Question 1

A tariff is better than a quota because

Accepted Answer

A)  it does not distort trade as much.
B)  quotas are inflexible.
C)  tariffs produce tax revenue.
D)  quotas hurt domestic producers; tariffs hurt foreign producers.E) None of the above
F) All of the above

Question 2

Opportunity cost refers to whatever is given up to obtain some item.

Accepted Answer

A) True 
 B)False

Question 3

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

Accepted Answer

A)  elasticity of demand.
B)  elasticity of supply.
C)  how important the good is.
D)  income elasticity.
E)  cross elasticity of demand with domestic products.F) A) and E)
G) B) and D)

Question 4

Comparative advantage is a comparison among producers based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 5

A country has a comparative advantage over another in the production of gadgets if it can produce

Accepted Answer

A)  more gadgets than can the other country.
B)  more gadgets than can any other country.
C)  gadgets more efficiently than it can produce any other good.
D)  gadgets at lower opportunity cost than can the other country.E) A) and D)
F) A) and C)

Question 6

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

A)  No, because protection has no place in industrial development.
B)  No, protection is always improper.
C)  Uncertain, economic theory has no answer to this question.
D)  Yes, although it can be overstated and abused.E) A) and D)
F) A) and C)

Question 7

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

Accepted Answer

A)  increase in Japanese cars goes into the revenue of U.S. automakers.
B)  increase in Japanese cars goes into the revenue of Japanese automakers.
C)  increase in Japanese cars goes into the revenue of the U.S. government.
D)  decrease in Japanese cars comes out of the revenue of U.S. automakers.
E)  decrease in Japanese cars comes out of the revenue of the U.S. government.F) A) and E)
G) A) and C)

Question 8

Labor is defined as cheap only if its productivity is very low.

Accepted Answer

A) True 
 B)False

Question 9

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Accepted Answer

A)  remain unchanged in that nation.
B)  rise and then fall below where it was originally.
C)  rise in that nation.
D)  drop in that nation.E) C) and D)
F) All of the above

Question 10

If South Korea has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Accepted Answer

A) True 
 B)False

Question 11

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

Accepted Answer

A)  fall.
B)  rise.
C)  exceed the price in foreign countries.
D)  be below the price in foreign countries.
E)  One cannot predict the impact on the price of the commodity.F) B) and D)
G) C) and E)

Question 12

A tariff affects imports

Accepted Answer

A)  by limiting quantity and raising price to a higher level.
B)  by reducing quantity demanded so that supply falls.
C)  by increasing supply, raising price, and reducing demand.
D)  by raising price and reducing quantity demanded.E) A) and B)
F) None of the above

Question 13

Figure 34-4 ​

In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Accepted Answer

A)  1 for the United States and 5 for Egypt.
B)  20 for the United States and 2 for Egypt.
C)  1 for the United States and 2 for Egypt.
D)  20 for the United States and 10 for Egypt.E) A) and B)
F) All of the above

Question 14

Absolute advantage is the ability to produce a good using fewer inputs than another producer.

Accepted Answer

A) True 
 B)False

Question 15

Japan and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will

Accepted Answer

A)  import guns.
B)  have a comparative advantage in guns.
C)  have an absolute advantage in guns.
D)  have a comparative advantage in rice.E) A) and B)
F) B) and D)

Question 16

Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?

Accepted Answer

From the numbers given, Vermont has the ...

Question 17

Figure 34-9 ​

In Figure 34-9, Pestoland at price OA

Accepted Answer

A)  is importing MN pasta from Pastaland.
B)  is exporting MN pasta to Pastaland.
C)  is exporting XY pasta to Pastaland.
D)  is exporting OZ pasta to Pastaland.E) A) and C)
F) B) and D)

Question 18

Table 34-1
 From Table 34-1, the United States

Accepted Answer

A)  has an absolute advantage over Great Britain in the production of textiles.
B)  has an absolute advantage over Great Britain in the production of wheat.
C)  has a comparative advantage in the production of textiles.
D)  should export textiles to Great Britain.E) All of the above
F) A) and B)

Question 19

The logic of why international trade increases well-being is

Accepted Answer

A)  a major revision of the logic of why trade within a country increases well-being.
B)  completely different from the logic of why trade within a country increases well-being.
C)  a narrow, special case of the logic of why trade within a country increases well-being.
D)  no different from the logic of why trade within a country increases well-being.E) B) and C)
F) B) and D)

Question 20

Figure 34-7 ​

In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute

Accepted Answer

A)  advantage in both pesto and pasta.
B)  and comparative advantage in both pesto and pasta.
C)  advantage in both goods, but a comparative advantage only in pesto.
D)  advantage in pesto only and a comparative advantage only in pasta.E) B) and C)
F) None of the above

Exam 21: International Trade and Comparative Advantage

A tariff affects imports

Correct Answer
verified

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

Correct Answer
verified

A country has a comparative advantage over another in the production of gadgets if it can produce

Correct Answer
verified

Correct Answer
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From the numbers given, Vermont has the ...
View Answer

Labor is defined as cheap only if its productivity is very low.

Correct Answer
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Comparative advantage is a comparison among producers based on opportunity cost.

Correct Answer
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Figure 34-9 In Figure 34-9, Pestoland at price OA

Correct Answer
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The logic of why international trade increases well-being is

Correct Answer
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Table 34-1 From Table 34-1, the United States

Correct Answer
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Absolute advantage is the ability to produce a good using fewer inputs than another producer.

Correct Answer
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If South Korea has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Correct Answer
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Japan and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will

Correct Answer
verified

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

Correct Answer
verified

Figure 34-4 In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Correct Answer
verified

Is the call for protection on the basis of "infant industry" valid?

Correct Answer
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If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Correct Answer
verified

Opportunity cost refers to whatever is given up to obtain some item.

Correct Answer
verified

Figure 34-7 In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute

Correct Answer
verified

A tariff is better than a quota because

Correct Answer
verified

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

Correct Answer
verified

Exam 21: International Trade and Comparative Advantage

A tariff affects imports

Correct AnswerverifiedShow Answer

If the United States imposes a tariff on the import of Japanese cars instead of a quota, the price

Correct AnswerverifiedShow Answer

A country has a comparative advantage over another in the production of gadgets if it can produce

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFrom the numbers given, Vermont has the ...View AnswerShow Answer

Labor is defined as cheap only if its productivity is very low.

Correct AnswerverifiedShow Answer

Comparative advantage is a comparison among producers based on opportunity cost.

Correct AnswerverifiedShow Answer

Figure 34-9 ​ In Figure 34-9, Pestoland at price OA

Correct AnswerverifiedShow Answer

The logic of why international trade increases well-being is

Correct AnswerverifiedShow Answer

Table 34-1 From Table 34-1, the United States

Correct AnswerverifiedShow Answer

Absolute advantage is the ability to produce a good using fewer inputs than another producer.

Correct AnswerverifiedShow Answer

If South Korea has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Correct AnswerverifiedShow Answer

Japan and China produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will

Correct AnswerverifiedShow Answer

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

Correct AnswerverifiedShow Answer

Figure 34-4 ​ In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

Correct AnswerverifiedShow Answer

Is the call for protection on the basis of "infant industry" valid?

Correct AnswerverifiedShow Answer

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Correct AnswerverifiedShow Answer

Opportunity cost refers to whatever is given up to obtain some item.

Correct AnswerverifiedShow Answer

Figure 34-7 ​ In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute

Correct AnswerverifiedShow Answer

A tariff is better than a quota because

Correct AnswerverifiedShow Answer

If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends upon

Correct AnswerverifiedShow Answer

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From the numbers given, Vermont has the ...
View Answer

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Figure 34-9 In Figure 34-9, Pestoland at price OA

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Figure 34-4 In Figure 34-4, the opportunity cost of a unit of wheat in terms of cotton is

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Figure 34-7 In Figure 34-7, AB represents the production possibilities of Pestoland and CD that of Pastaland. The graph indicates Pestoland has an absolute

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Correct Answer
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