \
\hline \text { Canada } & 8 & 32 \
\hline
\end{array}$$ Table 9-9 shows the output per hour of work for light bulbs and flash drives in Mexico and in Canada.
-Refer to Table 9-9.
a.Which country has an absolute advantage in the production of both light bulbs and flash drives?
b.Which country has a comparative advantage in the production of light bulbs?
c.Which country has a comparative advantage in the production of flash drives?

Accepted Answer

a.Neither country has an absolute advant

Question 3

As a percentage of GDP,imports are greater than exports for which of the following countries?

Accepted Answer

A) Germany 
B) Italy 
C) the Netherlands 
D) the United States 
A) Germany 
B) Italy 
C) the Netherlands 
D) the United States

Question 4

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

Accepted Answer

A) they do not want to offend their employers who want them. 
B) politicians lobby to convince workers the restrictions will make them better off. 
C) they believe the restrictions will protect their jobs. 
D) they don't understand that the restrictions will threaten their jobs. 
A) they do not want to offend their employers who want them. 
B) politicians lobby to convince workers the restrictions will make them better off. 
C) they believe the restrictions will protect their jobs. 
D) they don't understand that the restrictions will threaten their jobs.

Question 5

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Accepted Answer

A) both a U.S.and a French import. 
B) a U.S.import and a French export. 
C) a U.S.export and a French import. 
D) neither an export nor an import for either country. 
A) both a U.S.and a French import. 
B) a U.S.import and a French export. 
C) a U.S.export and a French import. 
D) neither an export nor an import for either country.

Question 6

Figure 9-4 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 9-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Accepted Answer

A) Q0 
B) Q1 
C) Q2 
D) Q2 - Q0 
A) Q0 
B) Q1 
C) Q2 
D) Q2 - Q0

Question 7

Twenty-nine countries in Europe have formed the European Union (EU).After the EU was formed it

Accepted Answer

A) eliminated all tariffs among its member countries. 
B) completed a trade treaty (NAFT
A) that reduced tariff rates between the EU and North American countries. 
C) greatly decreased imports and exports among its member countries. 
D) barred imports of 747 jumbo jets by its member countries;all EU countries must now buy jets from Airbus,a European company. 
A) eliminated all tariffs among its member countries. 
B) completed a trade treaty (NAFT
A) that reduced tariff rates between the EU and North American countries. 
C) greatly decreased imports and exports among its member countries. 
D) barred imports of 747 jumbo jets by its member countries;all EU countries must now buy jets from Airbus,a European company.

Question 8

A quota is

Accepted Answer

A) a limit placed on the quantity of goods that can be imported into a country. 
B) a tax imposed by a government on goods imported into a country. 
C) a subsidy granted to importers of a vital input. 
D) a health and safety restriction imposed on an imported product. 
A) a limit placed on the quantity of goods that can be imported into a country. 
B) a tax imposed by a government on goods imported into a country. 
C) a subsidy granted to importers of a vital input. 
D) a health and safety restriction imposed on an imported product.

Question 9

A tariff is a tax imposed by a government on imports.

Accepted Answer

A) True 
 B)False

Question 10

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.Prior to trade,what was the opportunity cost to produce 1 hat in Denmark?

Accepted Answer

A) 1/6 of a clock 
B) 1/2 of a clock 
C) 2 clocks 
D) 6 clocks 
A) 1/6 of a clock 
B) 1/2 of a clock 
C) 2 clocks 
D) 6 clocks

Question 11

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 belt in Morocco?

Accepted Answer

A) 1/2 of a sword 
B) 1 sword 
C) 1.5 swords 
D) 2 swords 
A) 1/2 of a sword 
B) 1 sword 
C) 1.5 swords 
D) 2 swords

Question 12

What is the difference between imports and exports?

Accepted Answer

Imports are goods and services

Question 13

If Estonia has an absolute advantage in the production of two goods compared to Norway,Estonia can not benefit from trade with Norway.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is false?

Accepted Answer

A) Japan is less dependent on foreign trade than is the United States. 
B) Imports and exports account for over one-half of the GDP of the Netherlands. 
C) China is the leading exporting country,accounting for 10.3 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 less dependent on foreign trade than is the United States. 
B) Imports and exports account for over one-half of the GDP of the Netherlands. 
C) China is the leading exporting country,accounting for 10.3 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

Dumping refers to

Accepted Answer

A) selling inferior products to unsuspecting consumers. 
B) selling a product for a price below its cost of production. 
C) exporting products that do not meet domestic safety standards. 
D) illegally avoiding tariffs by selling products on the black market. 
A) selling inferior products to unsuspecting consumers. 
B) selling a product for a price below its cost of production. 
C) exporting products that do not meet domestic safety standards. 
D) illegally avoiding tariffs by selling products on the black market.

Question 16

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.The loss in domestic consumer surplus as a result of the tariff is equal to the area

Accepted Answer

A) B + D + E + F. 
B) D + E + F. 
C) C + D + E + F. 
D) B. 
A) B + D + E + F. 
B) D + E + F. 
C) C + D + E + F. 
D) B.

Question 17

Bragabong currently both produces and imports almonds.The government of Bragabong decides to restrict international trade in almonds by imposing a quota that allows imports of only 10 million kilos each year.Figure 9-7 shows the estimated demand and supply curves for almonds in Bragabong and the results of imposing the quota.
-Use Figure 9-7 to answer questions a-j.
a.If there is no quota what is the domestic price of almonds and what is the quantity of almonds demanded by consumers?
b.If there is no quota how many kilos of almonds would domestic producers supply and what quantity would be imported?
c.If there is no quota what is the dollar value of consumer surplus?
d.If there is no quota what is the dollar value of producer surplus received by producers in Bragabong?
e.If there is no quota what is the revenue received by foreign producers who supply almonds to Bragabong?
f.With a quota in place what is the price that consumers of Bragabong must now pay and what is the quantity demanded?
g.With a quota in place what is the dollar value of consumer surplus? Are consumers better off?
h.With a quota in place what is the dollar value of producer surplus received by producers in Bragabong? Are domestic producers better off?
i.Calculate the revenue to foreign producers who are granted permission to sell in Bragabong after the imposition of the quota.
j.Calculate the deadweight loss as a result of the quota.

Accepted Answer

a.Price without a quota = $3 per kilo;qu

Question 18

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.With the tariff in place,the United States produces

Accepted Answer

A) 18 million pounds of coffee. 
B) 20 million pounds of coffee. 
C) 26 million pounds of coffee. 
D) 38 million pounds of coffee. 
A) 18 million pounds of coffee. 
B) 20 million pounds of coffee. 
C) 26 million pounds of coffee. 
D) 38 million pounds of coffee.

Question 19

In order to avoid the imposition of other types of trade barriers,foreign producers will sometimes agree to voluntary export restraints.With voluntary export restraints,foreign producers

Accepted Answer

A) agree to meet specific quality standards required by the importing country. 
B) limit their exports to a country. 
C) pay a tax on all products they export. 
D) must agree to import an equal quantity of products that they export. 
A) agree to meet specific quality standards required by the importing country. 
B) limit their exports to a country. 
C) pay a tax on all products they export. 
D) must agree to import an equal quantity of products that they export.

Question 20

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

Accepted Answer

A) China also has an absolute advantage in producing corn relative to Japan. 
B) China has a lower opportunity cost of producing corn relative to Japan. 
C) Japan has an absolute disadvantage in producing corn relative to China. 
D) Labor costs are higher for corn producers in Japan than in China. 
A) China also has an absolute advantage in producing corn relative to Japan. 
B) China has a lower opportunity cost of producing corn relative to Japan. 
C) Japan has an absolute disadvantage in producing corn relative to China. 
D) Labor costs are higher for corn producers in Japan than in China.

Exam 9: Comparative Advantage and the Gains From International Trade

If Canada has a comparative advantage relative to Mexico in the production of timber,then

As a percentage of GDP,imports are greater than exports for which of the following countries?

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Figure 9-4 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Twenty-nine countries in Europe have formed the European Union (EU).After the EU was formed it

A quota is

A tariff is a tax imposed by a government on imports.

What is the difference between imports and exports?

If Estonia has an absolute advantage in the production of two goods compared to Norway,Estonia can not benefit from trade with Norway.

Which of the following statements is false?

Dumping refers to

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.The loss in domestic consumer surplus as a result of the tariff is equal to the area

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.With the tariff in place,the United States produces

In order to avoid the imposition of other types of trade barriers,foreign producers will sometimes agree to voluntary export restraints.With voluntary export restraints,foreign producers

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

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

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