Question 1

A tariff is a tax imposed by a government on its own exports.

Accepted Answer

A) True 
 B)False

Question 2

$$\begin{array} { | l | c | c | } 
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Tran } & 40 & 160 \
\hline \text { Farah } & 50 & 150 \
\hline
\end{array}$$ Table 9-10 shows the output per week for pens and pencils by Tran and Farah.
-Refer to Table 9-10.Fill in the following table with the opportunity costs of producing bows and arrows for Tran and Farah.
 $$\begin{array} { | l | l | l | } 
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Tran } & & \
\hline \text { Farah } & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | c | c

Question 3

Today,the United States charges an average tariff rate of less than 1.5 percent.

Accepted Answer

A) True 
 B)False

Question 4

The Smoot-Hawley Tariff

Accepted Answer

A) lowered U.S.tariffs by 50 percent following World War II. 
B) was passed by the U.S.Congress following the Civil War as a means of increasing government revenue. 
C) was passed by the U.S.Congress upon a recommendation made by the General Agreement on Tariffs and Trade (GATT)in 1948. 
D) raised average tariff rates by over 50 percent in the United States in 1930. 
A) lowered U.S.tariffs by 50 percent following World War II. 
B) was passed by the U.S.Congress following the Civil War as a means of increasing government revenue. 
C) was passed by the U.S.Congress upon a recommendation made by the General Agreement on Tariffs and Trade (GATT)in 1948. 
D) raised average tariff rates by over 50 percent in the United States in 1930.

Question 5

Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________.

Accepted Answer

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

Question 6

Suppose in Finland a worker can produce either 32 cell phones or 4 kayaks while in Canada a worker can produce either 40 cell phones or 10 kayaks.
a.Which country has an absolute advantage in cell phone production? In kayak production?
b.What is the opportunity cost of 1 cell phone in Finland? In Canada?
c.What is the opportunity cost of 1 kayak in Finland? In Canada?
d.Which country has a comparative advantage in cell phone production? In kayak production?
e.Suppose each country has 1,000 workers.Currently,each country devotes 40 percent of its labor force to cell phone production and 60 percent to kayak production.What is the output of cell phones and kayaks for each country and what is the total output of cell phones and kayaks between the two countries?
f.Suppose each country specializes in the production of the good in which it has a comparative advantage.What is the total output of cell phones and kayaks in the two countries?
g.Provide a numerical example to show how Finland and Canada can both gain from trade.Assume that the terms of trade are established at 6 cell phones for 1 kayak.

Accepted Answer

a.Canada has an absolute advantage in th

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 demanded by domestic consumers 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

A situation in which a country does not trade with other countries is called

Accepted Answer

A) autarky. 
B) self-actualization. 
C) autonomy. 
D) independence. 
A) autarky. 
B) self-actualization. 
C) autonomy. 
D) independence.

Question 9

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.Fill in the following table with the opportunity costs of producing handbags and jackets for Cambodia and Thailand.
 $$\begin{array} { | l | l | l | } 
\hline & \text { Handbags } & \text { Jackets } \
\hline \text { Cambodia } & & \
\hline \text { Thailand } & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | c | c

Question 10

Explain why international trade is less important to the United States than it is to many other countries.

Accepted Answer

In the United States,international trade

Question 11

Domestically produced goods and services sold to other countries are referred to as

Accepted Answer

A) exports. 
B) imports. 
C) transfer payments. 
D) capital outflow. 
A) exports. 
B) imports. 
C) transfer payments. 
D) capital outflow.

Question 12

$$\begin{array} { | l | c | c | } 
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Tran } & 40 & 160 \
\hline \text { Farah } & 50 & 150 \
\hline
\end{array}$$ Table 9-10 shows the output per week for pens and pencils by Tran and Farah.
-Refer to Table 9-10.
a.Which person has an absolute advantage in the production of pens? pencils?
b.Which person has a comparative advantage in the production of pens?
c.Which person has a comparative advantage in the production of pencils?

Accepted Answer

a.Farah has an absolute advantage in the

Question 13

A tariff

Accepted Answer

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

Question 14

Which of the following statements is true?

Accepted Answer

A) Exports benefit trading countries because exports create jobs.Imports do not benefit trading countries because they result in a loss of jobs. 
B) Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop. 
C) Most of the leading exporting countries are large,high-income countries. 
D) All sectors of the U.S.economy are affected equally by international trade. 
A) Exports benefit trading countries because exports create jobs.Imports do not benefit trading countries because they result in a loss of jobs. 
B) Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop. 
C) Most of the leading exporting countries are large,high-income countries. 
D) All sectors of the U.S.economy are affected equally by international trade.

Question 15

Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|c|c|}
\hline & \text { Clocks } & \text { Hats } & & \text { Clocks } & \text { Hats } && \text { Clocks } & \text { Hats } \
\hline \text { Denmark } & 6 & 3 & & 900 & 150 & &1,200 & 0 \
\hline \text { Belize } & 1 & 2 & & 150 & 100& & 0 & 400 \
\hline
\end{array}$
 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.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many clocks will Belize gain compared to the "without trade" numbers?

Accepted Answer

A) -100 
B) 100 
C) 120 
D) 250 
A) -100 
B) 100 
C) 120 
D) 250

Question 16

The ratio at which a country can trade its exports for imports from other countries is called

Accepted Answer

A) a trade barrier. 
B) the terms of trade. 
C) autarky. 
D) a free trade agreement. 
A) a trade barrier. 
B) the terms of trade. 
C) autarky. 
D) a free trade agreement.

Question 17

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Accepted Answer

A) True 
 B)False

Question 18

$$\begin{array} { | l | c | c | } 
\hline & \text { Bathing } & \text { Grooming } \
\hline \text { Linda } & 60 & 20 \
\hline \text { Sandy } & 50 & 25 \
\hline
\end{array}$$ 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) Sandy has a comparative advantage in dog grooming. 
B) Linda has a comparative advantage in dog grooming. 
C) Linda has a comparative advantage in dog grooming and dog bathing. 
D) Sandy has a comparative advantage in dog bathing. 
A) Sandy has a comparative advantage in dog grooming. 
B) Linda has a comparative advantage in dog grooming. 
C) Linda has a comparative advantage in dog grooming and dog bathing. 
D) Sandy has a comparative advantage in dog bathing.

Question 19

Which of the following is not an example of a trade restriction?

Accepted Answer

A) tariffs 
B) quotas and voluntary export restraints 
C) legislation requiring that cars sold in a country have a 50 percent domestic content 
D) consumer preferences for goods produced domestically 
A) tariffs 
B) quotas and voluntary export restraints 
C) legislation requiring that cars sold in a country have a 50 percent domestic content 
D) consumer preferences for goods produced domestically

Question 20

A quota

Accepted Answer

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

Exam 9: Comparative Advantage and the Gains From International Trade

A tariff is a tax imposed by a government on its own exports.

Pens Pencils Tran 40 160 Farah 50 150 Table 9-10 shows the output per week for pens and pencils by Tran and Farah. -Refer to Table 9-10.Fill in the following table with the opportunity costs of producing bows and arrows for Tran and Farah. Pens Pencils Tran Farah

Today,the United States charges an average tariff rate of less than 1.5 percent.

The Smoot-Hawley Tariff

Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________.

A situation in which a country does not trade with other countries is called

Explain why international trade is less important to the United States than it is to many other countries.

Domestically produced goods and services sold to other countries are referred to as

A tariff

Which of the following statements is true?

The ratio at which a country can trade its exports for imports from other countries is called

The U.S.economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

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.

Which of the following is not an example of a trade restriction?

A quota

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 gain from specializing in producing goods in which they have and trading for goods in which other countries have .