Question 1

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are

Accepted Answer

A)   1.5 beers for 1 pizza.
B)   1 beer for 2 pizzas.
C)   2 beers for 1 pizza.
D)   1 beer for 1.5 pizzas.E) None of the above
F) C) and D)

Question 2

"Offshoring" refers to

Accepted Answer

A)   importing goods, services, and resources.
B)   stashing money in offshore accounts for the purpose of avoiding taxes.
C)   shifting work overseas that was previously done domestically.
D)   exporting key resources.E) A) and C)
F) None of the above

Question 3

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic eﬃciency. The production possibilities curves
For the two countries are shown in the graphs. It can be deduced that

Accepted Answer

A)   Greece has a comparative advantage in chemicals.
B)   Greece has the absolute advantage in both products.
C)   Italy has a comparative advantage in chemicals.
D)   it is more costly in terms of resources to produce steel in Italy.E) A) and C)
F) B) and C)

Question 4

Which of the following statements is true?

Accepted Answer

A)   Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it.
B)   Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner.
C)   Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product.
D)   Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.E) A) and B)
F) A) and C) D

Question 5

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units
of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta
are 60X and 40Y. Therefore, Alpha should specialize in Y and Beta in X.

Accepted Answer

A) True 
 B)False

Question 6

Offshoring beneﬁts some ﬁrms by reducing their producing costs and maintaining their global
competitiveness.

Accepted Answer

A) True 
 B)False

Question 7

In a two-nation, two-good world, if country A has the comparative advantage in producing good X over country B, then country A

Accepted Answer

A)   should not trade with country B.
B)   could have the comparative advantage in producing the other good, Y, as well.
C)   must have the comparative disadvantage in producing the other good, Y.
D)   can produce good X with fewer resources than country B.E) B) and C)
F) A) and D)

Question 8

Accepted Answer

A)   is vz.
B)   is vy.
C)   is wy.
D)   cannot be determined.E) None of the above
F) B) and D)

Question 9

The ratio at which nations will exchange one product for another is known as the

Accepted Answer

A)   exchange rate.
B)   discount rate.
C)   terms of trade.
D)   balance of trade.E) B) and D)
F) All of the above

Question 10

Dumping of goods abroad

Accepted Answer

A)   constitutes a general case for permanent tariffs.
B)   is simply comparative advantage at work.
C)   may be part of a nation's strategy to rectify its trade deﬁcit.
D)   drives up prices of the dumped goods.E) All of the above
F) B) and C) B

Question 11

Which of the following is not a major achievement of the European Union (EU) ?

Accepted Answer

A)   It abolished tariffs and quotas among its member nations.
B)   It liberalized the movement of capital and labor among its member nations.
C)   It created common policies in agriculture, transportation, and business practices among its members.
D)   It established a common ﬁscal policy among its member nations.E) A) and B)
F) A) and C) D

Question 12

In recent years, the United States has

Accepted Answer

A)   exported more services abroad than it has imported.
B)   had a small goods trade surplus with Japan.
C)   had a large goods trade surplus with the rest of the world.
D)   maintained an overall trade surplus (goods and services combined)  with the rest of the world.E) C) and D)
F) A) and C)

Question 13

A tariff can best be described as

Accepted Answer

A)   an excise tax on an imported good.
B)   a government payment to domestic producers to enable them to sell competitively in world markets.
C)   an excise tax on an exported good.
D)   a law that sets a limit on the amount of a good that can be imported.E) B) and C)
F) B) and D)

Question 14

A tariff is a

Accepted Answer

A)   tax.
B)   price ceiling.
C)   quantity limit.
D)   subsidy.E) B) and C)
F) All of the above

Question 15

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

Accepted Answer

A)   has chosen to specialize in the production of cheese.
B)   has chosen to specialize in the production of beef.
C)   has decided to trade beef for cheese.
D)   is relatively more eﬃcient than its trading partners in producing both cheese and beef.E) A) and C)
F) None of the above

Question 16

A nation's export supply curve for a speciﬁc product

Accepted Answer

A)   is upsloping.
B)   shows the amount of the product it will export at prices below its domestic price.
C)   lies below its import demand curve for the product.
D)   depends on domestic supply of the product, but not on domestic demand.E) B) and C)
F) C) and D)

Question 17

Quantity Demanded  Domestically  Price  Quantity Supplied  Domestically 1,400$102,2001,60092,0001,80081,8002,00071,6002,20061,4002,40051,200\begin{array} { | c | c | c | } \hline \begin{array} { c } 	ext { Quantity Demanded } \	ext { Domestically }\end{array} & 	ext { Price } & \begin{array} { c } 	ext { Quantity Supplied } \	ext { Domestically }\end{array} \\hline 1,400 & \$ 10 & 2,200 \\hline 1,600 & 9 & 2,000 \\hline 1,800 & 8 & 1,800 \\hline 2,000 & 7 & 1,600 \\hline 2,200 & 6 & 1,400 \\hline 2,400 & 5 & 1,200 \\hline\end{array} Quantity Demanded  Domestically ​1,4001,6001,8002,0002,2002,400​ Price $1098765​ Quantity Supplied  Domestically ​2,2002,0001,8001,6001,4001,200​​  Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the total
Revenue (after tariff)  going to domestic producers would be

Accepted Answer

A)   $11,200, and the total revenue (after tariff)  going to foreign producers would be $2,800.
B)   $11,200, and the total revenue (after tariff)  going to foreign producers would be $2,400.
C)   $8,400, and the total revenue (after tariff)  going to foreign producers would be $2,800.
D)   $13,200, and the total revenue (after tariff)  going to foreign producers would be $2,400. E) B) and C)
F) C) and D)

Question 18

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Accepted Answer

A) True 
 B)False

Question 19

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units
of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta
are 60X and 40Y. The terms of trade will be at or within the 1X = 1½Y to 1X = ?Y range.

Accepted Answer

A) True 
 B)False

Question 20

Describe the economic reasons why businesses use offshoring.

Accepted Answer

Offshoring is the practice of shifting w...

Exam 20: International Trade

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are

Correct Answer
verified

"Offshoring" refers to

Correct Answer
verified

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic eﬃciency. The production possibilities curves For the two countries are shown in the graphs. It can be deduced that

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified
D

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta are 60X and 40Y. Therefore, Alpha should specialize in Y and Beta in X.

Correct Answer
verified

Offshoring beneﬁts some ﬁrms by reducing their producing costs and maintaining their global competitiveness.

Correct Answer
verified

In a two-nation, two-good world, if country A has the comparative advantage in producing good X over country B, then country A

Correct Answer
verified

Correct Answer
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The ratio at which nations will exchange one product for another is known as the

Correct Answer
verified

Dumping of goods abroad

Correct Answer
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B

Which of the following is not a major achievement of the European Union (EU) ?

Correct Answer
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D

In recent years, the United States has

Correct Answer
verified

A tariff can best be described as

Correct Answer
verified

A tariff is a

Correct Answer
verified

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

Correct Answer
verified

A nation's export supply curve for a speciﬁc product

Correct Answer
verified

Correct Answer
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A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Correct Answer
verified

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta are 60X and 40Y. The terms of trade will be at or within the 1X = 1½Y to 1X = ?Y range.

Correct Answer
verified

Describe the economic reasons why businesses use offshoring.

Correct Answer
verified
Offshoring is the practice of shifting w...
View Answer

Exam 20: International Trade

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are

Correct AnswerverifiedShow Answer

"Offshoring" refers to

Correct AnswerverifiedShow Answer

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic eﬃciency. The production possibilities curves For the two countries are shown in the graphs. It can be deduced that

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedD

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta are 60X and 40Y. Therefore, Alpha should specialize in Y and Beta in X.

Correct AnswerverifiedShow Answer

Offshoring beneﬁts some ﬁrms by reducing their producing costs and maintaining their global competitiveness.

Correct AnswerverifiedShow Answer

In a two-nation, two-good world, if country A has the comparative advantage in producing good X over country B, then country A

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ratio at which nations will exchange one product for another is known as the

Correct AnswerverifiedShow Answer

Dumping of goods abroad

Correct AnswerverifiedB

Which of the following is not a major achievement of the European Union (EU) ?

Correct AnswerverifiedD

In recent years, the United States has

Correct AnswerverifiedShow Answer

A tariff can best be described as

Correct AnswerverifiedShow Answer

A tariff is a

Correct AnswerverifiedShow Answer

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States

Correct AnswerverifiedShow Answer

A nation's export supply curve for a speciﬁc product

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Correct AnswerverifiedShow Answer

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable ﬁgures for nation Beta are 60X and 40Y. The terms of trade will be at or within the 1X = 1½Y to 1X = ?Y range.

Correct AnswerverifiedShow Answer

Describe the economic reasons why businesses use offshoring.

Correct AnswerverifiedOffshoring is the practice of shifting w...View AnswerShow Answer

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D

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B

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D

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Offshoring is the practice of shifting w...
View Answer