Question 1

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,if the economy is operating under free trade,who would be opposed to a tariff?

Accepted Answer

A)   Foreign producers
B)   Domestic consumers
C)   Domestic producers
D)   Both A and B would be opposed to a tariff.E) A) and B)
F) A) and C)

Question 2

When a country has the ability to produce more of a good than others with a given amount of resources,they:

Accepted Answer

A)   have an absolute advantage.
B)   have a comparative advantage.
C)   are free-traders.
D)   should remain self-sufficient.E) A) and B)
F) None of the above

Question 3

For a country to be a price taker in the global market for some good:

Accepted Answer

A)   the quantity it produces and consumes must be very small relative to the total amount of that good bought and sold worldwide.
B)   the quantity it produces and consumes must be very large relative to the total amount of that good bought and sold worldwide.
C)   there must be many sellers all supplying a very significant amount to the market.
D)   there must be many buyers all buying a large amount from the market.E) All of the above
F) A) and D)

Question 4

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,what is the world price?

Accepted Answer

A)   $16
B)   $11
C)   $23
D)   $45E) A) and D)
F) None of the above

Question 5

Comparative advantage is the ability to produce:

Accepted Answer

A)   more of a good than others with a given amount of resources.
B)   relatively more than any other good with a given amount of resources.
C)   a good or service at a lower opportunity cost than others.
D)   more of a good at a lower cost.E) A) and B)
F) A) and C)

Question 6

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,the change to government revenue brought about by the introduction of a tariff to an economy once operating under free trade is:

Accepted Answer

A)   an increase of area JK.
B)   an increase of area FGJK.
C)   an increase of area IJKL.
D)   a decrease of area IL.E) All of the above
F) A) and B)

Question 7

Exports are goods and services that are produced:

Accepted Answer

A)   in other countries and consumed domestically.
B)   domestically and consumed in other countries.
C)   and consumed in other countries.
D)   and consumers domestically.E) B) and C)
F) A) and D)

Question 8

We might predict that Hawaii has a comparative advantage compared to Russia in the production of pineapples because Hawaii has:

Accepted Answer

A)   a climate more suitable for pineapples.
B)   more land available to grow them on.
C)   more advanced farming technology.
D)   less governmental oversight in the pineapple industry.E) None of the above
F) A) and B)

Question 9

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,the area ABC represents consumer surplus in an economy with:

Accepted Answer

A)   free trade.
B)   autarky.
C)   a tariff being imposed on trade.
D)   None of these is true.E) A) and D)
F) All of the above

Question 10

Profits earned by foreign firms or governments under a quota are called:

Accepted Answer

A)   quota rents.
B)   quota revenue.
C)   trade costs.
D)   trade rents.E) All of the above
F) A) and C)

Question 11

If a country has a comparative advantage in wine moved from autarky to free trade,this would cause what reaction in the world market?

Accepted Answer

A)   Foreign wine producers would be opposed.
B)   Domestic wine consumers would be opposed.
C)   Domestic wine producers would be opposed.
D)   Domestic wine consumers would not be influenced.E) None of the above
F) A) and D)

Question 12

Technology or production processes developed in a particular country:

Accepted Answer

A)   may give that country a temporary comparative advantage.
B)   may set that country back until they earn back the research and development costs.
C)   will give that country a permanent comparative advantage.
D)   generally are not transferrable to other nations.E) A) and C)
F) A) and D)

Question 13

Once a new technology spreads and is adopted by many countries:

Accepted Answer

A)   the first country to use it may lose its comparative advantage.
B)   the first country to use it will lose its absolute advantage.
C)   other countries will perfect it, putting them at an absolute advantage.
D)   the country will have to have strict intellectual property rights protections in place.E) A) and C)
F) A) and D)

Question 14

When a country gains from trade:

Accepted Answer

A)   everyone in that country benefits from the trade.
B)   the net gain of surplus is positive for that country.
C)   the total producer surplus increased in the country.
D)   the total consumer surplus increased in the country.E) B) and D)
F) A) and B)

Question 15

A country may gain a temporary comparative advantage if it:

Accepted Answer

A)   remains self-sufficient until it stockpiles enough inventory to supply the world.
B)   is the first to discover and implement a new technology or production process.
C)   remains a political ally to all.
D)   All of these are true.E) A) and D)
F) A) and B)

Question 16

A country is likely to have a comparative advantage in a capital-intensive activity if it has a:

Accepted Answer

A)   lot of land relative to its population.
B)   large amount of capital relative to its landmass.
C)   higher opportunity cost of producing technology.
D)   higher amount of labor relative to its population.E) B) and C)
F) None of the above

Question 17

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this economy was to engage in free trade,the good would:

Accepted Answer

A)   be imported.
B)   be exported.
C)   no longer be produced domestically.
D)   not be imported or exported and only be produced domestically.E) None of the above
F) B) and D)

Question 18

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this economy were to open to trade,domestic prices would:

Accepted Answer

A)   remain $14 for domestically produced goods, and be $10 for those units imported.
B)   drop to $10 for all units.
C)   remain $14, with more units sold overall.
D)   increase to $17 for all units sold.E) A) and D)
F) None of the above

Question 19

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,if the economy were operating in autarky and then moved to free trade,the overall impact on surplus would be a net:

Accepted Answer

A)   gain of FGIJKL.
B)   loss of FGIJKL.
C)   gain of FGJK.
D)   loss of FGJK.E) A) and C)
F) None of the above

Question 20

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.  According to the graph shown,if this economy were to open to trade,domestic producers would increase:

Accepted Answer

A)   production by 75 units.
B)   production by 35 units.
C)   prices by $5.
D)   prices by $11.E) A) and D)
F) A) and C)

Exam 17: International Trade

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this economy were to open to trade,domestic producers would increase:

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We might predict that Hawaii has a comparative advantage compared to Russia in the production of pineapples because Hawaii has:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,the change to government revenue brought about by the introduction of a tariff to an economy once operating under free trade is:

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When a country gains from trade:

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A country may gain a temporary comparative advantage if it:

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A country is likely to have a comparative advantage in a capital-intensive activity if it has a:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,what is the world price?

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Technology or production processes developed in a particular country:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,if the economy were operating in autarky and then moved to free trade,the overall impact on surplus would be a net:

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For a country to be a price taker in the global market for some good:

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Exports are goods and services that are produced:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this economy was to engage in free trade,the good would:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,if the economy is operating under free trade,who would be opposed to a tariff?

Correct AnswerverifiedShow Answer

If a country has a comparative advantage in wine moved from autarky to free trade,this would cause what reaction in the world market?

Correct AnswerverifiedShow Answer

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,the area ABC represents consumer surplus in an economy with:

Correct AnswerverifiedShow Answer

Once a new technology spreads and is adopted by many countries:

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Comparative advantage is the ability to produce:

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Profits earned by foreign firms or governments under a quota are called:

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When a country has the ability to produce more of a good than others with a given amount of resources,they:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this economy were to open to trade,domestic prices would:

Correct AnswerverifiedShow Answer

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