Deck 17: International Trade.

Question 1

U.S. imports of goods and services amounted to _____ in 2016, or _____ of GDP.

A) $2.0 trillion; 12 percent
B) $2.0 trillion; 6 percent
C) $1.0 trillion; 12 percent
D) $1.0 trillion; 6 percent
E) $2.7 trillion; 15 percent

Answer 1

$2.7 trillion; 15 percent

Question 2

Consumer goods accounted for _____ of U.S. imports in 2016.

A) 22 percent
B) 19 percent
C) 16 percent
D) 13 percent
E) 5 percent

Answer 2

22 percent

Question 3

Capital goods accounted for _____ of U.S. imports in 2016.

A) 22 percent
B) 19 percent
C) 16 percent
D) 13 percent
E) 5 percent

Answer 3

22 percent

Question 4

The third largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

A) capital goods; 24 percent
B) services; 31 percent
C) industrial supplies; 18 percent
D) consumer goods; 9 percent
E) food; 31 percent

Question 5

To reap the gains that arise from specialization, countries _____

A) engage in international trade.
B) should protect domestic industries.
C) should set up international trade barriers.
D) are subject to economies of scale.
E) must agree on how much of one good exchanges for another.

Question 6

The largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

A) capital goods; 24 percent
B) services; 31 percent
C) industrial supplies; 18 percent
D) consumer goods; 9 percent
E) food; 31 percent

Question 7

Exports account for _____ of the gross domestic product (GDP) in Canada and the United Kingdom.

A) one-sixth
B) one-third
C) one-quarter
D) half
E) two-thirds

Question 8

U.S. exports of goods and services amounted to _____ in 2016, or _____ of GDP.

A) $2.0 trillion; 12 percent
B) $2.0 trillion; 6 percent
C) $1.0 trillion; 12 percent
D) $1.0 trillion; 6 percent
E) $2.7 trillion; 15 percent

Question 9

The second largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

A) capital goods; 24 percent
B) services; 31 percent
C) industrial supplies; 18 percent
D) consumer goods; 9 percent
E) food; 31 percent

Question 10

Services accounted for _____ of U.S. imports in 2016.

A) 22 percent
B) 19 percent
C) 16 percent
D) 13 percent
E) 5 percent

Question 11

The production possibilities curve of a country will be a straight line if _____

A) the production of each commodity is subject to economies of scale.
B) the country completely specializes in the production of the good with the highest opportunity cost.
C) the country has an absolute advantage in the production of each commodity.
D) the resources in the country are equally adaptable to the production of each commodity.
E) the country completely specializes in the production of the good with the lowest opportunity cost.

Question 12

The fourth largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

A) capital goods; 24 percent
B) services; 31 percent
C) industrial supplies; 18 percent
D) consumer goods; 11 percent
E) food; 6 percent

Question 13

The top trading partner for U.S. imports in 2016 was _____

A) Canada
B) China
C) Ireland
D) Japan
E) Brazil

Question 14

The largest categories of U.S. imports in 2016 were _____, which accounted for _____ each of total imports.

A) capital goods and industrial supplies; 22 percent
B) capital goods and services; 19 percent
C) industrial supplies and consumer goods; 16 percent
D) consumer goods and services; 22 percent
E) consumer goods and food; 5 percent

Question 15

Exports account for _____ of the gross domestic product (GDP) in the Netherlands.

A) one-sixth
B) one-third
C) one-quarter
D) half
E) two-thirds

Question 16

Exports account for _____ of the gross domestic product (GDP) in Japan.

A) one-sixth
B) one-third
C) one-quarter
D) half
E) two-thirds

Question 17

The law of comparative advantage states that _____

A) each country should specialize in producing the good with the lowest opportunity cost.
B) a country that is able to produce something using fewer resources than other countries would gain from specialization and trade.
C) international trade barriers slow the introduction of new goods and better technologies.
D) countries can gain from trade if production is subject to economies of scale.
E) countries must agree on how much of one good exchanges for another.

Question 18

Exports account for _____ of the gross domestic product (GDP) in Germany, Sweden, and Switzerland.

A) one-sixth
B) one-third
C) one-quarter
D) half
E) two-thirds

Question 19

The top trading partner for U.S. exports in 2016 was _____

A) Canada.
B) China.
C) Ireland.
D) Japan.
E) Brazil.

Question 20

World trade totaled about ____ in 2016.

A) $21 trillion
B) $15 trillion
C) $10 trillion
D) $11 trillion
E) $2 trillion

Question 21

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

A) absolute advantage
B) diplomatic expertise
C) comparative advantage
D) overpowering military strength
E) the size of a nation

Question 22

Suppose one worker in New Ralph Island can produce 40 walking sticks or 10 boomerangs each hour. The opportunity cost of producing 1 walking stick is _____

A) 40 boomerangs.
B) 0.01 hour of labor.
C) 4 boomerangs.
D) 0.25 boomerangs.
E) 0.5 hours of labor.

Question 23

For each pair of jeans Casina produces, it gives up the opportunity to make 50 pounds of chocolate truffle. Marina can produce one pair of jeans for every 100 pounds of chocolate truffle it produces. Suppose the data is converted into production possibilities frontiers (PPFs), with constant opportunity costs for both countries. While the pounds of chocolate truffle produced are measured on the vertical axis, the pairs of jeans produced are measured along the horizontal axis. Identify the correct statement in this case.

A) The slope of Marina's production possibilities frontier is equal to −50.
B) The slope of Marina's production possibilities frontier is flatter than Casina's.
C) The slope of Marina's production possibilities frontier is equal to −0.02.
D) The slope of Marina's production possibilities frontier is steeper than Casina's.
E) The slope of Casina's production possibilities frontier is equal to −0.01.

Question 24

Which of the following is true of autarky?

A) A country's consumption possibilities are the same as its production possibilities.
B) Equilibrium is attained with the maximum gains from specialization and trade.
C) There is no legal limit on the amount of a commodity that can be imported.
D) Countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
E) World price is determined by the world supply and demand for a product.

Question 25

Suppose workers in Transylvania can produce only two goods-yo-yos or sweat socks. If the Transylvanian currency is the daler, then the opportunity cost of producing yo-yos is measured in terms of _____

A) dalers.
B) dalers per yo-yo.
C) dalers per sweat sock.
D) yo-yos.
E) sweat socks.

Question 26

Autarky is _____

A) the situation of national self-sufficiency, in which there is no economic interaction with foreign producers or consumers.
B) the situation in which there is no legal limit on the amount of a commodity that can be imported.
C) the situation in which countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
D) the situation in which world price is determined by the world supply and demand for a product.
E) the situation in which each country specializes in making goods with the lowest opportunity cost.

Question 27

If a country has an absolute advantage in producing a good, _____

A) the country is able to produce that good using fewer resources than other countries.
B) the opportunity cost of producing the good is the lowest in that country.
C) the productivity of workers in that country is lower than that in all countries.
D) the country produces as many units of the good as demanded domestically.
E) countries of the same size have the same opportunity cost of producing both goods.

Question 28

International trade is most likely to occur whenever _____

A) nations have an absolute advantage in the production of goods.
B) all of the trading nations are self-sufficient.
C) world production equals world consumption.
D) each of the trading nations gains from trade.
E) labor is cheaper abroad.

Question 29

The consumption possibilities frontier shows _____

A) a nation's possible combinations of goods available as a result of specialization and exchange.
B) a nation's opportunity cost of producing different goods for consumption.
C) possible combinations of goods that residents of a nation consume at different income levels.
D) the difference between the most that consumers would pay for a good and the actual amount they pay.
E) a nation's possible combinations of how much of one good exchanges for another.

Question 30

Which of the following is true of the terms of trade?

A) It is determined by supply and demand factors.
B) It is a legal limit on the amount of a commodity that can be imported.
C) It is determined by the General Agreement on Tariffs and Trade.
D) It is independent of the negotiations between trading partners.
E) It is identical for all trading partners with differences in tastes.

Question 31

Table 17.1
? $$\begin{array}{l}\text { Table } 17.1\\\begin{array} { l l l } & \begin{array} { l } \text { Computers } \\\text { (units) }\end{array} & \begin{array} { l } \text { Shoes } \\\text { (pairs) }\end{array} \\\text { Aharoni } & 600 & 300 \\\text { Kalinga } & 200 & 400\end{array}\end{array}$$

-Refer to Table 17.1. Suppose Aharoni and Kalinga are the only two countries in the world and they produce computers and shoes. Aharoni has 100 workers, and Kalinga has 200 workers. The table below shows the per-day production possibilities for each country. Aharoni has

A) an absolute advantage in computers only.
B) an absolute advantage in shoes only.
C) a comparative advantage in computers.
D) a comparative advantage in shoes.
E) neither an absolute advantage nor a comparative advantage in computers.

Question 32

Terms of trade refers to _____

A) the quantity of one good exchanged for a unit of another good.
B) the opportunity cost of producing a good.
C) the quantity of a good demanded by U.S. consumers at a market-clearing price.
D) the price of a good in a country after the imposition of a tariff.
E) the maximum amount of credit that a country can borrow for a particular line of credit.

Question 33

The basis of the benefits of specialization is _____

A) comparative advantage.
B) absolute advantage.
C) the size of the country.
D) identical production costs between two countries.
E) the stock of natural resources.

Question 34

The top trading partners for U.S. exports and imports in 2016 were _____

A) Canada, Ireland, Japan
B) China, Canada, Mexico
C) the United Kingdom, Germany, Brazil
D) South Korea, Japan, Germany
E) France, India, Ireland

Question 35

In determining comparative advantage, the cost of producing a good is measured in terms of _____

A) foreign currency.
B) domestic currency.
C) only gold.
D) marginal cost of the resources employed.
E) opportunities forgone.

Question 36

For each fancy dress Cafilla produces, it gives up the opportunity to make 50 pounds of cheese. Bodoni can produce one fancy dress for every 100 pounds of cheese it produces. If specialization and trade were to occur between these two countries, which of the following would be consistent with the theory of comparative advantage?

A) Cafilla has the comparative advantage in dresses and cheese.
B) Bodoni has the comparative advantage in dresses and cheese.
C) Bodoni has the comparative advantage in only dresses.
D) Cafilla has the comparative advantage in only dresses.
E) Cafilla has the comparative advantage in only cheese.

Question 37

For each pound of blueberry cheesecake Abura produces, it gives up the opportunity to make 150 screwdrivers. Mayo can produce one pound of blueberry cheesecake for every 300 screwdrivers it produces. If specialization and trade were to occur between these two countries, which of the following is true of opportunity costs in the two countries?

A) The opportunity cost of producing cheesecakes is lower in Abura than in Mayo.
B) The opportunity cost of producing screwdrivers is lower in Abura than in Mayo.
C) The opportunity cost of producing cheesecakes is identical in both countries.
D) The opportunity cost of producing screwdrivers is identical in both countries.
E) In Mayo, the opportunity cost of producing one unit of screwdriver is one pound of cheesecake.

Question 38

In a two-country, two-commodity framework, when one country has an absolute advantage in the production of both commodities, _____

A) autarky is always preferred to trade.
B) differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains.
C) the country with the lowest opportunity cost of production is the least competitive in international markets.
D) the countries gain from mutual trade as long as tastes differ across countries.
E) the countries gain from specialization and exchange as long as they are the same size.

Question 39

Which of the following does not result in a mutually beneficial trade between two countries?

A) one country having a higher opportunity cost of production of a good than the other
B) one country having an abundant supply of natural resources than the other
C) one country's production being more efficient than the other
D) one country having an absolute advantage over the other
E) one country having a comparative advantage in producing a good than the other

Question 40

For each watch the country of Marina produces, it gives up the opportunity to make 50 pounds of cheese. Cambria can produce one watch for every 100 pounds of cheese it produces. If specialization and trade were to occur between these two countries, which of the following is true of opportunity costs in the two countries?

A) The opportunity cost of producing watches is higher in Marina than in Cambria.
B) The opportunity cost of producing cheese is higher in Marina than in Cambria.
C) The opportunity cost of producing cheese is identical in both countries.
D) The opportunity cost of producing watches is lower in Cambria than in Marina.
E) In both countries, the opportunity cost of one watch is 150 pounds of cheese.

Question 41

Which of the following explains why many countries with relatively small populations import automobiles from Japan, the United States, and Germany instead of producing them domestically?

A) differences in resource endowments
B) economies of scale
C) differences in tastes
D) import quotas
E) import tariffs

Question 42

The United States is a major exporter of _____

A) diamonds.
B) bananas.
C) coffee.
D) corn.
E) gold.

Question 43

Differences in resource endowments refer to differences in _____

A) the tariffs charged by each country.
B) consumption patterns across nations.
C) production patterns across nations.
D) the quantity, but not the quality, of resources available in different nations.
E) the quality of resources available in different nations.

Question 44

One reason for international specialization is _____

A) a high world price for a good.
B) higher trade restrictions imposed by a national government.
C) diminishing returns to a variable factor of production.
D) the difference in resource endowments throughout the world.
E) the difference in benefits that consumers and producers get from the domestic market.

Question 45

Economies of scale in the production of a good imply that _____

A) the long-run average cost of production rises as the scale of operation expands.
B) the marginal cost of production falls below zero as the scale of operation contracts.
C) the long-run average cost of production falls as the scale of operation expands.
D) the long-run average cost of production remains the same as the scale of operation increases.
E) marginal output decreases as the amount of a factor of production is incrementally increased.

Question 46

A country should export only those goods _____

A) in which it has an absolute advantage.
B) for which it has favorable terms of trade.
C) that have higher consumption possibilities.
D) that have a strong domestic demand.
E) that have a lower opportunity cost.

Question 47

Differences in tastes among nations _____

A) make gains from trade possible even in the absence of differences in resource endowments.
B) make gains from trade possible only when there are differences in resource endowments.
C) negate any potential gains from trade.
D) are caused by differences in the stock of capital.
E) occur only among countries with different population sizes.

Question 48

Which of the following is true of international trade?

A) It allows a country to specialize in the production of certain goods and services.
B) It leads to a reduction in the world production of goods and services.
C) It allows a country to move to a lower consumption possibilities frontier.
D) It allows a country's consumption possibilities frontier to lie inside its production possibilities frontier.
E) It makes a country's production possibilities frontier a downward-sloping straight line.

Question 49

Which of the following reasons best explains U.S. imports of crude oil from Saudi Arabia and diamonds from South Africa?

A) differences in resource endowments
B) economies of scale
C) differences in tastes
D) import tariffs
E) import quotas

Question 50

Table 17.1
$$\begin{array}{l}\text { Table } 17.1\\\begin{array} { | c | c | c | c | } \hline{ \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}\end{array}$$

-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 T-shirt in Bodoni is _____

A) 0.9 tons of rice.
B) 0.5 tons of rice.
C) 0.75 tons of rice.
D) 0.01 tons of rice.
E) 0.02 tons of rice.

Question 51

Table 17.1
$$\begin{array}{l}\text { Table } 17.1\\\begin{array} { | c | c | c | c | } \hline{ \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}\end{array}$$

-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Which of the following is true in such a case?

A) Bodoni has an absolute advantage in the production of both rice and T-shirts.
B) Bodoni has an absolute advantage in the production of rice only.
C) Bodoni has an absolute advantage in the production of T-shirts only.
D) Cambria has an absolute advantage in the production of both rice and T-shirts.
E) Cambria has an absolute advantage in the production of T-shirts only.

Question 52

The source of gains from trade is _____

A) tariff revenue.
B) self-sufficiency.
C) terms of trade.
D) absolute advantage.
E) comparative advantage.

Question 53

Table 17.1
$$\begin{array}{l}\text { Table } 17.1\\\begin{array} { | c | c | c | c | } \hline{ \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}\end{array}$$

-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 ton of rice in Cambria is _____

A) 3 T-shirts.
B) 10 T-shirts.
C) 20 T-shirts.
D) 30 T-shirts.
E) 40 T-shirts.

Question 54

Which of the following reasons best explains why the United States is a net exporter of farm crops?

A) differences in resource endowments
B) economies of scale
C) differences in tastes
D) import quotas
E) import tariffs

Question 55

Which of the following results in international specialization?

A) differing consumer tastes
B) diseconomies of scale in production
C) a high world price for a good
D) diminishing returns to a variable factor of production
E) differences in the benefits that consumers and producers get from the exchange of goods and services

Question 56

Table 17.1
$$\begin{array}{l}\text { Table } 17.1\\\begin{array} { | c | c | c | c | } \hline{ \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}\end{array}$$

-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 T-shirt in Cambria is _____

A) 4 tons of rice.
B) 0.5 tons of rice.
C) 0.75 tons of rice.
D) 0.025 tons of rice.
E) 2 tons of rice.

Question 57

Table 17.1
$$\begin{array}{l}\text { Table } 17.1\\\begin{array} { | c | c | c | c | } \hline{ \text { Cambria } } & & { \text { Bodoni } } \\\hline \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } & \begin{array} { c } \text { Tons of rice per } \\\text { day }\end{array} & \text { T-shirts per day } \\\hline 20 & 0 & 100 & 0 \\\hline 18 & 80 & 90 & 100 \\\hline 16 & 160 & 80 & 200 \\\hline 14 & 240 & 70 & 300 \\\hline 12 & 320 & 60 & 400 \\\hline 10 & 400 & 50 & 500 \\\hline 8 & 480 & 40 & 600 \\\hline 6 & 560 & 30 & 700 \\\hline 4 & 640 & 20 & 800 \\\hline 2 & 720 & 10 & 900 \\\hline 0 & 800 & 0 & 1,000 \\\hline\end{array}\end{array}$$

-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of a ton of rice in Bodoni is _____

A) 20 T-shirts.
B) 3 T-shirts.
C) 4 T-shirts.
D) 10 T-shirts.
E) 2 T-shirts.

Question 58

Which of the following is true of a country's production possibilities frontier?

A) International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.
B) International trade requires that a country's production possibilities exceed its consumption possibilities.
C) A country's production possibilities always equal its consumption possibilities.
D) A country's consumption possibilities can never equal its production possibilities because of leakages in the system.
E) The slope of a country's production possibilities frontier is equal to the absolute advantage of producing a particular good.

Question 59

If production is subject to economies of scale, _____

A) countries can gain from trade if each nation specializes.
B) the domestic price will be above the world price and quantity produced will be below the free-trade level.
C) higher output levels result in higher average production costs.
D) every consumer gets to buy goods at their market-clearing prices.
E) autarky will be preferred to trade.

Question 60

World output will be maximized if each country _____

A) attempts to be self-sufficient.
B) specializes in producing those goods in which it has a comparative advantage.
C) specializes in producing those goods in which it has an absolute advantage.
D) reduces its consumption possibilities.
E) equals its consumption possibilities.

Question 61

Table 17.2

Refer to Table 17.2, which shows the demand for, supply of, and price of tulips in the Netherlands. If the world price of tulips is $4 and there are no trade restrictions, the Netherlands will _____

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 9,000, consume 6,000, and export 6,000 tulips.
E) import all of the tulips that it consumes.

Question 62

Table 17.2

Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $1 and there are no trade restrictions, the Netherlands will _____

A) produce 7,000, consume 10,000, and export 3,000 tulips.
B) produce 10,000 and consume 10,000 tulips.
C) produce 9,000, consume 6,000, and export 6,000 tulips.
D) import all of the tulips that it consumes.
E) consume all of the tulips that it produces.

Question 63

A lump-sum tax per unit on imports is known as _____

A) a specific tariff.
B) an import quota.
C) an ad valorem tariff.
D) an import concession.
E) an import substitution.

Question 64

Exhibit 17.2

Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit, and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, the government revenue from a tariff of $0.50 per unit is represented by area _____

A) c.
B) e + g.
C) i + e + f.
D) d + e.
E) e.

Question 65

A charge levied on imports in terms of a fixed percentage of value is known as a(n) _____

A) specific tariff.
B) ad valorem tariff.
C) import quota.
D) import concession.
E) import substitution.

Question 66

Exhibit 17.2

Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit, and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area _____

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

Question 67

The world demand for and the world supply of a good will together determine the _____

A) tariff.
B) world price.
C) exchange rate.
D) terms of trade.
E) quota.

Question 68

Exhibit 17.b

Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, then the quantity demanded is _____

A) Q.
B) Q'
C) Q"
D) 0.5 x (Q'-Q)
E) 0.5 x (Q"-Q')

Question 69

Which of the following is not a reason for international specialization?

A) Some countries have educated, trained workers, while other countries have unskilled workers.
B) Tastes and preferences tend to be different in different countries.
C) Economies of scale can allow larger, more specialized producers to operate at lower average costs.
D) People prefer having a choice of products.
E) The world price of a good is determined by the world supply and demand for it.

Question 70

Exhibit 17.1

Refer to Exhibit 17.1 which shows the market equilibrium for corn in the United States. If the world price of corn is $6 and there are no trade restrictions, the United States will _____

A) produce 7,000 bushels of corn, consume 3,000 bushels of corn, and import 4,000 bushels of corn.
B) produce 7,000 bushels of corn, consume 3,000 bushels of corn, and export 4,000 bushels of corn.
C) have an excess demand for corn.
D) produce 3,000 bushels of corn, consume 7,000 bushels of corn, and import 4,000 bushels of corn.
E) produce 3,000 bushels of corn, consume 7,000 bushels of corn, and export 4,000 bushels of corn.

Question 71

Unless there are barriers to prevent free international trade, a country becomes an importer _____

A) when the world price exceeds the domestic price.
B) when the domestic price exceeds the world price.
C) when there is an excess supply in the domestic market.
D) when it wants to expand its scale of operation.
E) when the opportunity cost of producing a good is lower relative to other countries.

Question 72

If there are no trade restrictions, a country will import a particular good if _____

A) domestic quantity supplied equals domestic quantity demanded at the world price.
B) there is excess quantity demanded by domestic consumers at the world price.
C) the quantity of the good demanded by domestic consumers decreases.
D) the quantity of the good supplied by domestic producers increases.
E) the world price of the good is higher than its domestic price.

Question 73

Exhibit 17.2

Refer to Exhibit 17.2, which shows the demand for and domestic supply of a good in a country. If the country decides to trade, then at a world price of $1.00, _____

A) 20 units will be exported.
B) 20 units will be imported.
C) 50 units will be exported.
D) 50 units will be imported.
E) 10 units will be exported.

Question 74

When a country imposes a per-unit tariff on an imported good or service, _____

A) the price that domestic consumers pay for the import falls.
B) the quantity of the good or service imported into the country declines.
C) the quantity of the good or service imported into the country increases.
D) the price at which any supplier can sell output in the world market decreases.
E) the quantity of the good or service demanded by the consumers increases.

Question 75

Exhibit 17.2

Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit, and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, the gain in producer surplus as a result of a tariff of $0.50 per unit is represented by the area _____

A) c + h.
B) h.
C) c.
D) c + g.
E) g.

Question 76

Tariffs and quotas _____

A) reduce consumer surplus and increase producer surplus in the importing country.
B) increase consumer surplus and reduce producer surplus in the importing country.
C) reduce both consumer surplus and producer surplus in the exporting country.
D) are imposed when there are differences in the opportunity cost of production across countries.
E) are imposed when production is subject to economies of scale.

Question 77

Table 17.2

Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $4 and there are no trade restrictions, the Netherlands will _____

A) produce 10,000, consume 4,000, and import 6,000 tulips.
B) produce 10,000 and consume 10,000 tulips.
C) produce 8,000 and consume 8,000 tulips.
D) import all the tulips it consumes.
E) consume only some of the tulips it produces.

Question 78

Exhibit 17.2

Refer to Exhibit 17.2, which shows U.S. demand for and supply of a good. Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, net welfare loss as a result of a tariff of $0.50 per unit is represented by the area ____

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

Question 79

Exhibit 17.2

Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, _____

A) 25 units will be exported.
B) 25 units will be imported.
C) 50 units will be exported.
D) 50 units will be imported.
E) 10 units will be exported.

Question 80

Exhibit 17.1

Refer to Exhibit 17.1, which shows the market equilibrium for corn in the United States. If the world price of corn is $2 and there are no trade restrictions, the United States will:

A) produce 3,000 bushels of corn, consume 7,000 bushels of corn, and import 4,000 bushels of corn.
B) produce 3,000 bushels of corn, consume 7,000 bushels of corn, and export 4,000 bushels of corn.
C) have an excess supply of corn.
D) produce 7,000 bushels of corn.
E) produce 5,000 bushels of corn, consume 7,000 bushels of corn, and import 2,000 bushels of corn.