Question 1

Figure 9-4  Figure 9-4 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. The market price falls to $24. What area represents domestic producer surplus?

Accepted Answer

A)  T + U 
B)  V 
C)  V + W + X + Y 
D)  W + X + Y

Question 2

Autarky is a situation in which a country

Accepted Answer

A)  only exports products. 
B)  only imports products. 
C)  does not trade with other countries. 
D)  has no absolute advantage in any production.

Question 3

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to

Accepted Answer

A)  Canadian manufacturers. 
B)  the Canadian government. 
C)  manufacturers who export to Canada. 
D)  Canadian consumers.

Question 4

Figure 9-5  Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5. With the tariff in place, the United States produces

Accepted Answer

A)  18 million pounds of coffee. 
B)  20 million pounds of coffee. 
C)  26 million pounds of coffee. 
D)  38 million pounds of coffee.

Question 5

Figure 9-1  Figure 9-1 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus?

Accepted Answer

A)  $0 
B)  $270 
C)  $305 
D)  $320

Question 6

Governments sometimes erect barriers to trade other than tariffs and quotas. Which of the following is not an example of this type of trade barrier?

Accepted Answer

A)  a requirement that the employees of domestic firms that engage in foreign trade pay income taxes 
B)  a requirement that imports meet health and safety requirements 
C)  restrictions on imports for national security reasons 
D)  a requirement that the U.S. government buy military uniforms only from U.S. manufacturers

Question 7

Costa Rica is a leading exporter of bananas. What explains the comparative advantage of this country in banana production?

Accepted Answer

A)  climate and soil conditions in Costa Rica, which are well-suited for banana production 
B)  investment by multinational firms such as Chiquita Brands International and the Dole Food Company 
C)  a large supply of unskilled labor 
D)  positive externalities

Question 8

Which of the following statements is false?

Accepted Answer

A)  Japan is less dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of the Netherlands. 
C)  The United States is the leading exporting country, accounting for almost 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops.

Question 9

If Finland has an absolute advantage in the production of two goods compared to Latvia, Finland can still benefit from trade with Latvia.

Accepted Answer

A) True 
 B)False

Question 10

Table 9-12
Production and
Consumption Production
Without Trade With Trade
  Estonia and Morocco can produce both swords and belts. Table 9-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. Which country has a comparative advantage in producing swords?

Accepted Answer

A)  Estonia 
B)  Morocco 
C)  both countries 
D)  neither country

Question 11

Globalization is the process of countries imposing trade restrictions on other countries.

Accepted Answer

A) True 
 B)False

Question 12

Absolute advantage is

Accepted Answer

A)  the ability to produce more of a good or service than competitors when using the same amount of resources. 
B)  the ability to produce higher quality goods compared to one's competitors. 
C)  the ability to produce a good or service at a higher opportunity cost than one's competitors. 
D)  the ability to produce more of a good or service than competitors that have more resources.

Question 13

Goodyear's sales are now greater outside the United States than inside the United States.

Accepted Answer

A) True 
 B)False

Question 14

Japan has developed a comparative advantage in designing and producing automobiles. The source of its comparative advantage in these products is

Accepted Answer

A)  abundant supplies of natural resources. 
B)  a favorable climate. 
C)  a strong central government. 
D)  technology.

Question 15

Figure 9-5  Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff.
-Refer to Figure 9-5. With the tariff in place, the United States consumes

Accepted Answer

A)  18 million pounds of coffee. 
B)  20 million pounds of coffee. 
C)  26 million pounds of coffee. 
D)  38 million pounds of coffee.

Question 16

Today, the United States charged an average tariff rate

Accepted Answer

A)  that is more than its average tariff rate in 1930. 
B)  which is greater than any other high-income country. 
C)  of less than 2 percent. 
D)  that exceeds 50 percent.

Question 17

At the beginning of 2013, with the tariff on Chinese tires having expired, Goodyear's profits ________ compared to the previous year, and Chinese tire imports ________.

Accepted Answer

A)  rose; increased 
B)  rose; decreased 
C)  fell; increased 
D)  fell; decreased

Question 18

Figure 9-1  Figure 9-1 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be?

Accepted Answer

A)  $10 
B)  $18 
C)  $24 
D)  >$24

Question 19

Each year, the U.S. exports about 50 percent of its wheat crop.

Accepted Answer

A) True 
 B)False

Question 20

Many people assume that if child workers in developing countries weren't working in factories, they would be in school. In fact, children in developing countries

Accepted Answer

A)  split their time evenly between work and school. 
B)  usually have few good alternatives to work. 
C)  are only allowed to work if they have attended school up to age 15. 
D)  who work are relatively rare, as most do attend school full time.

Exam 9: Comparative Advantage and the Gains From International Trade

Figure 9-4 Figure 9-4 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. The market price falls to $24. What area represents domestic producer surplus?

Autarky is a situation in which a country

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to

Figure 9-5 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff. -Refer to Figure 9-5. With the tariff in place, the United States produces

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus?

Governments sometimes erect barriers to trade other than tariffs and quotas. Which of the following is not an example of this type of trade barrier?

Costa Rica is a leading exporter of bananas. What explains the comparative advantage of this country in banana production?

Which of the following statements is false?

If Finland has an absolute advantage in the production of two goods compared to Latvia, Finland can still benefit from trade with Latvia.

Globalization is the process of countries imposing trade restrictions on other countries.

Absolute advantage is

Goodyear's sales are now greater outside the United States than inside the United States.

Japan has developed a comparative advantage in designing and producing automobiles. The source of its comparative advantage in these products is

Figure 9-5 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff. -Refer to Figure 9-5. With the tariff in place, the United States consumes

Today, the United States charged an average tariff rate

At the beginning of 2013, with the tariff on Chinese tires having expired, Goodyear's profits compared to the previous year, and Chinese tire imports .

Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be?

Each year, the U.S. exports about 50 percent of its wheat crop.

Many people assume that if child workers in developing countries weren't working in factories, they would be in school. In fact, children in developing countries