Deck 13: Are Sweatshops All Bad Globalization and Trade Policy

Question 1

The ability to produce a product or service more cheaply than another producer is called

A) comparative advantage.
B) specialization.
C) opportunity cost.
D) absolute advantage.
E) mutual benefit.

Answer 1

absolute advantage.

Question 2

The terms of trade are

A) the quantity you give up for one unit of what you get.
B) the quantity you get for one unit of what you give up.
C) less than the sum of the traders' opportunity costs.
D) greater than the sum of the traders' opportunity costs.
E) equal to the sum of the traders' opportunity costs.

Answer 2

the quantity you give up for one unit of what you get.

Question 3

Dave gave Candy 10 kilograms of fish and received in exchange 5 litres of wine. The terms of trade for a litre of wine are

A) 10 kilograms of fish.
B) 0.5 litres of wine.
C) 2 kilograms of fish.
D) 5 litres of wine.
E) 7.5 litres of wine.

Answer 3

2 kilograms of fish.

Question 4

It takes Mom 30 minutes to cook dinner. In the same time, she can iron 6 shirts. Dad takes an hour to cook dinner and 30 minutes to iron a single shirt.

A) Mom should cook dinner; even though the opportunity cost is 12 shirts.
B) there are no gains from trade.
C) Dad has an absolute advantage in cooking dinner.
D) Dad has an absolute advantage in ironing shirts.
E) Mom shouldn't cook dinner; her opportunity cost is 6 shirts.

Question 5

Mutually beneficial trade is also called

A) a zero-sum game.
B) self-sufficiency.
C) international subsidization.
D) voluntary trade.
E) involuntary trade.

Question 6

In a zero sum game

A) collaboration can make everyone better off.
B) mutually beneficial gains are possible.
C) one person's gain is the other person's loss.
D) both players will be worse off.
E) both players will be better off.

Question 7

Mutual gains from voluntary trade require differences in

A) depreciation costs.
B) comparative advantage.
C) external costs.
D) implicit costs.
E) absolute advantage.

Question 8

It takes Mom 30 minutes to cook dinner. In the same time, she can iron 6 shirts. Dad takes an hour to cook dinner and 30 minutes to iron a single shirt.

A) Dad has an absolute advantage in ironing shirts.
B) Mom's opportunity cost of cooking dinner is ironing 6 shirts.
C) Mom has a comparative advantage in cooking dinner.
D) Dad's opportunity cost of cooking dinner is ironing half a shirt.
E) Dad's opportunity cost of cooking dinner is 6 shirts.

Question 9

You have a comparative advantage when your

A) opportunity cost is lower than your absolute cost.
B) opportunity cost is lower than your competitor's opportunity cost.
C) absolute cost is lower than your competitor's absolute cost.
D) absolute cost is greater than your competitor's absolute cost.
E) opportunity cost is greater than your competitor's opportunity cost.

Question 10

Trade improves our standard of living through

A) specialization and voluntary exchange.
B) taking advantage of losers.
C) self-sufficiency and involuntary exchange.
D) equalizing opportunity costs.
E) minimizing absolute costs.

Question 11

Mutually beneficial trade happens when both persons

A) increase production of the product where they have a comparative advantage.
B) decrease production of the product where they have a lower opportunity cost.
C) increase production of the product where they have a higher opportunity cost.
D) increase production of the product where they have an absolute advantage.
E) increase consumption of the product where they have a higher opportunity cost.

Question 12

Specialization eliminates

A) scarcity.
B) dependency.
C) self-sufficiency.
D) mutual benefits.
E) opportunity cost.

Question 13

Opportunity cost is

A) the ratio of what you get to what you give up.
B) the ratio of what you give up to what you get.
C) what you get minus what you give up.
D) what you give up minus what you get.
E) always less than one.

Question 14

The table below shows the maximum amount of bread and fish that Adam and Bruce can each produce in one hour. According to the numbers in this table,

A) Bruce has a comparative advantage in fish production.
B) Adam's opportunity cost of 1 loaf of bread is 2 kilos of fish.
C) Bruce's opportunity cost of 1 loaf of bread is 4 kilos of fish.
D) Bruce's opportunity cost of 1 kilo of fish is 1/4 loaves of bread.
E) Adam has a comparative advantage in fish production.

Question 15

Mutual gains from voluntary trade require differences in

A) internal costs.
B) implicit costs.
C) opportunity costs.
D) import tariffs.
E) external costs.

Question 16

The process by which each person feels that what they give up is worth less than what they get is called

A) opportunity cost.
B) specialization.
C) comparative advantage.
D) absolute advantage.
E) voluntary trade.

Question 17

In a zero-sum game

A) both players can lose.
B) the number of players is zero.
C) both players can win.
D) one player gains only when another player loses.
E) both players get zero gains.

Question 18

In one hour, Chloe can bake 24 cookies or 12 blueberry muffins; Zabeen can bake 6 cookies or 2 blueberry muffins. Which statement is true?

A) Zabeen's opportunity cost of a cookie is 2 muffins.
B) Zabeen's opportunity cost of a cookie is 6 muffins.
C) Chloe's opportunity cost of a muffin is 12 cookies.
D) Chloe's opportunity cost of a muffin is 2 cookies.
E) Zabeen's opportunity cost of a cookie is 4 muffins.

Question 19

The terms of trade are

A) the quantity of imports required to pay for one unit of exports.
B) the quantity of exports required to pay for one unit of imports.
C) less than the sum of the traders' opportunity costs.
D) greater than the sum of the traders' opportunity costs.
E) equal to the sum of the traders' opportunity costs.

Question 20

It takes Mom 30 minutes to cook dinner. In the same time, she can iron 6 shirts. Dad takes an hour to cook dinner and 30 minutes to iron a single shirt.

A) Dad has an absolute advantage in cooking.
B) Mom should cook dinner and iron; trade is impossible.
C) Dad has an absolute advantage in ironing shirts.
D) Dad should cook dinner; the opportunity cost is only 2 shirts.
E) Dad should cook dinner; the opportunity cost is only 1 shirt.

Question 21

In two hours of work, Clinton can catch 4 fish or he can pick 5 pints of berries. In two hours, Dong can catch 6 fish or she can pick 9 pints of berries. Which statement is true?

A) Clinton has a comparative advantage in catching fish.
B) Clinton has an absolute advantage in picking berries.
C) Clinton has an absolute advantage in catching fish.
D) Clinton has a comparative advantage in picking berries.
E) Clinton will lose if he trades.

Question 22

On a graph of a production possibilities frontier (PPF), impossible combinations of outputs are represented by

A) points inside the PPF.
B) points outside the PPF.
C) points on the PPF.
D) the slope of the PPF.
E) none of the above.

Question 23

To gain from comparative advantage, countries must trade, and must

A) save.
B) invest.
C) do research and development.
D) add add capital equipment.
E) specialize.

Question 24

If Canada specializes in the production of wine we can produce 10,000 bottles per month. If Canada specializes in the production of wheat we can produce 200,000 bushels per month. The opportunity cost of a bottle of wine in Canada is

A) 120,000 bottles of wine.
B) 20 bushels of wheat.
C) 200 bushels of wheat.
D) 2,500 bottles of wine.
E) 1/20 of a bushel of wheat.

Question 25

Figure 1.3.2
Monthly Production Possibilities for a Country Producing Only Hockey Sticks and Maple Leaves

In Figure 1.3.2, moving from possibility b to possibility c, the opportunity cost of producing one additional maple leaf is

A) 2 hockey sticks.
B) 3 hockey sticks.
C) 6 hockey sticks.
D) 1/6 hockey stick.
E) 1/3 hockey stick.

Question 26

In two hours of work, Clinton can catch 4 fish or he can pick 5 pints of berries. In two hours, Dong can catch 6 fish or she can pick 9 pints of berries. Which statement is true?

A) Clinton and Dong will trade and both persons will benefit.
B) Clinton and Dong will trade but only Dong will benefit.
C) Clinton and Dong will not trade.
D) Clinton and Dong will trade but only Clinton will benefit.
E) Clinton and Dong will both lose if they trade.

Question 27

Figure 1.3.2
Monthly Production Possibilities for a Country Producing Only Hockey Sticks and Maple Leaves

According to Figure 1.3.2

A) the opportunity cost of producing hockey sticks stays the same as more hockey sticks are produced.
B) a combination of 3 hockey sticks and 9 maples leaves is possible.
C) a combination of 3 hockey sticks and 2 maple leaves is possible.
D) the opportunity cost of producing hockey sticks increases as more hockey sticks are produced.
E) the opportunity cost of producing hockey sticks decreases as more hockey sticks are produced.

Question 28

On a graph of a production possibilities frontier (PPF), opportunity cost is measured by

A) the points inside the PPF.
B) the points outside the PPF.
C) where the PPF touches the vertical axis.
D) the slope of the PPF.
E) where the PPF touches the horizontal axis.

Question 29

Canada and Chile produce both oil and apples using labour only. A barrel of oil can be produced with 4 hours of labour in Canada and 8 hours of labour in Chile. A bushel of apples can be produced with 8 hours of labour in Canada and 12 hours of labour in Chile. Chile has

A) an absolute advantage in producing oil.
B) an absolute advantage in producing apples.
C) a comparative advantage in producing oil.
D) a comparative advantage in producing apples.
E) none of the above.

Question 30

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
Based on the information above, the opportunity cost of producing 1 loaf of bread is

A) 1 hour for Andy and 20 minutes (1/3 hour) for Rolfe.
B) 1/3 kilogram of butter for Andy and 1 kilogram of butter for Rolfe.
C) 3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe.
D) 8 kilograms of butter for both Andy and Rolfe.
E) not calculable from the given information.

Question 31

On a graph of a production possibilities frontier (PPF), possible combinations of outputs are represented by

A) points inside the PPF.
B) points outside the PPF.
C) points on the PPF.
D) the slope of the PPF.
E) all of the above.

Question 32

Tova and Ron are the only two people on the planet Melmac. It takes Tova 3 hours to produce a widget and 3 hours to produce a woggle.
It takes Ron 1 hour to produce a widget and 2 hours to produce a woggle.
Based on the information above, Tova and Ron

A) can both gain from trade if Tova specializes in producing widgets and Ron specializes in producing woggles.
B) can both gain from trade if Tova specializes in producing woggles and Ron specializes in producing widgets.
C) cannot both gain from trade because Tova has an absolute advantage in producing widgets and woggles.
D) can trade, but only Tova will gain.
E) can trade, but only Ron will gain.

Question 33

Figure 1.3.2
Monthly Production Possibilities for a Country Producing Only Hockey Sticks and Maple Leaves

According to Figure 1.3.2

A) the best possibility is 2 hockey sticks and 3 maple leaves.
B) a combination of 3 hockey sticks and 9 maples leaves is not possible.
C) a combination of 3 hockey sticks and 2 maple leaves is possible.
D) the opportunity cost of producing hockey sticks increases as more hockey sticks are produced.
E) the opportunity cost of producing hockey sticks decreases as more hockey sticks are produced.

Question 34

In one hour, Chloe can bake 24 cookies or 12 blueberry muffins; Zabeen can bake 6 cookies or 2 blueberry muffins. For mutually beneficial trade, Chloe should

A) bake muffins because she has a comparative advantage.
B) give up. Mutually beneficial trade is impossible in this situation.
C) bake cookies because she has an absolute advantage.
D) bake cookies because she has a comparative advantage.
E) bake muffins because she has an absolute advantage.

Question 35

Mexico and Canada produce both oil and apples using labour only. A barrel of oil can be produced with 8 hours of labour in Mexico and 4 hours of labour in Canada. A bushel of apples can be produced with 12 hours of labour in Mexico and 8 hours of labour in Canada. Mexico has

A) an absolute advantage in producing oil.
B) an absolute advantage in producing apples.
C) a comparative advantage in producing oil.
D) a comparative advantage in producing apples.
E) none of the above.

Question 36

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 24 loaves of bread or 24 kilograms of butter.
Based on the information above, which statement is true?

A) Andy has an absolute advantage in producing butter.
B) Rolfe has an absolute advantage in producing bread.
C) Andy has an absolute advantage is producing bread.
D) Andy has a comparative advantage in producing bread.
E) Rolfe has a comparative advantage in producing bread.

Question 37

Tova and Ron are the only two people on the planet Melmac. It takes Tova 1 hour to produce a widget and 2 hours to produce a woggle.
It takes Ron 3 hours to produce a widget and 3 hours to produce a woggle.
Based on the information above, Tova and Ron

A) can both gain from trade if Tova specializes in producing widgets and Ron specializes in producing woggles.
B) can both gain from trade if Tova specializes in producing woggles and Ron specializes in producing widgets.
C) cannot both gain from trade because Tova has an absolute advantage in producing widgets and woggles.
D) can trade, but only Tova will gain.
E) can trade, but only Ron will gain.

Question 38

In Portugal, the opportunity cost of a bale of wool is 3 bottles of wine. In England, the opportunity cost of 1 bottle of wine is 3 bales of wool. Based on this information,

A) England has an absolute advantage in producing wine.
B) England has an absolute advantage in producing wool.
C) no trade will occur.
D) Portugal has a comparative advantage in producing wool.
E) Portugal has a comparative advantage in producing wine.

Question 39

Figure 1.3.2
Monthly Production Possibilities for a Country Producing Only Hockey Sticks and Maple Leaves

In Figure 1.3.2, moving from possibility c to possibility b, the opportunity cost of producing one additional hockey stick is

A) 2 maple leaves.
B) 3 maple leaves.
C) 6 maple leaves.
D) 1/6 maple leaves.
E) 1/3 maple leaves.

Question 40

Canada has an absolute advantage in situations where

A) we can produce the product on weekends.
B) we consume less of this product than do people in other countries.
C) we consume more of this product than do people in other countries.
D) our opportunity cost of production is very high.
E) we can produce at lower cost than producers in other countries.

Question 41

Dave gives Candy 2 kilograms of fish and receives in exchange 5 litres of wine. The terms of trade are 2/5 kilograms of fish per litre of wine.

Question 42

For a trade to have mutual benefits, terms of trade must be between each trader's local opportunity costs.

Question 43

The ability to produce a product or service at a lower opportunity cost than another producer is called comparative advantage.

Question 44

Dave gives Candy 10 kilograms of fish and receives in exchange 5 litres of wine. The terms of trade are 2 kilograms of fish per litre of wine.

Question 45

Sam and Dave participate in a zero sum game. Since Sam won $5 we know that Dave must have won $5 too.

Question 46

Dave gives Candy 2 kilograms of fish and receives in exchange 5 litres of wine. The terms of trade are 2.5 kilograms of fish per litre of wine.

Question 47

On a graph of a production possibilities frontier (PPF), maximum combinations of outputs are represented by

A) points inside the PPF.
B) points outside the PPF.
C) points on the PPF.
D) the slope of the PPF.
E) none of the above.

Question 48

For a trade to have mutual benefits, terms of trade must be greater than each trader's local opportunity costs.

Question 49

Trade improves our standard of living through specialization and voluntary exchange.

Question 50

Opportunity cost is the ratio of what you give up to what you get.

Question 51

Voluntary trade occurs when each person feels that what they give up is worth more than what they get.

Question 52

If Ying must decrease production of some other product to increase his production of houses, then Ying

A) is producing on his production possibilities frontier.
B) is producing outside his production possibilities frontier.
C) is producing inside his production possibilities frontier.
D) must prefer houses to any other product.
E) has too little capital equipment.

Question 53

The ability to produce a product or service at a lower absolute cost than another producer is called comparative advantage.

Question 54

Voluntary trade occurs when each person feels that what they get is worth more than what they give up.

Question 55

If Ying can increase production of houses without decreasing production of any other product, then Ying

A) is producing on his production possibilities frontier.
B) is producing outside his production possibilities frontier.
C) is producing inside his production possibilities frontier.
D) must have constant opportunity costs.
E) must prefer houses to any other product.

Question 56

Adam gives Eve 2 apples and receives 3 bananas. The terms of trade are 2/3 apple per banana.

Question 57

Dave gives Candy 10 kilograms of fish and receives in exchange 5 litres of wine. The terms of trade are 1/2 kilograms of fish per litre of wine.

Question 58

For a trade to have mutual benefits, terms of trade must be less than each trader's local opportunity costs.

Question 59

Sam and Dave participate in a zero sum game. Since Sam won $5 we know that Dave must have lost $5.

Question 60

You have a comparative advantage when your opportunity cost is lower than your competitor's opportunity cost.

Question 61

Which government policy is not protectionist?

A) quotas
B) tariffs
C) taxes on imported goods
D) subsidies to domestic producers
E) subsidies to importers

Question 62

Canada's trade with the United States is more important to us than the United States' trade with Canada is to them.

Question 63

Measured as a percentage of GDP, trade is more important to the United States than it is to Canada.

Question 64

Specialization and voluntary trade eliminate the problem of scarcity.

Question 65

Voluntary trade is a zero-sum game.

Question 66

Wine producers in the province of Ontario compete with producers from France, Australia, Chile, and other countries. All countries sell their wines to Ontario consumers through government-owned stores. Who would support a quota on wines imported into Ontario?

A) consumers of Ontario wine
B) Ontario wine producers
C) workers at the government-owned stores
D) producers in France, Australia and Chile
E) Ontario consumers of imported wines

Question 67

Which organization is not connected with globalization and trade?

A) NAFTA
B) CSIS
C) GATT
D) IMF
E) WTO

Question 68

A Canadian import quota on automobiles produced in Korea would be supported by

A) Canadians who want to buy domestic cars.
B) unions representing Korea's auto workers.
C) Canadians who want to buy Korean cars.
D) unions representing Canada's auto workers.
E) economists.

Question 69

Gains from trade arise from differences in

A) comparative advantage.
B) self-sufficiency.
C) absolute advantage.
D) involuntary exchange.
E) protectionism.

Question 70

In a zero-sum game, one person's gain equals other person's loss.

Question 71

Schumpeter's theory of creative destruction suggests that

A) less productive industries will be driven out of business by freer trade.
B) workers in more productive, lower-cost industries will become structurally unemployed.
C) robots will force all creative people to leave the country.
D) business cycles will be eliminated.
E) workers in less productive industries will be frictionally unemployed.

Question 72

Measured as a percentage of GDP, trade is more important to Japan than it is to Canada.

Question 73

80 percent of Canada's international trade is with the United States.

Question 74

60 percent of Canada's international trade is with the United States.

Question 75

Specialization and trade makes us dependent on others.

Question 76

Measured as a percentage of GDP, trade is more important to Canada than it is to the United States.

Question 77

Political pressure for protectionism arises because a

A) large number of producers face small losses.
B) large number of consumers face large losses.
C) small number of producers face large losses.
D) small number of consumers face large losses.
E) small number of producers face large gains.

Question 78

Absolute advantage is the key to mutually beneficial gains from trade.

Question 79

Which is not an argument for protectionism?

A) avoiding dependency
B) saving jobs in import-competing industries
C) protecting national security
D) maintaining cultural identity
E) saving jobs in export-competing industries

Question 80

Measured as a percentage of GDP, trade is more important to Canada than it is to Japan.