Deck 18: International Trade and Public Policy

Question 1

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.The opportunity cost of a bagpipe in Poland is

A) 1/3 of an accordion.
B) 1/2 of an accordion.
C) 2 accordions.
D) 6 accordions.

Answer 1

2 accordions.

Question 2

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.Scotland has a comparative advantage in

A) accordions.
B) bagpipes.
C) both accordions and bagpipes.
D) neither accordions nor bagpipes.

Answer 2

bagpipes.

Question 3

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.The opportunity cost of a bagpipe in Scotland is

A) 1/3 of an accordion.
B) 1/2 of an accordion.
C) 3 accordions.
D) 6 accordions.

Answer 3

1/2 of an accordion.

Question 4

The production possibilities curve represents the set of all

A) feasible combinations of goods given that a nation's resources are fully employed.
B) factors of production that can be used to manufacture goods and services.
C) combinations of goods and services that can be used in the production of other goods and services.
D) nonlinear forms of production in the economy.

Question 5

Suppose Nation A produces only two goods,apples and oranges.If Nation A produces only apples,it can make 12 apples per day.If Nation A produces only oranges,it can make 36 oranges per day.If the country has a constant production trade-off between apples and oranges,then the opportunity cost of one orange in Nation A is

A) 0.33 apples.
B) 3 apples.
C) 12 apples.
D) 36 apples.

Question 6

If Germany can produce cars at a lower opportunity cost than any other nation,Germany is said to have a(n)________ in the production of cars.

A) comparative advantage
B) autarky
C) absolute advantage
D) comparative disadvantage

Question 7

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.If Poland produces 50 bagpipes,how many accordions can they produce for the rest of the day?

A) 25
B) 50
C) 75
D) 125

Question 8

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.The opportunity cost of an accordion in Poland is

A) 1/3 of a bagpipe.
B) 1/2 of a bagpipe.
C) 3 bagpipes.
D) 6 bagpipes.

Question 9

Suppose Nation A produces only two goods,apples and oranges.If Nation A produces only apples,it can make 12 apples per day.If Nation A produces only oranges,it can make 36 oranges per day.If the country has a constant production trade-off between apples and oranges,then the opportunity cost of one apple in Nation A is

A) 0.33 oranges.
B) 3 oranges.
C) 12 oranges.
D) 36 oranges.

Question 10

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.If Scotland produces 10 bagpipes,how many accordions can they produce for the rest of the day?

A) 15
B) 20
C) 25
D) 40

Question 11

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.If Scotland produces 50 bagpipes,how many accordions can they produce for the rest of the day?

A) zero
B) 1/2
C) 25
D) 50

Question 12

If the production possibilities curve is drawn as a straight line it means that

A) the tradeoff between the two goods is increasing.
B) the tradeoff between the two goods is decreasing.
C) the tradeoff between the two goods is constant.
D) no tradeoff is possible between the two goods.

Question 13

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.The opportunity cost of an accordion in Scotland is

A) 1/3 of a bagpipe.
B) 1/2 of a bagpipe.
C) 2 bagpipes.
D) 6 bagpipes.

Question 14

Suppose Nation A produces only two goods,apples and oranges.If Nation A produces only apples,it can make 16 apples per day.If Nation A produces only oranges,it can make 4 oranges per day.If the country has a constant production trade-off between apples and oranges,then the opportunity cost of one apple in Nation A is

A) 0.25 oranges.
B) 2 oranges.
C) 4 oranges.
D) 16 oranges.

Question 15

The terms of trade refers to the

A) slope of the production possibilities curve.
B) relative amounts of the goods that will be exchanged for each other in trade.
C) opportunity cost of producing each good in each country.
D) all of the above

Question 16

For a nation to have a comparative advantage in a good it must have

A) more resources.
B) better resources.
C) a lower opportunity cost of producing that good.
D) a straight-line production possibilities curve.

Question 17

If France can produce grapes at a higher opportunity cost than any other nation,France is said to have a(n)________ in the production of grapes.

A) autarky
B) absolute advantage
C) comparative disadvantage
D) comparative advantage

Question 18

If France can produce grapes at a lower opportunity cost than any other nation,France is said to have a(n)________ in the production of grapes.

A) autarky
B) absolute advantage
C) comparative disadvantage
D) comparative advantage

Question 19

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.If Scotland produces and consumes 5 accordions and 40 bagpipes while Poland produces and consumes 25 bagpipes and 100 accordions,then we say that Poland and Scotland are

A) in autarky.
B) specializing and trading.
C) in limited trade.
D) fully utilizing the benefits of their comparative advantage.

Question 20

Suppose Nation A produces only two goods,apples and oranges.If Nation A produces only apples,it can make 20 apples per day.If Nation A produces only oranges,it can make 15 oranges per day.If the country has a constant production trade-off between apples and oranges,then the opportunity cost of one apple in Nation A is

A) 0.75 oranges.
B) 1.33 oranges.
C) 15 oranges.
D) 20 oranges.

Question 21

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.After trade begins,________ will specialize in the production of stereos and ________ will specialize in the production of tractors.

A) the United States; the United States
B) the United States; Japan
C) Japan; the United States
D) Japan; Japan

Question 22

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.The nation with a comparative advantage in tractors is

A) both the United States and Japan.
B) neither the United States nor Japan.
C) the United States.
D) Japan.

Question 23

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.Possible terms of trade between the United States and Japan are

A) 1 stereo for 8 tractors.
B) 1 tractor for 3 stereos.
C) 1 stereo for 1/3 of a tractor.
D) 1 tractor for 1/3 of a stereo.

Question 24

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.Poland has a comparative advantage in

A) accordions.
B) bagpipes.
C) both accordions and bagpipes.
D) neither accordions nor bagpipes.

Question 25

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.The nation with a comparative advantage in accordions is

A) both Scotland and Poland.
B) neither Scotland nor Poland.
C) Poland.
D) Scotland.

Question 26

If Nation A can produce shirts at a lower opportunity cost than any other nation,Nation A is said to have a(n)________ in the production of shirts.

A) autarky
B) comparative advantage
C) absolute advantage
D) comparative disadvantage

Question 27

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.After trade begins,________ will specialize in the production of accordions and ________ will specialize in the production of bagpipes.

A) Scotland; Poland
B) Poland; Scotland
C) Poland; Poland
D) Scotland; Scotland

Question 28

If Cowland can produce milk at a lower opportunity cost than any other nation,Cowland is said to have a(n)________ in the production of milk.

A) autarky
B) absolute advantage
C) comparative advantage
D) comparative disadvantage

Question 29

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.The opportunity cost of a tractor in Japan is

A) 1/4 of a stereo.
B) 1/2 of a stereo.
C) 2 stereos.
D) 4 stereos.

Question 30

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.The United States has a comparative advantage in the production of

A) stereos.
B) tractors.
C) both stereos and tractors.
D) neither stereos nor tractors.

Question 31

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.The opportunity cost of a tractor in the United States is

A) 1/4 of a stereo.
B) 1/2 of a stereo.
C) 2 stereos.
D) 4 stereos.

Question 32

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.Japan has a comparative advantage in the production of

A) stereos.
B) tractors.
C) both stereos and tractors.
D) neither stereos nor tractors.

Question 33

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

A) autarky.
B) free trade.
C) comparative advantage.
D) specialization.

Question 34

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.The opportunity cost of a stereo in the United States is

A) 1/4 of a tractor.
B) 1/2 of a tractor.
C) 2 tractors.
D) 4 tractors.

Question 35

Autarky refers to

A) a situation in which nations trade goods and services.
B) a nation in the Middle East.
C) a situation in which there is no trade.
D) the equilibrium a nation reaches after trade begins.

Question 36

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.Possible terms of trade between Scotland and Poland are

A) 1 accordion for 1/4 bagpipe.
B) 1 bagpipe for 2 accordions.
C) 1 bagpipe for 1/3 accordion.
D) 1 accordion for 1 bagpipe.

Question 37

When President Jefferson declared a self-imposed embargo on international shipping between 1807-1809,it may be said that the United States came very close to

A) autarky.
B) free trade.
C) comparative advantage.
D) specialization.

Question 38

Daily Output of Japan and United States

Table 18.2
Refer to Table 18.2.The opportunity cost of a stereo in Japan is

A) 1/4 of a tractor.
B) 1/2 of a tractor.
C) 2 tractors.
D) 4 tractors.

Question 39

A nation can produce anywhere ________ its production possibilities curve.

A) on
B) outside
C) inside
D) Both A and C are correct.

Question 40

Daily Output of Scotland and Poland

Table 18.1
Refer to Table 18.1.The nation with a comparative advantage in bagpipes is

A) both Scotland and Poland.
B) neither Scotland nor Poland.
C) Poland.
D) Scotland.

Question 41

The combinations of goods a nation can consume after trade and specialization begin are illustrated by the ________ curve.

A) supply
B) production possibilities
C) consumption possibilities
D) demand

Question 42

Figure 18.2
Refer to Figure 18.2.The opportunity cost of producing tomatoes in Pizzaland is

A) 0.4 cheese.
B) 0.6 cheese.
C) 1.67 cheese.
D) 2.5 cheese.

Question 43

Figure 18.1
Refer to Figure 18.1.In autarky,the maximum amount of sunglasses that Duckland can produce is

A) 90.
B) 100.
C) 120.
D) 150.

Question 44

Figure 18.1
Refer to Figure 18.1.The terms of trade for Duckland is

A) 1 pair of sunglasses for 2/3 of an umbrella.
B) 1 pair of sunglasses for 5/6 of an umbrella.
C) 1 pair of sunglasses for 1 1/5 umbrellas.
D) 1 pair of sunglasses for 1 1/2 umbrellas.

Question 45

Figure 18.1
Refer to Figure 18.1.After trade and specialization begin,the maximum amount of umbrellas that Duckland can consume is

A) 90.
B) 100.
C) 120.
D) 150.

Question 46

Figure 18.2
Refer to Figure 18.2.The opportunity cost of producing cheese in Pizzaland is

A) 0.4 tomatoes.
B) 0.6 tomatoes.
C) 1.67 tomatoes.
D) 2.5 tomatoes.

Question 47

Figure 18.1
Refer to Figure 18.1.The opportunity cost of producing sunglasses in Duckland is

A) 2/3 of an umbrella.
B) 5/6 of an umbrella.
C) 1 1/5 umbrellas.
D) 1 1/2 umbrellas.

Question 48

Figure 18.1
Refer to Figure 18.1.Duckland has a comparative advantage in the production of

A) sunglasses.
B) umbrellas.
C) both umbrellas and sunglasses.
D) neither umbrellas nor sunglasses.

Question 49

The production possibilities curve shows the combinations of goods that can be

A) consumed by a nation before trade begins.
B) produced by a nation before trading begins.
C) produced by a nation after trade begins.
D) all of the above

Question 50

Figure 18.2
Refer to Figure 18.2.In autarky,the maximum amount of tomatoes that Pizzaland can produce is

A) 150.
B) 120.
C) 90.
D) 60.

Question 51

Figure 18.1
Refer to Figure 18.1.In autarky,the maximum amount of umbrellas that Duckland can produce is

A) 40.
B) 50.
C) 100.
D) 150.

Question 52

The rate at which nations will exchange goods and service is known as the

A) exchange rate.
B) transfer rate.
C) terms of trade.
D) terms of exchange.

Question 53

The consumption possibilities curve shows the combinations of goods that can be

A) consumed by a nation before trade begins.
B) consumed by a nation after trading begins.
C) produced by a nation before trading begins.
D) produced by a nation after trade begins.

Question 54

Figure 18.2
Refer to Figure 18.2.Pizzaland has a comparative advantage in the production of

A) tomatoes.
B) cheese.
C) both cheese and tomatoes.
D) neither cheese nor tomatoes.

Question 55

The terms of trade is the

A) exchange rate for two nations.
B) end point of a consumption possibilities curve.
C) opportunity costs of production.
D) rate at which two goods will be exchanged.

Question 56

Figure 18.2
Refer to Figure 18.2.In autarky,the maximum amount of cheese that Pizzaland can produce is

A) 150.
B) 120.
C) 90.
D) 80.

Question 57

Which of the following statements is FALSE?

A) The production possibilities curve shows the combinations of goods that can be consumed by a nation before trade begins.
B) The production possibilities curve shows the combinations of goods that can be consumed by a nation after trade and specialization begins.
C) The production possibilities curve shows the combinations of goods that can be produced by a nation before trading begins.
D) The production possibilities curve shows the combinations of goods that can be produced by a nation after trade and specialization begins.

Question 58

Figure 18.1
Refer to Figure 18.1.The opportunity cost of producing umbrellas in Duckland is

A) 2/3 sunglasses.
B) 5/6 sunglasses.
C) 1 1/5 sunglasses.
D) 1 1/2 sunglasses.

Question 59

As a whole,nations are better off after trade and specialization because

A) nations can consume along their consumption possibilities curve, which is above of their production possibilities curve.
B) nations can consume along their consumption possibilities curve, which is below of their production possibilities curve.
C) nations can consume along their production possibilities curve, which is above of their consumption possibilities curve.
D) nations experience an outward shift of their production possibilities curve.

Question 60

Figure 18.1
Refer to Figure 18.1.After trade and specialization begin,the maximum amount of sunglasses that Duckland can consume is

A) 40.
B) 90.
C) 100.
D) 150.

Question 61

The opportunity cost of a table is 5 chairs in Nation A and 4 chairs in Nation B.If the countries specialize and trade,an acceptable terms of trade for both countries would be 3 chairs per table.

Question 62

The opportunity cost of a table is 5 chairs in Nation A and 1 chair in Nation B.If the countries specialize and trade,an acceptable terms of trade for both countries would be 3 chairs per table.

Question 63

Free trade will affect a country's employment in different industries.

Question 64

Consider the following weekly production possibilities of bagpipes and accordions in Poland and Scotland:

What is each country's opportunity cost of producing bagpipes and accordions? If the countries could,should they trade?

Question 65

Suppose Japan produces only two goods,rice and electronics.If Japan has a comparative advantage in electronics,a move toward free trade will

A) harm electronics workers, benefit rice workers, but benefit the nation as a whole.
B) benefit electronics workers, harm rice workers, but benefit the nation as a whole.
C) harm electronics workers, harm rice workers, but benefit the nation as a whole.
D) benefit electronics workers, harm rice workers, but harm the nation as a whole.

Question 66

Figure 18.2
Refer to Figure 18.2.After trade and specialization begin,the maximum amount of tomatoes that Pizzaland can consume is

A) 120.
B) 90.
C) 80.
D) 60.

Question 67

Suppose there are only 2 Nations,A and B,and only two goods,x and y.If Nation A produces only x,it can make 20x per day.If Nation A produces only y,it can make 15y per day.If Nation B produces only x,it can make 15x per day.If Nation B produces only y,it can make 15y per day.After trade begins Nation ________ will specialize in the production of x and Nation ________ will specialize in the production of y.

A) A; A
B) A; B
C) B; B
D) B; A

Question 68

Figure 18.2
Refer to Figure 18.2.After trade and specialization begin,the maximum amount of cheese that Pizzaland can consume is

A) 150.
B) 120.
C) 90.
D) 60.

Question 69

If the opportunity cost of a table is 5 chairs in Nation A and 1 chair in Nation B,it makes sense for Nation A to produce chairs.

Question 70

Consider the following weekly production possibilities of bagpipes and accordions in Poland and Scotland:

What is the possible range of terms of trade between Poland and Scotland?

Question 71

Figure 18.2
Refer to Figure 18.2.The terms of trade for Pizzaland is

A) 1 tomato for 2.5 cheese.
B) 1 tomato for 0.6 cheese.
C) 1 tomato for 0.4 cheese.
D) 1 tomato for 0.167 cheese.

Question 72

If the opportunity cost of a table is 5 chairs in Nation A and 1 chair in Nation B,it makes sense for Nation B to produce chairs.

Question 73

Suppose France produces only two goods,airplanes and grapes.If France has a comparative advantage in grapes,a move toward free trade will

A) harm grape workers, benefit airplane workers, but benefit the nation as a whole.
B) harm grape workers, harm airplane workers, but benefit the nation as a whole.
C) benefit grape workers, harm airplane workers, but harm the nation as a whole.
D) benefit grape workers, harm airplane workers, but benefit the nation as a whole.

Question 74

Suppose the United States produces only two goods,textiles and computer chips.If the United States has a comparative advantage in computer chips,a move toward free trade will

A) benefit computer chip workers, harm textile workers, but benefit the nation as a whole.
B) harm computer chip workers, benefit textile workers, but benefit the nation as a whole.
C) harm computer chip workers, harm textile workers, but benefit the nation as a whole.
D) benefit computer chip workers, harm textile workers, but harm the nation as a whole.

Question 75

Suppose Canada produces only two goods,corn and automobiles.If Canada has a comparative advantage in automobiles,a move toward free trade will

A) harm automobile workers, benefit corn workers, but benefit the nation as a whole.
B) harm automobile workers, harm corn workers, but benefit the nation as a whole.
C) benefit automobile workers, harm corn workers, but harm the nation as a whole.
D) benefit automobile workers, harm corn workers, but benefit the nation as a whole.

Question 76

Suppose there are only 2 Nations,A and B,and only two goods,x and y.If Nation A produces only x,it can make 16x per day.If Nation A produces only y,it can make 4y per day.If Nation B produces only x,it can make 20x per day.If Nation B produces only y,it can make 4y per day.After trade begins,Nation ________ will specialize in the production of x and Nation ________ will specialize in the production of y.

A) A; A
B) A; B
C) B; B
D) B; A

Question 77

Suppose there are only 2 Nations,A and B,and only two goods,x and y.If Nation A produces only x,it can make 12x per day.If Nation A produces only y,it can make 36y per day.If Nation B produces only x,it can make 4x per day.If Nation B produces only y,it can make 12y per day.After trade begins,Nation ________ will specialize in the production of x and Nation ________ will specialize in the production of y.

A) A; B
B) B; B
C) B; A
D) No trade will occur.

Question 78

Suppose the United States produces only two goods,grapes and tractors.If the United States has a comparative advantage in tractors,a move toward free trade will

A) harm tractor workers, benefit grape workers, but benefit the nation as a whole.
B) harm tractor workers, harm grape workers, but benefit the nation as a whole.
C) benefit tractor workers, harm grape workers, but benefit the nation as a whole.
D) benefit tractor workers, harm grape workers, but harm the nation as a whole.

Question 79

Free trade makes the people of a country worse off.

Question 80

Which of the following statements is true?

A) Free trade will benefit all workers in a nation equally.
B) As a result of specialization some workers will be displaced and hence, harmed by free trade.
C) Free trade leads to lower wages for all workers in both nations.
D) Specialization will result in a decline in an industry and none of those workers will be able to find other jobs.