Question 1

A natural-resource abundant nation would be expected to export a land-intensive commodity such as:

Accepted Answer

A)   Tractors
B)   DVD players
C)   Meat
D)   ChemicalsE) C) and D)
F) All of the above

Question 2

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 below.  Refer to the graphs and information above. The assumption made about the domestic production opportunity costs in both countries is that they are:

Accepted Answer

A)   Constant
B)   Variable
C)   Increasing
D)   DecreasingE) None of the above
F) All of the above

Question 3

Given the following maximum-output alternatives for Brazil and Poland, it can be seen that if the two nations open up trade with each other, then:

Accepted Answer

A)   Brazil will specialize in producing machines, and import wine
B)   Poland will specialize in producing machines, and import wine
C)   Poland will export wine
D)   Brazil will not gain from specializing and trading, but Poland will gainE) A) and B)
F) A) and C)

Question 4

Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will:

Accepted Answer

A)   Import 500 units
B)   Import 100 units
C)   Import 400 units
D)   Export 100 unitsE) All of the above
F) None of the above

Question 5

In a two-nation two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Accepted Answer

A) True 
 B)False

Question 6

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case:

Accepted Answer

A)   Korea has a comparative advantage in the production of wheat
B)   The United States has a comparative advantage in the production of televisions
C)   Mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States
D)   Mutual gains from trade can be obtained if the United States imports wheat from Korea and Korea imports televisions from the United StatesE) C) and D)
F) A) and B)

Question 7

Nation Alpha can produce employing all its available resources either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of clothing:

Accepted Answer

A)   Nation Alpha has a comparative advantage in producing clothing
B)   Nation Beta has a comparative advantage in producing chemicals
C)   Nation Alpha has a comparative advantage in producing chemicals
D)   Nation Beta is the high-cost producer of clothingE) A) and B)
F) A) and C)

Question 8

Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. If the world price for this product is $2.00, then Econland will:

Accepted Answer

A)   Export 200 units
B)   Export 400 units
C)   Import 200 units
D)   Import 400 unitsE) None of the above
F) All of the above

Question 9

Refer to the table above for a certain product's market in Econland. If the world price of the product were $6 and an import quota of 400 units were imposed on the product, then the equilibrium price in Econland would be:

Accepted Answer

A)   $6 and the total quantity available in Econland would be 2,200 units
B)   $6 and the total quantity available in Econland would be 1,800 units
C)   $7 and the total quantity available in Econland would be 2,000 units
D)   $7 and the total quantity available in Econland would be 1,800 unitsE) B) and C)
F) A) and C)

Question 10

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 below.  Refer to the graphs and information above. If Italy and Greece should open up trade with each other, which of the following terms of trade is mutually beneficial?

Accepted Answer

A)   1 ton of chemicals = 1 ton of steel
B)   2 tons of chemicals = 1 ton of steel
C)   5 tons of chemicals = 2 tons of steel
D)   9 tons of chemicals = 5 tons of steelE) A) and C)
F) C) and D)

Question 11

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 BE) B) and C)
F) A) and B)

Question 12

If a nation imposes a tariff on an imported product, then the nation will experience a(n) :

Accepted Answer

A)   Decrease in total supply and an increase in the price of the product
B)   Decrease in demand and a decrease in the price of the product
C)   Decrease in supply of, and an increase in demand for, the product
D)   Increase in supply of, and a decrease in demand for, the productE) A) and D)
F) B) and D)

Question 13

A nation with abundant capital resources tends to be an exporter of:

Accepted Answer

A)   Labor-intensive products
B)   Capital-intensive products
C)   Natural resource-based products
D)   Consumer productsE) A) and B)
F) All of the above

Question 14

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically-produced product which is now:

Accepted Answer

A)   Lower in price because import competition has risen
B)   Higher in price because import competition has risen
C)   Higher in price because import competition has declined
D)   Lower in price because import competition has declinedE) B) and D)
F) A) and C)

Question 15

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Accepted Answer

A) True 
 B)False

Question 16

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Accepted Answer

A) True 
 B)False

Question 17

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case:

Accepted Answer

A)   France has a comparative advantage in the production of chemicals
B)   Germany has a comparative advantage in the production of chemicals
C)   France has an absolute advantage in the production of chemicals
D)   Germany has an absolute advantage in the production of chemicalsE) A) and C)
F) A) and D)

Question 18

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 productE) A) and B)
F) C) and D)

Question 19

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting:

Accepted Answer

A)   U.S. firms to establish export markets around the world
B)   Other nations to become familiar with, and adjust to, U.S. products
C)   Workers displaced by imports or plant relocations abroad
D)   Businesses who wish to globalize and compete in the world marketE) A) and C)
F) A) and D)

Question 20

Refer to the table above for a certain product's market in Econland. Assume that the world price of the product is $6. What would be the difference in the total revenue received by foreign producers after a quota of 400 units is imposed, compared against the total revenue received by foreign producers when a $1 per unit tariff is paid?

Accepted Answer

A)   $0 revenue difference
B)   $100 more in revenue with a quota than with a tariff
C)   $400 more in revenue with a quota than with a tariff
D)   $400 more in revenue with a tariff than with a quotaE) A) and B)
F) A) and C)

Exam 20: International Trade

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case:

Correct Answer
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Refer to the table above for a certain product's market in Econland. If the world price of the product were $6 and an import quota of 400 units were imposed on the product, then the equilibrium price in Econland would be:

Correct Answer
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In a two-nation two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Correct Answer
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Which of the following statements is true?

Correct Answer
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Correct Answer
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If a nation imposes a tariff on an imported product, then the nation will experience a(n) :

Correct Answer
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Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will:

Correct Answer
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The Trade Adjustment Assistance Act of 2002 focused mainly on assisting:

Correct Answer
verified

A nation with abundant capital resources tends to be an exporter of:

Correct Answer
verified

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Correct Answer
verified

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Correct Answer
verified

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case:

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

A natural-resource abundant nation would be expected to export a land-intensive commodity such as:

Correct Answer
verified

Correct Answer
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Given the following maximum-output alternatives for Brazil and Poland, it can be seen that if the two nations open up trade with each other, then:

Correct Answer
verified

Nation Alpha can produce employing all its available resources either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of clothing:

Correct Answer
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The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically-produced product which is now:

Correct Answer
verified

Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. If the world price for this product is $2.00, then Econland will:

Correct Answer
verified

Correct Answer
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Exam 20: International Trade

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case:

Correct AnswerverifiedShow Answer

Refer to the table above for a certain product's market in Econland. If the world price of the product were $6 and an import quota of 400 units were imposed on the product, then the equilibrium price in Econland would be:

Correct AnswerverifiedShow Answer

In a two-nation two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a nation imposes a tariff on an imported product, then the nation will experience a(n) :

Correct AnswerverifiedShow Answer

Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. When the world price for this product is $0.50, Econland will:

Correct AnswerverifiedShow Answer

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting:

Correct AnswerverifiedShow Answer

A nation with abundant capital resources tends to be an exporter of:

Correct AnswerverifiedShow Answer

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Correct AnswerverifiedShow Answer

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Correct AnswerverifiedShow Answer

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case:

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

A natural-resource abundant nation would be expected to export a land-intensive commodity such as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Given the following maximum-output alternatives for Brazil and Poland, it can be seen that if the two nations open up trade with each other, then:

Correct AnswerverifiedShow Answer

Nation Alpha can produce employing all its available resources either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of clothing:

Correct AnswerverifiedShow Answer

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically-produced product which is now:

Correct AnswerverifiedShow Answer

Refer to the graph above showing the domestic demand and supply curves for a specific product in a hypothetical nation called Econland. If the world price for this product is $2.00, then Econland will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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