Question 1

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce:

Accepted Answer

A)   The product with fewer inputs than the other nation
B)   The product at lower average cost than the other nation
C)   The product at a lower domestic opportunity cost than the other nation
D)   More of the product than the other nationE) A) and D)
F) B) and C)

Question 2

Tariffs and quotas are costly to consumers because:

Accepted Answer

A)   The price of the imported good falls
B)   The supply of the imported good increases
C)   Import competition increases for domestic goods
D)   Consumers have to switch to higher-priced domestic goodsE) A) and B)
F) None of the above

Question 3

Refer to the above 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 tariff would generate government revenues of:

Accepted Answer

A)   $600
B)   $400
C)   $800
D)   $1,200E) A) and C)
F) A) and B)

Question 4

The following are commonly-used arguments for protection against imports, except:

Accepted Answer

A)   Self-sufficiency and diversification-for-stability
B)   Protection against dumping
C)   Infant industry protection
D)   Price- and profit-maintenanceE) B) and C)
F) A) and B)

Question 5

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Accepted Answer

A) True 
 B)False

Question 6

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. Assume that prior to specialization and trade, Italy and Greece preferred points I and G on their respective production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in total output will be:

Accepted Answer

A)   5 steel and 15 chemicals
B)   10 chemicals
C)   15 steel and 5 chemicals
D)   25 steelE) B) and C)
F) C) and D)

Question 7

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Accepted Answer

A)   Increase domestic employment
B)   Protection against dumping
C)   Strategic trade policy
D)   Cheap foreign laborE) None of the above
F) B) and C)

Question 8

Which of the following is a valid counter-argument to the call for higher tariffs to save U.S. jobs?

Accepted Answer

A)   U.S. firms and workers must be protected from the cheaper labor in nations where wages are low
B)   All nations cannot simultaneously succeed in restricting imports while maintaining exports
C)   Reducing tariffs will benefit all consumers and domestic producers
D)   The need to protect U.S. workers from the unemployment is not a concern in international economicsE) C) and D)
F) B) and D)

Question 9

Assume that a VER (voluntary export restraint)  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)   Foreign exporters
C)   Domestic consumers
D)   Domestic workersE) B) and C)
F) None of the above

Question 10

The benefits to trading nations based on comparative advantage accrue from:

Accepted Answer

A)   Specialization only
B)   Specialization and trading
C)   Trading only
D)   Protection of domestic industriesE) B) and C)
F) A) and C)

Question 11

The table below shows labor-productivity figures in two countries facing constant costs:  Refer to the table above. Based on the data provided, it can be deduced that:

Accepted Answer

A)   Country A can produce more meat and houses than country B
B)   Country A has a comparative advantage in producing houses
C)   Country B has the absolute advantage in producing houses
D)   Country B has a comparative advantage in producing housesE) A) and B)
F) None of the above

Question 12

A major goal of the World Trade Organization is to:

Accepted Answer

A)   Increase the protection of producers against foreign trade competition
B)   Encourage bilateral trade agreements between nations
C)   Liberalize international trade among nations
D)   Maximize tariff revenue for governmentsE) All of the above
F) C) and D)

Question 13

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?

Accepted Answer

A)   Country Y should specialize in the growing of soybeans according to the principle of comparative advantage
B)   Country X is the least cost producer of wheat
C)   The domestic opportunity cost of wheat production is lower in country Y
D)   The high cost producer of soybeans is country XE) A) and C)
F) B) and C)

Question 14

The basic difference in the economic effects of a tariff compared with a quota is that a:

Accepted Answer

A)   Quota reduces domestic consumption of the product, but a tariff does not
B)   Tariff allows imports to increase if demand increases, whereas a quota does not
C)   Tariff raises product prices, but a quota does not
D)   Quota raises product prices, but a tariff does notE) A) and B)
F) A) and C)

Question 15

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when:

Accepted Answer

A)   Tariffs are eliminated
B)   Transportation costs are almost zero
C)   Relative costs of production differ between nations
D)   A country can produce more of some product than other nations canE) B) and C)
F) A) and D)

Question 16

Refer to the graph above which shows the import demand and export supply curves for two nations that produce a certain product. Lines 6 and 8 apply to one nation and represent, respectively:

Accepted Answer

A)   Import demand and export supply
B)   Export supply and import demand
C)   Domestic supply and domestic demand
D)   Domestic demand and domestic supplyE) A) and B)
F) B) and C)

Question 17

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the graph above which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines:

Accepted Answer

A)   5 and 6
B)   5 and 7
C)   6 and 8
D)   7 and 8E) A) and C)
F) All of the above

Question 19

Major achievements of the European Union (EU)  include the following, except:

Accepted Answer

A)   Abolished tariffs and quotas among its member nations
B)   Liberalized the movement of capital and labor among its member nations
C)   Created common policies in agriculture, transportation, and business practices among its members
D)   Established a common fiscal policy among its member nationsE) C) and D)
F) A) and D)

Question 20

Use the following table to answer the question below for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Qdd)  and Column 3 is the quantity supplied domestically (Qsd) . dd)  and Column 3 is the quantity supplied domestically (Qsd) .   Refer to the table above. At what price will Country Y export 100 units of the product? A)  $9.00 B)  $8.00 C)  $7.00 D)  $6.00" class="answers-bank-image d-inline" rel="preload" > Refer to the table above. At what price will Country Y export 100 units of the product?

Accepted Answer

A)   $9.00
B)   $8.00
C)   $7.00
D)   $6.00E) A) and B)
F) A) and C)

Exam 20: International Trade

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Correct Answer
verified

Major achievements of the European Union (EU) include the following, except:

Correct Answer
verified

The following are commonly-used arguments for protection against imports, except:

Correct Answer
verified

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when:

Correct Answer
verified

Assume that a VER (voluntary export restraint) 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 world, comparative advantage in the production of a particular product means that one nation can produce:

Correct Answer
verified

Tariffs and quotas are costly to consumers because:

Correct Answer
verified

Refer to the graph above which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines:

Correct Answer
verified

Correct Answer
verified

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Correct Answer
verified

Which of the following is a valid counter-argument to the call for higher tariffs to save U.S. jobs?

Correct Answer
verified

Refer to the graph above which shows the import demand and export supply curves for two nations that produce a certain product. Lines 6 and 8 apply to one nation and represent, respectively:

Correct Answer
verified

The table below shows labor-productivity figures in two countries facing constant costs: Refer to the table above. Based on the data provided, it can be deduced that:

Correct Answer
verified

A major goal of the World Trade Organization is to:

Correct Answer
verified

The benefits to trading nations based on comparative advantage accrue from:

Correct Answer
verified

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Correct Answer
verified

Refer to the above 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 tariff would generate government revenues of:

Correct Answer
verified

Correct Answer
verified

The basic difference in the economic effects of a tariff compared with a quota is that a:

Correct Answer
verified

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?

Correct Answer
verified

Exam 20: International Trade

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Correct AnswerverifiedShow Answer

Major achievements of the European Union (EU) include the following, except:

Correct AnswerverifiedShow Answer

The following are commonly-used arguments for protection against imports, except:

Correct AnswerverifiedShow Answer

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when:

Correct AnswerverifiedShow Answer

Assume that a VER (voluntary export restraint) 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 world, comparative advantage in the production of a particular product means that one nation can produce:

Correct AnswerverifiedShow Answer

Tariffs and quotas are costly to consumers because:

Correct AnswerverifiedShow Answer

Refer to the graph above which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Correct AnswerverifiedShow Answer

Which of the following is a valid counter-argument to the call for higher tariffs to save U.S. jobs?

Correct AnswerverifiedShow Answer

Refer to the graph above which shows the import demand and export supply curves for two nations that produce a certain product. Lines 6 and 8 apply to one nation and represent, respectively:

Correct AnswerverifiedShow Answer

The table below shows labor-productivity figures in two countries facing constant costs: Refer to the table above. Based on the data provided, it can be deduced that:

Correct AnswerverifiedShow Answer

A major goal of the World Trade Organization is to:

Correct AnswerverifiedShow Answer

The benefits to trading nations based on comparative advantage accrue from:

Correct AnswerverifiedShow Answer

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Correct AnswerverifiedShow Answer

Refer to the above 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 tariff would generate government revenues of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The basic difference in the economic effects of a tariff compared with a quota is that a:

Correct AnswerverifiedShow Answer

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?

Correct AnswerverifiedShow Answer

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