Question 1

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will

Accepted Answer

A)  export all of the product.
B)  import all of the product.
C)  import some of the product and produce some of the product domestically.
D)  neither export nor import the product.E) All of the above
F) A) and C)

Question 2

In comparing a tariff and an import quota, we find that

Accepted Answer

A)  the tariff and quota both generate the same amount of revenue for the U.S. Treasury.
B)  the tariff generates revenue for the U.S. Treasury, but the quota does not.
C)  the quota generates revenue for the U.S. Treasury, but the tariff does not.
D)  neither the tariff nor the quota generates revenue for the U.S. Treasury.E) A) and D)
F) B) and D)

Question 3

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

Accepted Answer

A)  the government.
B)  domestic consumers.
C)  domestic producers.
D)  foreign exporters.E) C) and D)
F) A) and D)

Question 4

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

Accepted Answer

A)  have a domestic surplus of copper.
B)  export copper.
C)  import copper.
D)  neither export nor import copper.E) B) and C)
F) A) and D)

Question 6

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

Accepted Answer

A)  the terms of trade will be 3X equals 1Y.
B)  Alpha should specialize in Y and Beta in X.
C)  Alpha should specialize in X and Beta in Y.
D)  there is no basis for mutually beneficial specialization and trade.E) A) and B)
F) B) and C)

Question 7

Differences in production efficiencies among nations in producing a particular good result from

Accepted Answer

A)  different endowments of fertile soil.
B)  different amounts of skilled labor.
C)  different levels of technological knowledge.
D)  all of these.E) C) and D)
F) None of the above

Question 8

The law of increasing opportunity costs

Accepted Answer

A)  applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities.
B)  results in straight-line production possibilities curves rather than curves that are bowed outward from the origin.
C)  refutes the principle of comparative advantage.
D)  may limit the extent to which a nation specializes in producing a particular product.E) None of the above
F) All of the above

Question 9

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities  Sigma's production possibilities
 On the basis of this information,

Accepted Answer

A)  Gamma should export both tea and pots to Sigma.
B)  Sigma should export tea to Gamma, and Gamma should export pots to Sigma.
C)  Gamma should export tea to Sigma, and Sigma should export pots to Gamma.
D)  Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots.E) A) and B)
F) B) and D)

Question 10

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) All of the above
F) A) and C)

Question 11

Refer to the accompanying table for a certain product's market in Econland. If the world price for this product were $6, then Econland would import

Accepted Answer

A)  400 units and domestic producers would supply 1,400.
B)  800 units and domestic producers would supply 1,400.
C)  800 units and domestic producers would supply 2,200.
D)  400 units and domestic producers would supply 2,200.E) B) and C)
F) A) and 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) A) and B)
F) A) and C)

Question 13

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 imported is imposed, then the quantity of output that would be supplied domestically would be

Accepted Answer

A)  1,400 units, and the quantity of output that would be imported would be 800 units.
B)  1,600 units, and the quantity of output that would be imported would be 800 units.
C)  1,600 units, and the quantity of output that would be imported would be 400 units.
D)  1,400 units, and the quantity of output that would be imported would be 400 units.E) A) and B)
F) A) and C)

Question 14

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Accepted Answer

A)  a sharp decline in petroleum exports from the U.S.
B)  a significant increase in petroleum imports into the U.S.
C)  a significant decline in the petroleum imports into the U.S.
D)  a huge increase in petroleum exports from the U.S.E) All of the above
F) None of the above

Question 15

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Accepted Answer

A)  It spawned a global trade war.
B)  It triggered the Great Depression.
C)  It favored imports over domestic producers.
D)  It is a classic example of the dumping argument.E) None of the above
F) All of the above

Question 16

"Offshoring" of certain production activities refers to

Accepted Answer

A)  businesses shifting production activities from being done domestically to foreign locations.
B)  businesses acquiring other businesses abroad.
C)  investors putting their funds into foreign assets instead of investing them in local businesses.
D)  firms opening new markets offshore and expanding their targeted export areas.E) None of the above
F) A) and B)

Question 17

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

Accepted Answer

A)  textiles
B)  accounting services
C)  steel
D)  apparelE) A) and C)
F) A) and B)

Question 18

Answer the question using the accompanying cost ratios for two products, fish (F) and chicken (C) , in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world.Singsong: 1F = 2CHarmony: 1F = 4CIf these two nations specialize based on comparative advantage,

Accepted Answer

A)  Singsong will both produce chicken and catch fish.
B)  Harmony will both produce chicken and catch fish.
C)  Harmony will produce chicken and Singsong will catch fish.
D)  Singsong will produce chicken and Harmony will catch fish.E) A) and D)
F) A) and C)

Question 19

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 20

"NAFTA" stands for

Accepted Answer

A)  North African Free Trade Area.
B)  North American Free Trade Agreement.
C)  North Asian Free Trade Agreement.
D)  New Zealand-Australia Free Trade Agreement.E) None of the above
F) B) and C)

Exam 26: International Trade

Correct Answer
verified

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Correct Answer
verified

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will

Correct Answer
verified

"NAFTA" stands for

Correct Answer
verified

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

Correct Answer
verified

In comparing a tariff and an import quota, we find that

Correct Answer
verified

Refer to the accompanying table for a certain product's market in Econland. If the world price for this product were $6, then Econland would import

Correct Answer
verified

"Offshoring" of certain production activities refers to

Correct Answer
verified

The law of increasing opportunity costs

Correct Answer
verified

Differences in production efficiencies among nations in producing a particular good result from

Correct Answer
verified

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 imported is imposed, then the quantity of output that would be supplied domestically would be

Correct Answer
verified

In recent years, the United States has

Correct Answer
verified

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

Correct Answer
verified

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Correct Answer
verified

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

Correct Answer
verified

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities Sigma's production possibilities On the basis of this information,

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

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

Correct Answer
verified

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Correct Answer
verified

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Correct Answer
verified

Exam 26: International Trade

Correct AnswerverifiedShow Answer

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Correct AnswerverifiedShow Answer

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will

Correct AnswerverifiedShow Answer

"NAFTA" stands for

Correct AnswerverifiedShow Answer

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

Correct AnswerverifiedShow Answer

In comparing a tariff and an import quota, we find that

Correct AnswerverifiedShow Answer

Refer to the accompanying table for a certain product's market in Econland. If the world price for this product were $6, then Econland would import

Correct AnswerverifiedShow Answer

"Offshoring" of certain production activities refers to

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs

Correct AnswerverifiedShow Answer

Differences in production efficiencies among nations in producing a particular good result from

Correct AnswerverifiedShow Answer

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 imported is imposed, then the quantity of output that would be supplied domestically would be

Correct AnswerverifiedShow Answer

In recent years, the United States has

Correct AnswerverifiedShow Answer

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

Correct AnswerverifiedShow Answer

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Correct AnswerverifiedShow Answer

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

Correct AnswerverifiedShow Answer

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities Sigma's production possibilities On the basis of this information,

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Correct AnswerverifiedShow Answer

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Correct AnswerverifiedShow Answer

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