Question 1

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

Accepted Answer

A) tariff. 
B) quota. 
C) value added tax. 
D) sales tax. 
A) tariff. 
B) quota. 
C) value added tax. 
D) sales tax.

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.Which country has an absolute advantage in producing belts?

Accepted Answer

A) Estonia 
B) Morocco 
C) both countries 
D) neither country 
A) Estonia 
B) Morocco 
C) both countries 
D) neither country

Question 3

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Accepted Answer

A country can have an absolute advantage

Question 4

$$\begin{array} { | l | c | c | } 
\hline & \text { Bathing } & \text { Grooming } \
\hline \text { Linda } & 60 & 20 \
\hline \text { Sandy } & 50 & 25 \
\hline
\end{array}$$ Linda and Sandy own The Preppy Puppy,a dog grooming business.Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B) Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C) Sandy has an absolute advantage in dog bathing and dog grooming. 
D) Linda has an absolute advantage in dog bathing and dog grooming. 
A) Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming. 
B) Sandy has an absolute advantage in dog bathing and Linda has an absolute advantage in dog grooming. 
C) Sandy has an absolute advantage in dog bathing and dog grooming. 
D) Linda has an absolute advantage in dog bathing and dog grooming.

Question 5

$$\begin{array} { | l | l | l | } 
\hline & \text { Empanadas } & \text { Tacas } \
\hline \text { Madison } & 30 & 50 \
\hline \text { Austin } & 24 & 32 \
\hline
\end{array}$$ 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 comparative advantage in making empanadas. 
B) Austin has an absolute advantage in making tacos. 
C) Austin has a comparative advantage in making empanadas. 
D) Austin has a comparative advantage in making empanadas and making tacos. 
A) Madison has a comparative advantage in making empanadas. 
B) Austin has an absolute advantage in making tacos. 
C) Austin has a comparative advantage in making empanadas. 
D) Austin has a comparative advantage in making empanadas and making tacos.

Question 6

Figure 9-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity of imports?

Accepted Answer

A) 5 units 
B) 10 units 
C) 15 units 
D) 20 units 
A) 5 units 
B) 10 units 
C) 15 units 
D) 20 units

Question 7

Imposing tariffs in cases of dumping

Accepted Answer

A) is allowed under the WTO agreement. 
B) is not allowed under the WTO agreement. 
C) is not addressed by the WTO agreement. 
D) has never occurred,even though it is allowed under the WTO agreement. 
A) is allowed under the WTO agreement. 
B) is not allowed under the WTO agreement. 
C) is not addressed by the WTO agreement. 
D) has never occurred,even though it is allowed under the WTO agreement.

Question 8

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods,effectively acting as a quota of zero imports when stimulus money was being spent.In the U.S.steel market,the "Buy American" provision in the 2009 stimulus package would

Accepted Answer

A) convert some consumer surplus to deadweight loss. 
B) transfer some deadweight loss to producer surplus. 
C) transfer some producer surplus to consumer surplus. 
D) reduce the producer surplus received by foreign manufacturers. 
A) convert some consumer surplus to deadweight loss. 
B) transfer some deadweight loss to producer surplus. 
C) transfer some producer surplus to consumer surplus. 
D) reduce the producer surplus received by foreign manufacturers.

Question 9

Economists believe the most persuasive argument for protectionism is to

Accepted Answer

A) save jobs. 
B) protect high wages. 
C) protect national security. 
D) protect infant industries. 
A) save jobs. 
B) protect high wages. 
C) protect national security. 
D) protect infant industries.

Question 10

The General Agreement on Tariffs and Trade (GATT)was formed to replace the World Trade Organization (WTO)because the WTO was empowered only to reduce barriers to trade in goods.The GATT is an agreement to reduce barriers to trade in goods,services,and intellectual property.

Accepted Answer

A) True 
 B)False

Question 11

Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|c|c|}
\hline & \text { Clocks } & \text { Hats } & & \text { Clocks } & \text { Hats } && \text { Clocks } & \text { Hats } \
\hline \text { Denmark } & 6 & 3 & & 900 & 150 & &1,200 & 0 \
\hline \text { Belize } & 1 & 2 & & 150 & 100& & 0 & 400 \
\hline
\end{array}$
 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.Which country has an absolute advantage in producing hats?

Accepted Answer

A) Denmark 
B) Belize 
C) both countries 
D) neither country 
A) Denmark 
B) Belize 
C) both countries 
D) neither country

Question 12

How have U.S.imports and exports,as a fraction of GDP,changed from 1970 to the present?

Accepted Answer

Since 1950,both exports and imports have

Question 13

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Hansen

Accepted Answer

A) is incorrect.Free trade raises living standards by increasing economic efficiency. 
B) is right in asserting the need to protect high wages if the United States wishes to maintain its high standard of living. 
C) is correct in arguing that the high wages of U.S.workers make it impossible to compete with workers in low-wage countries. 
D) is advancing the anti-dumping argument for protectionism. 
A) is incorrect.Free trade raises living standards by increasing economic efficiency. 
B) is right in asserting the need to protect high wages if the United States wishes to maintain its high standard of living. 
C) is correct in arguing that the high wages of U.S.workers make it impossible to compete with workers in low-wage countries. 
D) is advancing the anti-dumping argument for protectionism.

Question 14

The Trans-Pacific Partnership (TPP)would ________ tariffs on most goods and services shipped between partnership countries and also ________ so-called non-tariff barriers to trade,such the licenses governments require to import some goods.

Accepted Answer

A) eliminate;reduce 
B) raise;raise 
C) lower;raise 
D) lower;eliminate 
A) eliminate;reduce 
B) raise;raise 
C) lower;raise 
D) lower;eliminate

Question 15

Which of the following statements about the importance of trade to the U.S.economy is false?

Accepted Answer

A) Since 1970,both exports and imports have steadily increased as a fraction of U.S.gross domestic product. 
B) Overall,about 20 percent of U.S.manufacturing jobs depend directly or indirectly on exports. 
C) The United States is the second largest exporter in the world. 
D) The U.S.economy is highly dependent on international trade for growth in its gross domestic product. 
A) Since 1970,both exports and imports have steadily increased as a fraction of U.S.gross domestic product. 
B) Overall,about 20 percent of U.S.manufacturing jobs depend directly or indirectly on exports. 
C) The United States is the second largest exporter in the world. 
D) The U.S.economy is highly dependent on international trade for growth in its gross domestic product.

Question 16

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is

Accepted Answer

A) false since it ignores the workers who lose their jobs as result of international trade. 
B) false since not all countries participate in international trade. 
C) true because it refers to countries;individuals may be losers as a result of international trade. 
D) true because all consumers and workers benefit from international trade. 
A) false since it ignores the workers who lose their jobs as result of international trade. 
B) false since not all countries participate in international trade. 
C) true because it refers to countries;individuals may be losers as a result of international trade. 
D) true because all consumers and workers benefit from international trade.

Question 17

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 domestic quantity supplied?

Accepted Answer

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

Question 18

What is dumping? Who benefits and who loses from dumping?

Accepted Answer

Dumping refers to selling a product for

Question 19

Many economists ________ protectionism because it ________ consumers and ________ jobs in domestic industries that use protected products.

Accepted Answer

A) support;benefits;creates 
B) criticize;causes losses to;eliminates 
C) support;lowers prices for;raises wages for 
D) criticize;unfairly rewards;relocates 
A) support;benefits;creates 
B) criticize;causes losses to;eliminates 
C) support;lowers prices for;raises wages for 
D) criticize;unfairly rewards;relocates

Question 20

The first example of comparative advantage appeared in a book that was published in 1817.This example showed that mutually beneficial trade between two countries (England and Portugal)was possible.The example assumed that two goods (wine and cloth)could be produced by both countries.Which of the following describes the conclusion of this example?

Accepted Answer

A) Portugal had a comparative advantage in wine and England had a comparative advantage in cloth. 
B) Portugal had a comparative advantage in both wine and cloth,but its advantage in cloth was greater. 
C) England had a comparative advantage in both wine and cloth,but its advantage in cloth was greater. 
D) England had an absolute advantage in both wine and cloth,but a comparative advantage in wine. 
A) Portugal had a comparative advantage in wine and England had a comparative advantage in cloth. 
B) Portugal had a comparative advantage in both wine and cloth,but its advantage in cloth was greater. 
C) England had a comparative advantage in both wine and cloth,but its advantage in cloth was greater. 
D) England had an absolute advantage in both wine and cloth,but a comparative advantage in wine.

Exam 9: Comparative Advantage and the Gains From International Trade

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

Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy,a dog grooming business.Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 9-1.Select the statement that accurately interprets the data in the table.

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.

Figure 9-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 9-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity of imports?

Imposing tariffs in cases of dumping

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods,effectively acting as a quota of zero imports when stimulus money was being spent.In the U.S.steel market,the "Buy American" provision in the 2009 stimulus package would

Economists believe the most persuasive argument for protectionism is to

The General Agreement on Tariffs and Trade (GATT)was formed to replace the World Trade Organization (WTO)because the WTO was empowered only to reduce barriers to trade in goods.The GATT is an agreement to reduce barriers to trade in goods,services,and intellectual property.

How have U.S.imports and exports,as a fraction of GDP,changed from 1970 to the present?

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Hansen

The Trans-Pacific Partnership (TPP)would ________ tariffs on most goods and services shipped between partnership countries and also ________ so-called non-tariff barriers to trade,such the licenses governments require to import some goods.

Which of the following statements about the importance of trade to the U.S.economy is false?

A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement 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 domestic quantity supplied?

What is dumping? Who benefits and who loses from dumping?

Many economists ________ protectionism because it ________ consumers and ________ jobs in domestic industries that use protected products.

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

The Trans-Pacific Partnership (TPP)would tariffs on most goods and services shipped between partnership countries and also so-called non-tariff barriers to trade,such the licenses governments require to import some goods.

Many economists protectionism because it consumers and jobs in domestic industries that use protected products.