Question 1

Is the value of U.S.exports typically larger or smaller than the value of U.S.imports?

Accepted Answer

As a percentage of G

Question 2

Which of the following describes the national security argument for protectionism?

Accepted Answer

A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand. 
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism. 
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. 
D) Private companies (for example,Coca-Cola)should not be forced to reveal their trade secrets to foreign companies. 
A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand. 
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism. 
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. 
D) Private companies (for example,Coca-Cola)should not be forced to reveal their trade secrets to foreign companies.

Question 3

Which of the following countries is not one of the top three exporting countries in the world?

Accepted Answer

A) China 
B) Germany 
C) South Korea 
D) the United States 
A) China 
B) Germany 
C) South Korea 
D) the United States

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.With trade,what is the total gain in sword production?

Accepted Answer

A) 40 
B) 60 
C) 100 
D) 200 
A) 40 
B) 60 
C) 100 
D) 200

Question 5

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 consumes

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 6

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

Accepted Answer

A) a large supply of natural resources. 
B) a large supply of unskilled workers and relatively little capital. 
C) investment in capital used to produce clothing. 
D) superior process technology. 
A) a large supply of natural resources. 
B) a large supply of unskilled workers and relatively little capital. 
C) investment in capital used to produce clothing. 
D) superior process technology.

Question 7

Autarky is a situation where one country does not trade with other countries.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the best example of a quota?

Accepted Answer

A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A) a subsidy from the U.S.government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B) a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C) a $150 fee imposed on all imported residential air conditioners 
D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 9

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.The market price falls to $24.What area represents consumer surplus?

Accepted Answer

A) R + S 
B) R + S + T + U 
C) V + W + X + Y 
D) R + S + V 
A) R + S 
B) R + S + T + U 
C) V + W + X + Y 
D) R + S + V

Question 10

$$\begin{array} { | l | l | l | } 
\hline & \text { Empanadas } & \text { Tacas } \
\hline \text { Madison } & 30 & 50 \
\hline \text { Austin } & 24 & 32 \
\hline
\end{array}$$ Madison and Austin own Cafe Ole'.Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour.
-Refer to Table 9-5.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Madison has a greater opportunity cost than Austin for making tacos. 
B) Madison's opportunity cost for making tacos is less than Austin's. 
C) Austin has a greater opportunity cost than Madison for making empanadas. 
D) Austin's opportunity cost for making tacos and making empanadas are both greater than Madison's. 
A) Madison has a greater opportunity cost than Austin for making tacos. 
B) Madison's opportunity cost for making tacos is less than Austin's. 
C) Austin has a greater opportunity cost than Madison for making empanadas. 
D) Austin's opportunity cost for making tacos and making empanadas are both greater than Madison's.

Question 11

Output Per Hour of Work
 $$\begin{array} { | l | c | c | } 
\hline & \text { Handbags } & \text { Jackets } \
\hline \text { Cambodia } & 15 & 3 \
\hline \text { Thailand } & 24 & 6 \
\hline
\end{array}$$ Table 9-7 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand.
-Refer to Table 9-7.
a.Which country has an absolute advantage in the production of handbags and jackets?
b.Which country has a comparative advantage in the production of handbags?
c.Which country has a comparative advantage in the production of jackets?

Accepted Answer

a.Thailand has an absolute advantage in

Question 12

Which of the following is the best example of a tariff?

Accepted Answer

A) a limit imposed on the number of sports utility vehicles that the United States can import from Japan 
B) a subsidy granted by the U.S.government to domestic sports utility vehicle manufacturers so they can compete more effectively with foreign sports utility vehicle manufacturers 
C) a tax placed on all sports utility vehicles sold in the domestic market 
D) a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States 
A) a limit imposed on the number of sports utility vehicles that the United States can import from Japan 
B) a subsidy granted by the U.S.government to domestic sports utility vehicle manufacturers so they can compete more effectively with foreign sports utility vehicle manufacturers 
C) a tax placed on all sports utility vehicles sold in the domestic market 
D) a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States

Question 13

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

Accepted Answer

A country has a comparative ad

Question 14

Which of the following statements is true?

Accepted Answer

A) All individuals in both countries are made better off as a result of international trade. 
B) Within each country,some individuals are made better off as a result of international trade,but one of the countries will be worse off overall. 
C) Although some individuals are made better off as a result of international trade,both countries may be made worse off overall. 
D) Each country as a whole is made better off as a result of international trade,but individuals within each country may be made worse off. 
A) All individuals in both countries are made better off as a result of international trade. 
B) Within each country,some individuals are made better off as a result of international trade,but one of the countries will be worse off overall. 
C) Although some individuals are made better off as a result of international trade,both countries may be made worse off overall. 
D) Each country as a whole is made better off as a result of international trade,but individuals within each country may be made worse off.

Question 15

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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.With trade,what is the total gain in belt production?

Accepted Answer

A) 20 
B) 40 
C) 60 
D) 120 
A) 20 
B) 40 
C) 60 
D) 120

Question 18

U.S.factories produce ________ of the shoes New Balance sells in the United States.

Accepted Answer

A) none 
B) about 25 percent 
C) roughly half 
D) about 75 percent 
A) none 
B) about 25 percent 
C) roughly half 
D) about 75 percent

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

$$\begin{array} { | l | l | l | } 
\hline & \text { Berries } & \text { Fish } \
\hline \text { Rob } & 20 & 80 \
\hline \text { Bill } & 30 & 60 \
\hline
\end{array}$$ Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and prepare their own food.Rob and Bill spent one day each fishing and picking berries.The table lists the pounds of output Rob and Bill produced.
-Refer to Table 9-4.Use the table above to select the statement that accurately interprets the data in the table.

Accepted Answer

A) Bill has a greater opportunity cost than Rob for picking berries. 
B) Bill's opportunity cost for catching fish is less than Rob's. 
C) Rob has a greater opportunity cost than Bill for picking berries. 
D) Bill's opportunity cost for picking berries and catching fish are both greater than Rob's. 
A) Bill has a greater opportunity cost than Rob for picking berries. 
B) Bill's opportunity cost for catching fish is less than Rob's. 
C) Rob has a greater opportunity cost than Bill for picking berries. 
D) Bill's opportunity cost for picking berries and catching fish are both greater than Rob's.

Exam 9: Comparative Advantage and the Gains From International Trade

Is the value of U.S.exports typically larger or smaller than the value of U.S.imports?

Which of the following describes the national security argument for protectionism?

Which of the following countries is not one of the top three exporting countries in the world?

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 consumes

China has developed a comparative advantage in the production of clothing.The source of this comparative advantage is

Autarky is a situation where one country does not trade with other countries.

Which of the following is the best example of a quota?

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.The market price falls to $24.What area represents consumer surplus?

Empanadas Tacas Madison 30 50 Austin 24 32 Madison and Austin own Cafe Ole'.Table 9-5 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 9-5.Select the statement that accurately interprets the data in the table.

Which of the following is the best example of a tariff?

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

Which of the following statements is true?

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

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

U.S.factories produce ________ of the shoes New Balance sells in the United States.

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

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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