Question 1

Which of the following factors is the most significant in determining the pattern of international trade?

Accepted Answer

A)  absolute advantage 
B)  diplomatic expertise 
C)  comparative advantage 
D)  overpowering military strength 
E)  a country's size relative to another country's 
A)  absolute advantage 
B)  diplomatic expertise 
C)  comparative advantage 
D)  overpowering military strength 
E)  a country's size relative to another country's C

Question 2

Which of the following is not correct regarding dumping?

Accepted Answer

A)  In the country where products are dumped, consumer surplus grows as a result of the dumping. 
B)  Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C)  Critics of dumping recommend applying a tariff as the correct antidumping measure. 
D)  A major difficulty with dumping by firms in other countries is that it drives up prices to the domestic consumer. 
E)  Predatory dumping is often aimed at driving domestic producers out of business. 
A)  In the country where products are dumped, consumer surplus grows as a result of the dumping. 
B)  Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C)  Critics of dumping recommend applying a tariff as the correct antidumping measure. 
D)  A major difficulty with dumping by firms in other countries is that it drives up prices to the domestic consumer. 
E)  Predatory dumping is often aimed at driving domestic producers out of business. D

Question 3

The United States is a major exporter of

Accepted Answer

A)  diamonds 
B)  bauxite 
C)  coffee 
D)  corn 
E)  gold 
A)  diamonds 
B)  bauxite 
C)  coffee 
D)  corn 
E)  gold D

Question 4

If production is subject to economies of scale,

Accepted Answer

A)  countries can gain from trade if each nation specializes 
B)  one country will develop an absolute advantage in the production of all goods 
C)  higher output levels result in higher average production costs 
D)  one country will develop a comparative advantage in the production of all goods 
E)  countries cannot gain from trade 
A)  countries can gain from trade if each nation specializes 
B)  one country will develop an absolute advantage in the production of all goods 
C)  higher output levels result in higher average production costs 
D)  one country will develop a comparative advantage in the production of all goods 
E)  countries cannot gain from trade

Question 5

International trade does all the following except

Accepted Answer

A)  allow a country to specialize in producing certain goods and services 
B)  reduce world output 
C)  allow a country to move to a higher consumption possibilities frontier 
D)  allow a country's consumption possibilities frontier to lie outside its production possibilities frontier 
E)  increase world output 
A)  allow a country to specialize in producing certain goods and services 
B)  reduce world output 
C)  allow a country to move to a higher consumption possibilities frontier 
D)  allow a country's consumption possibilities frontier to lie outside its production possibilities frontier 
E)  increase world output

Question 6

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour. What is the opportunity cost of producing one walking stick?

Accepted Answer

A)  40 boomerangs 
B)  10 boomerangs 
C)  4 boomerangs 
D)  1/4 of a boomerang 
E)  1/2 worker 
A)  40 boomerangs 
B)  10 boomerangs 
C)  4 boomerangs 
D)  1/4 of a boomerang 
E)  1/2 worker

Question 7

International trade is most likely to occur whenever

Accepted Answer

A)  one of the trading nations is self-sufficient 
B)  all of the trading nations are self-sufficient 
C)  one of the trading nations gains from trade 
D)  each of the trading nations gains from trade 
E)  labor is cheaper abroad 
A)  one of the trading nations is self-sufficient 
B)  all of the trading nations are self-sufficient 
C)  one of the trading nations gains from trade 
D)  each of the trading nations gains from trade 
E)  labor is cheaper abroad

Question 8

NARRBEGIN: Exhibit 32-3
Exhibit 19-4
  
-If the country illustrated in Exhibit 19-4 is initially trading without restrictions at a world price of $1.00, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

Accepted Answer

A)  a 
B)  b + d 
C)  c + i + e + f 
D)  c 
E)  d 
A)  a 
B)  b + d 
C)  c + i + e + f 
D)  c 
E)  d

Question 9

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

Accepted Answer

A) True 
 B)False

Question 10

If a manufacturer sells goods abroad for less than they sell for at home, which of the following is true?

Accepted Answer

A)  An embargo has been established. 
B)  A quota has been established. 
C)  The manufacturer is engaged in dumping. 
D)  There has been an improvement in the terms of trade. 
E)  Tariffs have been reduced. 
A)  An embargo has been established. 
B)  A quota has been established. 
C)  The manufacturer is engaged in dumping. 
D)  There has been an improvement in the terms of trade. 
E)  Tariffs have been reduced.

Question 11

NARRBEGIN: Exhibit 32-2
Exhibit 19-3
  
-In Exhibit 19-3, if the world price of tulips is $4 and there are no trade restrictions, The Netherlands will

Accepted Answer

A)  produce 10,000, consume 4,000, and import 6,000 tulips 
B)  produce 10,000, consume 4,000, and export 6,000 tulips 
C)  produce 4,000, consume 10,000, and import 6,000 tulips 
D)  produce no tulips 
E)  import all of the tulips that it consumes 
A)  produce 10,000, consume 4,000, and import 6,000 tulips 
B)  produce 10,000, consume 4,000, and export 6,000 tulips 
C)  produce 4,000, consume 10,000, and import 6,000 tulips 
D)  produce no tulips 
E)  import all of the tulips that it consumes

Question 12

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true concerning comparative advantage between the two countries?

Accepted Answer

A)  Denmark has the comparative advantage in watches and cheese. 
B)  Germany has the comparative advantage in watches and cheese. 
C)  Germany has the comparative advantage in watches. 
D)  Denmark has the comparative advantage in watches. 
E)  Denmark has the comparative advantage in cheese. 
A)  Denmark has the comparative advantage in watches and cheese. 
B)  Germany has the comparative advantage in watches and cheese. 
C)  Germany has the comparative advantage in watches. 
D)  Denmark has the comparative advantage in watches. 
E)  Denmark has the comparative advantage in cheese.

Question 13

A nation's consumption possibilities frontier is

Accepted Answer

A)  always the same as its production possibilities frontier 
B)  never the same as its production possibilities frontier 
C)  the same as its production possibilities frontier only if there is advantageous trade 
D)  the same as its production possibilities frontier only if there is no international trade 
E)  usually lower than its production possibilities frontier 
A)  always the same as its production possibilities frontier 
B)  never the same as its production possibilities frontier 
C)  the same as its production possibilities frontier only if there is advantageous trade 
D)  the same as its production possibilities frontier only if there is no international trade 
E)  usually lower than its production possibilities frontier

Question 14

NARRBEGIN: Exhibit 32-2
Exhibit 19-3
  
-In Exhibit 19-3, if the world price of tulips is $4 and there are no trade restrictions, The Netherlands will

Accepted Answer

A)  produce 10,000, consume 4,000, and import 6,000 tulips 
B)  produce 10,000 and consume 10,000 tulips 
C)  produce no tulips 
D)  import all of the tulips that it consumes 
E)  consume only some of the tulips it produces 
A)  produce 10,000, consume 4,000, and import 6,000 tulips 
B)  produce 10,000 and consume 10,000 tulips 
C)  produce no tulips 
D)  import all of the tulips that it consumes 
E)  consume only some of the tulips it produces

Question 15

A major U.S. motive for negotiating a free-trade agreement with Mexico was to

Accepted Answer

A)  increase immigration into the United States 
B)  encourage Mexico's recent drive to achieve a more market-oriented economy 
C)  keep Mexico from going Communist 
D)  achieve, ultimately, political union with Mexico 
E)  help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries 
A)  increase immigration into the United States 
B)  encourage Mexico's recent drive to achieve a more market-oriented economy 
C)  keep Mexico from going Communist 
D)  achieve, ultimately, political union with Mexico 
E)  help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries

Question 16

NARRBEGIN: Exhibit 32-4
Exhibit 19-5
  
-In Exhibit 19-5, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

Accepted Answer

A)  $4,000 
B)  $16,000 
C)  $20,000 
D)  $24,000 
E)  $48,000 
A)  $4,000 
B)  $16,000 
C)  $20,000 
D)  $24,000 
E)  $48,000

Question 17

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Accepted Answer

A)  The opportunity cost of producing watches is higher in Denmark. 
B)  The opportunity cost of producing cheese is higher in Denmark. 
C)  The opportunity cost of producing cheese is identical in both countries. 
D)  It is impossible to compare opportunity costs because the two countries use different currencies. 
E)  In both countries combined, the opportunity cost of one watch is 150 pounds of cheese. 
A)  The opportunity cost of producing watches is higher in Denmark. 
B)  The opportunity cost of producing cheese is higher in Denmark. 
C)  The opportunity cost of producing cheese is identical in both countries. 
D)  It is impossible to compare opportunity costs because the two countries use different currencies. 
E)  In both countries combined, the opportunity cost of one watch is 150 pounds of cheese.

Question 18

It is possible for one country to have a comparative advantage in the production of all products.

Accepted Answer

A) True 
 B)False

Question 19

NARRBEGIN: Exhibit 32-5
Exhibit 19-6
  
-Suppose that the world price in Exhibit 19-6 is $2.00 per unit. What is the smallest import quota that would not affect the level of imports in this country?

Accepted Answer

A)  $3.00 
B)  $2.00 
C)  50 units per month 
D)  100 units per month 
E)  150 units per month 
A)  $3.00 
B)  $2.00 
C)  50 units per month 
D)  100 units per month 
E)  150 units per month

Question 20

Which of the following is not true of the terms of trade?

Accepted Answer

A)  They are determined by supply and demand factors. 
B)  They lie somewhere between the opportunity costs of the trading partners. 
C)  GATT begins negotiations on the terms of trade. 
D)  They depend on negotiations between trade partners. 
E)  They often favor one partner more than the other. 
A)  They are determined by supply and demand factors. 
B)  They lie somewhere between the opportunity costs of the trading partners. 
C)  GATT begins negotiations on the terms of trade. 
D)  They depend on negotiations between trade partners. 
E)  They often favor one partner more than the other.

Exam 19: International Trade

Which of the following factors is the most significant in determining the pattern of international trade?

Which of the following is not correct regarding dumping?

The United States is a major exporter of

If production is subject to economies of scale,

International trade does all the following except

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour. What is the opportunity cost of producing one walking stick?

International trade is most likely to occur whenever

NARRBEGIN: Exhibit 32-3 Exhibit 19-4 -If the country illustrated in Exhibit 19-4 is initially trading without restrictions at a world price of $1.00, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

If a manufacturer sells goods abroad for less than they sell for at home, which of the following is true?

NARRBEGIN: Exhibit 32-2 Exhibit 19-3 -In Exhibit 19-3, if the world price of tulips is $4 and there are no trade restrictions, The Netherlands will

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true concerning comparative advantage between the two countries?

A nation's consumption possibilities frontier is

NARRBEGIN: Exhibit 32-2 Exhibit 19-3 -In Exhibit 19-3, if the world price of tulips is $4 and there are no trade restrictions, The Netherlands will

A major U.S. motive for negotiating a free-trade agreement with Mexico was to

NARRBEGIN: Exhibit 32-4 Exhibit 19-5 -In Exhibit 19-5, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

It is possible for one country to have a comparative advantage in the production of all products.

NARRBEGIN: Exhibit 32-5 Exhibit 19-6 -Suppose that the world price in Exhibit 19-6 is $2.00 per unit. What is the smallest import quota that would not affect the level of imports in this country?

Which of the following is not true of the terms of trade?

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Production and Cost in the Firm

A: Perfect Competition

B: Perfect Competition

A: Monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Finance

Economic Development

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