Deck 14: International Trade

Question 1

If Colombia produces coffee with less labour and land than any other country,what kind of advantage does it have?

A)both a comparative and absolute advantage in coffee production
B)a comparative advantage in coffee production
C)an absolute advantage and comparative disadvantage in coffee production
D)an absolute advantage in coffee production

Answer 1

an absolute advantage in coffee production

Question 2

What does the concept of comparative advantage show?

A)One party with an absolute advantage in producing two different goods may export both of those goods to the other party.
B)One party may be able to produce everything relatively more efficiently than another party.
C)One party may be able to produce something at a lower dollar cost than another party.
D)One party may be able to produce something at a lower opportunity cost than another party.

Answer 2

One party may be able to produce something at a lower opportunity cost than another party.

Question 3

Can a nation gain from trade if it has a comparative disadvantage in the production of some commodity?

A)It cannot gain from international trade in the commodity.
B)It can gain from international trade in that commodity only if it has an absolute advantage in that commodity.
C)It can still gain from international trade in that commodity by getting it at a lower opportunity cost than if it produced it domestically.
D)It cannot gain from international trade unless it has an absolute advantage in every other commodity.

Answer 3

It can still gain from international trade in that commodity by getting it at a lower opportunity cost than if it produced it domestically.

Question 4

Why does trade make all parties better off?

A)It encourages consumption rather than saving.
B)It always expands the amount of domestic production of each good and service, and more is preferred to less.
C)It guarantees everyone gets a job.
D)It permits all parties to acquire some items better suited to their tastes.

Question 5

Which of the following statements most accurately describes the amount of international trade?

A)Canadian international trade represents about 5 percent of Canadian GDP.
B)Less than 5 percent of world output is sold in a country different from the one in which it is produced.
C)The volume of international trade has grown rapidly in Canada over the past 50 years.
D)U.S. exports and imports as a percentage of GDP were much higher in 2010 than were Canadian exports and imports as a percentage of GDP.

Question 6

Which of the following is NOT a regional trade agreement?

A)NAFTA
B)the Canada-Honduras free trade agreement
C)the WTO
D)the EU

Question 7

What is the main reason one nation trades with another?

A)to save its natural resources from rapid depletion
B)to improve political alliances
C)to eliminate the danger of retaliation from other nations
D)to exploit the advantages of specialization

Question 8

Which of the following is Canada NOT a member of?

A)NAFTA
B)the EU
C)the WTO
D)the Canada-Chile Free Trade Agreement

Question 9

What is the effect of opening trade between countries?

A)Living standards rise in the country with more productive, higher-paid workers.
B)Total world production reduces, as both countries specialize in specific goods.
C)Living standards fall in the country with less productive, lower-paid workers.
D)Both countries can exploit absolute advantage and increase productivity.

Question 10

What basic concept related to international trade is the most important?

A)comparative advantage
B)absolute advantage
C)resource cost
D)the total amount of the good producible

Question 11

Which of the following best describes a nation that does NOT have an absolute advantage in producing anything?

A)It will benefit if it refuses to trade.
B)It can have no comparative advantage either.
C)It will export raw materials and import finished products.
D)It will have a comparative advantage in the activity in which its disadvantage is the least.

Question 12

What matters most in determining the efficient distribution of production all over the world?

A)the stock of resources
B)absolute advantage
C)comparative advantage
D)efficiency

Question 13

Why would a new limit on trade in goods with Canada by the United States be more important to the Canadian economy than the same type of policy in Italy?

A)The United States and Canada have the same political system.
B)The United States ranks behind only the United Kingdom as our second most important trade partner.
C)The United States is Canada's largest trading partner.
D)The American and Canadian cultures are very similar, so Canadian citizens are more likely to want the same types of goods and services as the Americans have.

Question 14

If nations begin to specialize in production for the purpose of trade,what is the effect on total world output?

A)Total world output would be indeterminate.
B)Total world output will not change.
C)Total world output will decrease.
D)Total world output will increase.

Question 15

Which of the following is one reason why nations trade?

A)The wants of their citizens exceeds their productive capacity.
B)No one country produces all of what citizens within the country want.
C)Labour costs are too high in some countries to efficiently produce goods.
D)Different countries have different levels of greed.

Question 16

Japan and China can both produce guns and rice.What type of advantage will the country with the lowest opportunity cost of guns (in terms of rice)have?

A)It will have a comparative advantage in guns.
B)It will have an absolute advantage in guns.
C)It will have absolute advantage in rice.
D)It will have a comparative advantage in rice.

Question 17

Which international trade agreement did the World Trade Organization evolve from?

A)GATT
B)NAFTA
C)the Canada-U.S. FTA
D)the EU

Question 18

What trade agreement allows for the free flow of labour and capital between member countries?

A)GATT
B)the Canada-U.S. FTA
C)the EU
D)NAFTA

Question 19

Which of the following trade agreements no longer exists?

A)GATT
B)the EU
C)the WTO
D)NAFTA

Question 20

Which of the following statements about comparative advantage is the most accurate?

A)A nation cannot have an absolute advantage in the production of every good.
B)A nation can have a comparative advantage in the production of every good, but not an absolute advantage.
C)A nation cannot have a comparative advantage in the production of every good.
D)A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.

Question 21

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
Refer to Table 14-3.If the exchange rate between apples and oranges in international markets is 1 tonne of apples per 3 tonnes of oranges,how will this affect trade between Karl and Adam?

A)Karl and Adam will trade apples and oranges with one another.
B)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges.
C)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples.
D)Karl and Adam will not engage in international trade.

Question 22

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
Refer to Table 14-2.Which of the following best describes the situation if terms of trade between the two countries are established as 1 apple for 4 oranges?

A)It is in the interest of both countries to specialize and trade with one another.
B)There is no incentive for Omega to engage in international specialization and trade with Alpha.
C)It is in the interest of Omega to grow oranges and trade for apples.
D)There is no incentive for Alpha or Omega to specialize and trade with one another.

Question 23

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
Refer to Table 14-2.Which of the following best describes the situation if terms of trade between the two countries are established as 1 apple for 2 oranges?

A)There is no incentive for Omega to engage in international specialization and trade of apples and oranges.
B)There is no incentive for Alpha to specialize and trade with Omega.
C)It is in the interest of Omega to grow oranges and trade for apples.
D)It is in the interest of both countries to specialize and trade with one another.

Question 24

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
Refer to Table 14-2.What are the opportunity costs of producing 1 orange for Alpha and Omega?

A)0.25 apples for Alpha and 0.5 apples for Omega
B)0.5 apples for Alpha and 0.25 apples for Omega
C)2 apples for Alpha and 4 apples for Omega
D)9 apples for Alpha and 4 apples for Omega

Question 25

In Bangladesh,one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore,one person can produce 400 pounds of rice or 200 shirts in one year.What is the result?

A)Bangladesh has an absolute advantage in the production of rice.
B)Bangladesh has a comparative advantage in the production of rice.
C)Singapore has both an absolute and comparative advantage in the production of rice.
D)Singapore has a comparative advantage in the production of rice.

Question 26

If Samoa could produce either 3 coconuts or 12 pineapples per worker,while Guam could produce either 5 coconuts or 20 pineapples per worker,what can we conclude in this situation?

A)Both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples.
B)Mutually beneficial trade cannot occur.
C)If trade occurs, both countries will be able to consume beyond their original production possibilities frontiers.
D)Guam will be better off if it exports coconuts and imports pineapples.

Question 27

Table 14-1
Alternate Outputs from One Day's Labour Input:
Canada: 12 bushels of wheat or 3 yards of textiles
Great Britain: 3 bushels of wheat or 12 yards of textiles
Refer to Table 14-1.What is the opportunity cost of one bushel of wheat in Great Britain?

A)1 yard of textiles
B)3 yards of textiles
C)4 yards of textiles
D)12 yards of textiles

Question 28

In Samoa,the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam,the opportunity cost of producing 1 coconut is 5 pineapples.What can we conclude in this situation?

A)If trade occurs, both countries will be able to consume beyond their original production possibilities frontiers.
B)Mutually beneficial trade cannot occur.
C)Guam will be better off if it exports coconuts and imports pineapples.
D)Both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples.

Question 29

In Artland,the opportunity cost of producing 1 tonne of wheat is 2 tonnes of corn,while in Scienceland,the opportunity cost of producing 2 tonnes of wheat is 3 tonnes of corn.What action would leave both countries better off?

A)Artland sells 4 tonnes of wheat to Scienceland in return for 7 tonnes of corn.
B)Artland sells 4 tonnes of wheat to Scienceland in return for 10 tonnes of corn.
C)Scienceland sells 4 tonnes of wheat to Artland in return for 4 tonnes of corn.
D)Scienceland sells 4 tonnes of wheat to Artland in return for 7 tonnes of corn.

Question 30

The opportunity cost of producing a pair of pants in Canada is 5 kilograms of wheat,while in China it is 2 kilograms of wheat.What is the result?

A)There can be mutual gains from trade to the two countries if Canada exports pants to China in exchange for wheat.
B)China has a comparative advantage over Canada in the production of wheat.
C)Canada has a comparative advantage over China in the production of pants.
D)There can be mutual gains from trade to the two countries if Canada exports wheat to China in exchange for pants.

Question 31

Table 14-1
Alternate Outputs from One Day's Labour Input:
Canada: 12 bushels of wheat or 3 yards of textiles
Great Britain: 3 bushels of wheat or 12 yards of textiles
Refer to Table 14-1.What can we conclude about Canada?

A)It has an absolute advantage over Great Britain in the production of textiles.
B)It has a comparative advantage in the production of textiles.
C)It should export textiles to Great Britain.
D)It has an absolute advantage over Great Britain in the production of wheat.

Question 32

If two countries are each producing two goods and each country begins to specialize in the good in which it has a comparative advantage,what will happen to total (world)output?

A)It will increase.
B)It will be unchanged in both countries.
C)It will rise in one country and fall in the other, but the total is unchanged.
D)It will decrease.

Question 33

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
Refer to Table 14-2.Which of the following statements about Alpha and Omega is the most accurate?

A)Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible.
B)If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain by specialization and trade.
C)Alpha should export to Omega, but Omega should not export to Alpha.
D)If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain by specialization and trade.

Question 34

Suppose that Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical workweek,while Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical workweek.What can we conclude from these numbers?

A)Canada has a comparative advantage in the production of hockey sticks.
B)Canada has an absolute advantage in the production of maple syrup.
C)Germany has a comparative advantage in the production of hockey sticks.
D)Germany has an absolute advantage in the production of maple syrup.

Question 35

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
Refer to Table 14-2.What terms of trade between apples and oranges would allow both Alpha and Omega to gain by specialization and exchange?

A)2 apples for 3 oranges
B)3 apples for 3 oranges
C)1 apple for 3 oranges
D)1 orange for 0.2 apples

Question 36

Assume that one day's labour in England can produce either 20 units of cloth or 2 units of wine,while in Portugal one day's labour can produce either 24 units of cloth or 12 units of wine.If England transfers 2 units of labour from wine to cloth and Portugal transfers 1 unit of labour from cloth to wine,what will the increase in combined output by those two workers be?

A)8 wine; 16 cloth
B)12 wine; 12 cloth
C)16 wine; 8 cloth
D)16 wine; 16 cloth

Question 37

Suppose that Canada can make 15 cars or 20 bottles of wine with one year's worth of labour.France can make 10 cars or 18 bottles of wine with one year's worth of labour.What can we conclude from these numbers?

A)France has a comparative advantage in the production of cars.
B)Canada has an absolute advantage in the production of cars.
C)Canada has a comparative advantage in the production of wine.
D)France has an absolute advantage in the production of wine.

Question 38

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
Refer to Table 14-3.What terms of trade between Karl and Adam would be mutually beneficial?

A)1 tonne of apples per 2.5 tonnes of oranges
B)1 tonne of apples per 1.5 tonnes of oranges
C)1 tonne of apples per 0.25 tonne of oranges
D)1 tonne of apples per 0.20 tonne of oranges

Question 39

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
Refer to Table 14-3.Which of the following statements about trade is the most accurate?

A)Karl has an absolute advantage and a comparative advantage in apples.
B)Karl has an absolute advantage in oranges and a comparative advantage in oranges.
C)Karl has an absolute advantage in both apples and oranges.
D)Adam has an absolute advantage in oranges and a comparative advantage in apples.

Question 40

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
Refer to Table 14-3.What exchange rate results in mutually beneficial trade between Karl and Adam?

A)1 tonne of oranges to 2 tonnes of apples
B)1 tonne of apples to 0.5 tonnes of oranges
C)1 tonne of apples to 1.5 tonnes of oranges
D)1 tonne of apples to 2 tonnes of oranges

Question 41

What level will the world price of a commodity settle at?

A)where there is no excess demand in the exporting country
B)where supply and demand are equal within each country
C)where the excess demand in the exporting country is equal to the excess demand in the importing country
D)where the excess demand of the importing country is just equal to the excess supply of the exporting country

Question 42

What is the difference between the price the seller receives for a good or service and the minimum price he would be willing to accept for that unit called?

A)the gain in producer surplus
B)excess supply
C)the total gains from trading that unit
D)the gain in consumer surplus

Question 43

In order for mutually beneficial trade to occur,what level must the exchange rate between the goods involved be set at?

A)at a level where each country can export a good at a price above the opportunity cost of producing the good in the domestic market
B)at a level where each country will specialize in the production of those goods in which it has an absolute advantage
C)at a level where the exchange ratio is exactly equal to the opportunity cost of producing the good in each country
D)at a level where each country can import a good at a price above the opportunity cost of producing the good in the domestic market

Question 44

Suppose Canada could produce 4 tonnes of potatoes or 2 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year.What country has the comparative advantage in producing wheat and the absolute advantage in producing potatoes?

A)Ireland has comparative advantage in wheat production, while Canada has absolute advantage in potato production.
B)Ireland has both comparative advantage in wheat production and absolute advantage in potato production.
C)Canada has comparative advantage in wheat production, while Ireland has absolute advantage in potato production.
D)Canada has both comparative advantage in wheat production and absolute advantage in potato production.

Question 45

Suppose an exporter has an upward-sloping supply curve.If a change in import demands in other countries leads it to a decrease in exports,other things equal,what would we expect to occur to prices?

A)The world price of the commodity will tend to be lower than before the change.
B)The domestic price of the commodity will rise.
C)The domestic price of the commodity will tend to be higher, but the world price will not change.
D)The domestic price of the commodity will be higher than the price in foreign countries, if transportation costs are positive.

Question 46

When markets reach the equilibrium price,all the opportunities for mutually beneficial trade have taken place.What can be said of the sum of consumer and producer surplus at this point?

A)It has been shared equally between consumers and producers.
B)It has been minimized.
C)It has been eliminated.
D)It has been maximized.

Question 47

Suppose Canada could produce 4 tons of potatoes or 2 tonnes of wheat per worker per year,while Ireland could produce 2 tonnes of potatoes or 3 tonnes of wheat per worker per year.What country has the comparative advantage and absolute advantage in producing potatoes?

A)Ireland has both the comparative and absolute advantage in potato production.
B)Canada has both the comparative and absolute advantage in potato production.
C)Canada has the comparative advantage in potato production, while Ireland has the absolute advantage.
D)Ireland has the comparative advantage in potato production, while Canada has the absolute advantage.

Question 48

According to international trade theory,which of the following actions should a country take?

A)import goods in which it has an comparative disadvantage
B)import goods in which it has an absolute disadvantage
C)export goods in which it has an absolute advantage
D)import goods in which it has an absolute advantage

Question 49

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 36 units of food per person per year or 18 units of clothing per person per year.Which of the following statements is the most accurate?

A)Lavaland has both an absolute and a comparative advantage in producing clothing.
B)Iceland has both an absolute and a comparative advantage in producing food.
C)Iceland has an absolute, but not a comparative advantage, in producing food.
D)Lavaland has an absolute, but not a comparative advantage, in producing clothing.

Question 50

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 24 units of food per person per year or 12 units of clothing per person per year.Which of the following statements is the most accurate?

A)Iceland has both a comparative and absolute advantage in producing food.
B)Iceland has comparative advantage, but not an absolute advantage, in producing food.
C)Lavaland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing.
D)Lavaland has both a comparative and an absolute disadvantage in producing clothing.

Question 51

Suppose Edland can produce either 30 units of good A or 30 units of good Z,and Georgeland can produce either 150 units of good A or 200 units of good Z.For them both to benefit from trade,how much will each unit of Z exchange for?

A)more than 1 unit of A
B)between 0.75 of a unit and 1 unit of A
C)between 0.1 of a unit and 0.75 of a unit of A
D)0 units of A since only if the good Z is free will there be mutual benefit.

Question 52

What is the difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit called?

A)the gain in producer surplus
B)the total gains from trading that unit
C)excess demand
D)the gain in consumer surplus

Question 53

Suppose Canada could produce 4 tonnes of potatoes or 2 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year.What country has the comparative advantage and the absolute advantage in producing potatoes?

A)Ireland has the comparative advantage in potato production, while Canada has the absolute advantage.
B)Canada has the comparative advantage in potato production, while Ireland has the absolute advantage.
C)Canada has both the comparative and absolute advantage in potato production.
D)Ireland has both the comparative and absolute advantage in potato production.

Question 54

If Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year,under what circumstances can there be mutual gains from trade?

A)there can be no mutual gains from trade in this situation
B)if Canada specializes in potatoes because of its comparative advantage in producing potatoes
C)if Canada specializes in wheat because of its absolute advantage in producing wheat
D)if Canada specializes in wheat because of its comparative advantage in producing wheat

Question 55

Compared to the no-trade situation,what occurs when a country exports a good?

A)Domestic consumers gain, domestic producers lose, and the losses outweigh the gains.
B)Domestic consumers gain, domestic producers lose, and the gains outweigh the losses.
C)Domestic consumers lose, domestic producers gain, and the gains outweigh the losses.
D)Domestic consumers gain and domestic producers lose an equal amount.

Question 56

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 24 units of food per person per year or 12 units of clothing per person per year.Which of the following statements is the most accurate?

A)Lavaland has a comparative advantage, but not an absolute advantage, in producing clothing.
B)Iceland has an absolute advantage in producing food but will not trade with Lavaland.
C)Iceland has a comparative advantage, but not an absolute advantage, in producing food.
D)Lavaland has both a comparative and an absolute advantage in producing clothing.

Question 57

Suppose Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year.What country has the comparative advantage in producing wheat and the absolute advantage in producing potatoes?

A)Ireland has comparative advantage in wheat production, while Canada has absolute advantage in potato production.
B)Canada has both comparative advantage in wheat production and absolute advantage in potato production.
C)Ireland has both comparative advantage in wheat production and absolute advantage in potato production.
D)Canada has comparative advantage in wheat production, while Ireland has absolute advantage in potato production.

Question 58

Assume that an exporter's supply curve of a commodity is upward sloping.If a change in import demands in other countries leads it to increase its exports,other things equal,what would be the impact on the domestic price of the commodity?

A)The domestic price of the commodity will fall.
B)The domestic price of the commodity will exceed the price in foreign countries.
C)The domestic price of the commodity will be below the price in foreign countries.
D)The domestic price of the commodity will rise.

Question 59

Suppose that Iceland can produce 40 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 16 units of food per person per year or 8 units of clothing per person per year.Which of the following statements is the most accurate?

A)Lavaland has a comparative advantage, but not an absolute advantage, in producing clothing.
B)Iceland has a comparative advantage, but not an absolute advantage, in producing food.
C)Lavaland has both a comparative and an absolute advantage in producing clothing.
D)Iceland has an absolute advantage, but not a comparative advantage, in producing food.

Question 60

In order for mutually beneficial trade to occur,at what level must the exchange rate between the goods involved be set at?

A)at a level where each country can export a good at a price below the opportunity cost of producing the good in the domestic market
B)at a level where each country can import a good at a price below the opportunity cost of producing the good in the domestic market
C)at a level where the exchange ratio is exactly equal to the opportunity cost of producing the good in each country
D)at a level where each country will specialize in the production of those goods in which it has an absolute advantage

Question 61

Compared to the no-trade situation,what occurs when a country imports a good?

A)Domestic consumers gain and domestic producers lose an equal amount.
B)Domestic consumers lose, domestic producers gain, and the gains outweigh the losses.
C)Domestic consumers gain, domestic producers lose, and the losses outweigh the gains.
D)Domestic consumers gain, domestic producers lose, and the gains outweigh the losses.

Question 62

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

A)The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.
B)The domestic price of automobiles would fall.
C)The number of unemployed workers in the domestic automobile industry would rise.
D)The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.

Question 63

After Canada introduces a tariff in the market for widgets,what will happen to the price of widgets in Canada?

A)It will increase.
B)It will decrease.
C)It will change in an indeterminate manner.
D)It will remain the same.

Question 64

What effect does reducing a tariff on a particular good have?

A)It increases the price of the good to domestic consumers.
B)It results in a lower total quantity sold.
C)It decreases the price of the domestic good to domestic consumers.
D)It redistributes income away from domestic consumers toward domestic producers.

Question 65

If opening up international trade resulted in Canada importing ballpoint pens,what would tend to happen to the Canadian price of ballpoint pens?

A)It is impossible to predict the impact.
B)The domestic price will remain constant.
C)The domestic price will fall.
D)The domestic price will rise.

Question 66

If Japan does NOT have a comparative advantage in producing rice,what would be a consequence of Japan adopting a policy of reducing or eliminating imports of rice?

A)The price of rice in Japan will fall.
B)Japan will be able to consume a combination of rice and other goods beyond their domestic production possibilities curve.
C)The real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall.
D)The real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall.

Question 67

What impact would introducing a tariff on vitamin E have?

A)It would increase total Canadian consumption of vitamin E.
B)It would increase Canadian consumption of domestically produced vitamin E.
C)It would reduce exports of vitamin E.
D)It would decrease domestic production of vitamin E.

Question 68

How is a tariff defined?

A)as a legal limit on imports
B)as a tax on exports
C)as a legal limit on exports
D)as a tax on imports

Question 69

What will likely be the effect of an import quota or tariff on French wine that raises wine prices?

A)It will hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition.
B)It will hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities.
C)It will hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.
D)It will hurt domestic wineries, which will lose business as a result of the higher prices.

Question 70

What effect does a tariff on a particular good have?

A)It results in a higher total quantity sold.
B)It redistributes income away from foreign producers toward domestic producers.
C)It decreases the price of the good to domestic consumers.
D)It increases the net-of-tariff price received by foreign producers.

Question 71

Why do tariffs result in a decrease in consumer surplus?

A)The price and the quantity consumed of the protected good increases.
B)The price of the protected good increases and quantity consumed decreases.
C)The price and the quantity consumed of the protected good decreases.
D)The price of the protected good decreases and quantity consumed increases.

Question 72

Which of the following is the best example of a tariff?

A)a limit imposed on the number of small cars that can be imported from a foreign country
B)a subsidy from the Canadian government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars
C)a $100-per-car fee imposed on all small cars imported
D)a tax placed on all small cars sold in the domestic market

Question 73

In what way does a tariff differ from a quota?

A)A tariff is levied on imports, whereas a quota is imposed on exports.
B)A tariff is a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported.
C)A tariff is a tax imposed on imports, whereas a quota is an absolute limit on the number of units of a good that can be imported.
D)A tariff is levied on exports, whereas a quota is imposed on imports.

Question 74

If vodka and whiskey are substitutes,which of the following can we conclude?

A)A ban on vodka imports would increase the price of whiskey.
B)The demand for vodka would increase if the price of whiskey fell.
C)The demand for whiskey would increase if the price of vodka fell.
D)An increase in the tariff imposed on vodka imports would reduce the price of whiskey.

Question 75

Relative to a no-international-trade initial situation,if Canada exported wine,what would happen to the Canadian domestic price and output of wine?

A)Domestic price would rise and domestic output would rise.
B)Domestic price would rise but domestic output would fall.
C)Domestic price would fall and domestic output would fall.
D)Domestic price would fall but domestic output would rise.

Question 76

Which of the following restricts the volume of international trade?

A)a stable international monetary system
B)the law of comparative advantage
C)stable prices
D)tariffs

Question 77

Economically speaking,which of the following best describes tariffs?

A)They protect domestic consumers of goods.
B)They protect foreign producers of goods.
C)They protect domestic producers of exported goods.
D)They limit voluntary exchanges.

Question 78

Relative to a no-international-trade initial situation,if Canada imported wine,what would happen to the Canadian domestic price and output of wine?

A)The price would fall but domestic output would rise.
B)The price would fall and domestic output would fall.
C)The price would rise and domestic output would rise.
D)The price would rise but domestic output would fall.

Question 79

Which of the following is NOT a result we would expect from a tariff on leather shoes?

A)Domestic producers would sell fewer shoes at the higher prices.
B)The price of leather shoes in Canada would increase.
C)The amount of shoes imported into Canada would decline.
D)Fewer pairs of shoes would be sold in Canada.

Question 80

Consider a situation where opening up international trade has resulted in Canada becoming a wheat exporter.Relative to the prior no-trade situation,what would be the effect on Canada's domestic price of wheat?

A)It would rise, but domestic output would fall.
B)It would decline, but domestic output would rise.
C)It would rise, as would domestic output.
D)It would decline, as would domestic output.