Question 1

If a country has an absolute advantage in producing a product,it may not have a comparative advantage in producing that product.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not a source of comparative advantage?

Accepted Answer

A) relative abundance of labor and capital 
B) technology 
C) climate and natural resources 
D) a strong foreign currency exchange rate 
A) relative abundance of labor and capital 
B) technology 
C) climate and natural resources 
D) a strong foreign currency exchange rate

Question 3

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 tariff revenue collected by the government equals

Accepted Answer

A) $10 million. 
B) $15 million. 
C) $19.875 million. 
D) $35 million. 
A) $10 million. 
B) $15 million. 
C) $19.875 million. 
D) $35 million.

Question 4

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.With a quota in place,what is the quantity supplied by domestic producers?

Accepted Answer

A) 8 million pounds 
B) 10 million pounds 
C) 16 million pounds 
D) 18 million pounds 
A) 8 million pounds 
B) 10 million pounds 
C) 16 million pounds 
D) 18 million pounds

Question 5

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.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Accepted Answer

A) Domestic consumption equals 28 million pounds of which 18 million pounds are imports. 
B) Domestic consumption equals 40 million pounds of which 22 million pounds are imports. 
C) Domestic consumption equals 34 million pounds of which 16 million pounds are imports. 
D) Domestic consumption equals 34 million pounds of which 18 million pounds are imports. 
A) Domestic consumption equals 28 million pounds of which 18 million pounds are imports. 
B) Domestic consumption equals 40 million pounds of which 22 million pounds are imports. 
C) Domestic consumption equals 34 million pounds of which 16 million pounds are imports. 
D) Domestic consumption equals 34 million pounds of which 18 million pounds are imports.

Question 6

Which of the following is the best example of a voluntary export restraint?

Accepted Answer

A) a limit imposed by the U.S.government on the number of cell phones that the United States can import from Korea 
B) a subsidy granted by the U.S.government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers 
C) a limit set by the Korean government on the number of cell phones that the United States can import from Korea. 
D) a $50 per-cell phone fee imposed on all cell phones imported into the United States 
A) a limit imposed by the U.S.government on the number of cell phones that the United States can import from Korea 
B) a subsidy granted by the U.S.government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers 
C) a limit set by the Korean government on the number of cell phones that the United States can import from Korea. 
D) a $50 per-cell phone fee imposed on all cell phones imported into the United States

Question 7

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.Without the quota,the domestic price of peanuts equals the world price which is $2.00 per pound.What is the quantity of peanuts supplied by domestic producers in the absence of a quota?

Accepted Answer

A) 10 million pounds 
B) 28 million pounds 
C) 30 million pounds 
D) 40 million pounds 
A) 10 million pounds 
B) 28 million pounds 
C) 30 million pounds 
D) 40 million pounds

Question 8

If Japanese workers are more productive than French workers then trade between Japan and France

Accepted Answer

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

Question 9

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

Accepted Answer

A) True 
 B)False

Question 10

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Accepted Answer

A) marginal 
B) explicit 
C) opportunity 
D) implicit 
A) marginal 
B) explicit 
C) opportunity 
D) implicit

Question 11

The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that

Accepted Answer

A) each country would be better off from trade if it had an absolute advantage in producing one of the goods. 
B) each country would have a comparative advantage in the production of the good for which it had an absolute advantage. 
C) mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods. 
D) mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods. 
A) each country would be better off from trade if it had an absolute advantage in producing one of the goods. 
B) each country would have a comparative advantage in the production of the good for which it had an absolute advantage. 
C) mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods. 
D) mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods.

Question 12

The textbook refers to the following quotation from a Federal Reserve publication: "Trade is a win-win situation for all countries that participate." But many firms and workers oppose free-trade policies and protests against globalization have become a regular occurrence at meetings of the World Trade Organization.If trade is a "win-win" situation,why is there strong opposition to free trade and globalization?

Accepted Answer

Free trade between any two countries can

Question 13

Exports are domestically produced goods and services

Accepted Answer

A) sold to other countries. 
B) sold to the government. 
C) sold at home. 
D) which are used to produce other goods and services. 
A) sold to other countries. 
B) sold to the government. 
C) sold at home. 
D) which are used to produce other goods and services.

Question 14

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

Accepted Answer

A) unless the buyer resides in a different country than the seller.International trade may make the buyer or seller worse off. 
B) unless one party is richer than the other. 
C) only if the buyer and seller live in countries with market economies. 
D) whether the buyer and seller live in the same city or different countries. 
A) unless the buyer resides in a different country than the seller.International trade may make the buyer or seller worse off. 
B) unless one party is richer than the other. 
C) only if the buyer and seller live in countries with market economies. 
D) whether the buyer and seller live in the same city or different countries.

Question 15

A quota is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A) True 
 B)False

Question 16

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 clock in Denmark?

Accepted Answer

A) 1/6 of a hat 
B) 1/2 of a hat 
C) 2 hats 
D) 6 hats 
A) 1/6 of a hat 
B) 1/2 of a hat 
C) 2 hats 
D) 6 hats

Question 17

What are three primary reasons for the growth of international trade over the past 50 years?

Accepted Answer

The increase in trade is the r

Question 18

Twenty-nine countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Accepted Answer

A) European Union. 
B) United Federation of Europe. 
C) Gruppo Euro. 
D) European Free Trade Association. 
A) European Union. 
B) United Federation of Europe. 
C) Gruppo Euro. 
D) European Free Trade Association.

Question 19

A tax imposed by a government on imports of a good into a country is called

Accepted Answer

A) an import levy. 
B) an import fine. 
C) a tariff. 
D) an import quota. 
A) an import levy. 
B) an import fine. 
C) a tariff. 
D) an import quota.

Question 20

Which of the following statements is true?

Accepted Answer

A) Japan is more dependent on foreign trade than is the United States. 
B) Imports and exports account for over one-half of the GDP of Belgium. 
C) France is the leading exporting country,accounting for 10 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 more dependent on foreign trade than is the United States. 
B) Imports and exports account for over one-half of the GDP of Belgium. 
C) France is the leading exporting country,accounting for 10 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.

Exam 9: Comparative Advantage and the Gains From International Trade

If a country has an absolute advantage in producing a product,it may not have a comparative advantage in producing that product.

Which of the following is not a source of comparative advantage?

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 tariff revenue collected by the government equals

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.With a quota in place,what is the quantity supplied by domestic producers?

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.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Which of the following is the best example of a voluntary export restraint?

If Japanese workers are more productive than French workers then trade between Japan and France

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

The first example used to explain comparative advantage used two countries (England and Portugal)and two goods (wine and cloth)to show that

Exports are domestically produced goods and services

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

A quota is a numerical limit on the quantity of a good that can be imported.

What are three primary reasons for the growth of international trade over the past 50 years?

Twenty-nine countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

A tax imposed by a government on imports of a good into a country is called

Which of the following statements is true?

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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