Question 1

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 chemicals.E) All of the above
F) C) and D)

Question 2

Countries engaged in international trade specialize in production based on

Accepted Answer

A)   relative levels of GDP.
B)   comparative advantage.
C)   relative exchange rates.
D)   relative inflation rates.E) A) and B)
F) None of the above

Question 3

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

Question 4

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.   Ouantity  Ouantity ( Supplied  Demanded  (Domestic)   Price  (Domestic)  12$52104473742111116\begin{array}{|c|c|c|}\hline\text { Ouantity }&&\text { Ouantity }\(\text { Supplied }&&\text { Demanded }\\hline \text { (Domestic)  } & \text { Price } & \text { (Domestic)  } \\hline 12 & \$ 5 & 2 \\hline 10 & 4 & 4 \\hline 7 & 3 & 7 \\hline 4 & 2 & 11 \\hline 1 & 1 & 16 \\hline\end{array} Ouantity ( Supplied  (Domestic)  1210741​ Price $54321​ Ouantity  Demanded  (Domestic)  2471116​​  With a $1-per-unit tariff, prices (revenue per unit)  received by domestic and foreign producers respectively will be

Accepted Answer

A)   $2 and $1.
B)   $1 and $2.
C)   $2 and $2.
D)   $3 and $2. E) A) and C)
F) B) and C)

Question 5

Answer the question on the basis of the accompanying production possibilities tables for two countries, Latalia and Trombonia.   \quad \quad \quad \quad \quad \quad Latalia’s production possibilities 	ext { Latalia&#x27;s production possibilities } Latalia’s production possibilities  
  A  B  C  D  E  Pork (Tons)  43210 Beans (Tons)  05101520\begin{array}{c|c|c|c|c|c} & 	ext { A } & 	ext { B } & 	ext { C } & 	ext { D } & 	ext { E } \\hline 	ext { Pork (Tons)  } & 4 & 3 & 2 & 1 & 0 \\hline 	ext { Beans (Tons)  } & 0 & 5 & 10 & 15 & 20\end{array} Pork (Tons)   Beans (Tons)  ​ A 40​ B 35​ C 210​ D 115​ E 020​​    \quad \quad \quad \quad \quad \quad \quad \quad Trombonia’s production 	ext { Trombonia&#x27;s production } Trombonia’s production  
  \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad possibilities 	ext { possibilities } possibilities  
  A  B  C  D  E  Pork (Tons)  86420 Beans (Tons)  06121824\begin{array}{c|c|c|c|c|c}\hline & 	ext { A } & 	ext { B } & 	ext { C } & 	ext { D } & 	ext { E } \\hline 	ext { Pork (Tons)  } & 8 & 6 & 4 & 2 & 0 \\hline 	ext { Beans (Tons)  } & 0 & 6 & 12 & 18 & 24 \\hline\end{array} Pork (Tons)   Beans (Tons)  ​ A 80​ B 66​ C 412​ D 218​ E 024​​  In Latalia the domestic real cost of 1 ton of pork

Accepted Answer

A)   is 3 tons of beans.
B)   diminishes with the level of pork production.
C)   is 5 tons of beans.
D)   is 1/5 of a ton of beans. E) None of the above
F) B) and D)

Question 6

The ratio at which nations will exchange one product for another is known as the

Accepted Answer

A)   exchange rate.
B)   discount rate.
C)   terms of trade.
D)   balance of trade.E) B) and C)
F) A) and C)

Question 7

One main point of Frederic Bastiat's satire is that

Accepted Answer

A)   employment, or jobs, is the single most important measure of the standard of living.
B)   we should not try to produce what we can get from others at a lower cost.
C)   some industries may reasonably require protection in order to grow.
D)   exporting is always a worthwhile activity to be supported and enhanced.E) C) and D)
F) B) and C)

Question 8

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

Accepted Answer

A) True 
 B)False

Question 9

If countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the accompanying production possibilities schedules.   Country  Rubber  Bands  Paper clips A4080B1040\begin{array} { | c | c | c | } \hline	ext { Country } & \begin{array} { c } 	ext { Rubber } \	ext { Bands }\end{array} & 	ext { Paper clips } \\hline \mathbf { A } & 40 & 80 \\hline  \mathbf  { B } & 10 & 40 \\hline\end{array} Country AB​ Rubber  Bands ​4010​ Paper clips 8040​​  In country A the opportunity cost of 1 paper clip is

Accepted Answer

A)   2 rubber bands.
B)   1 rubber band.
C)   1/2 rubber band.
D)   1/4 rubber band. E) All of the above
F) C) and D)

Question 10

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Accepted Answer

A) True 
 B)False

Question 11

Economists who criticize trade adjustment assistance argue that

Accepted Answer

A)   it only benefits a small fraction of all unemployed workers.
B)   money spent on the program overstimulates aggregate demand and threatens to cause inflation.
C)   benefits are too low to provide unemployed workers with a livable wage.
D)   it distorts patterns of foreign trade, reducing the gains from trade.E) A) and B)
F) A) and C)

Question 12

Which of the following statements is false?

Accepted Answer

A)   Studies show that developing nations that have relied on import restrictions to protect domestic industries have had higher growth rates than similar nations pursuing more open economic policies.
B)   The U.S. Constitution forbids individual states from levying tariffs.
C)   The high tariffs of the Smoot-Hawley Act of 1930 and the retaliation they caused worsened the Great Depression.
D)   The European Union has enhanced prosperity in Western Europe.E) A) and B)
F) A) and C)

Question 13

Import tariffs benefit the consumers of the product involved.

Accepted Answer

A) True 
 B)False

Question 14

Employing all its available resources, Nation Alpha can produce 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 clothing.E) A) and B)
F) B) and D)

Question 15

The World Trade Organization is the successor to the

Accepted Answer

A)   General Agreement on Tariffs and Trade (GATT) .
B)   United Nations Commission on Trade Law (UNCTL) .
C)   World Customs Organization.
D)   United Nations Conference on Trade and Development (UNCTA
D)  .E) B) and C)
F) All of the above

Question 16

The primary gain from international trade is

Accepted Answer

A)   increased employment in the domestic export sector.
B)   more goods than would be attainable through domestic production alone.
C)   tariff revenue.
D)   increased employment in the domestic import sector.E) B) and C)
F) All of the above

Question 17

Tariffs create larger gains to domestic producers than losses to domestic consumers.

Accepted Answer

A) True 
 B)False

Question 18

The number of countries belonging to the World Trade Organization (WTO) , as of 2015, is about

Accepted Answer

A)   161.
B)   125.
C)   80.
D)   202.E) All of the above
F) None of the above

Question 19

The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Accepted Answer

A) True 
 B)False

Question 20

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Accepted Answer

A)   Trade barriers protect the development of new technology, but the new technology eliminates jobs.
B)   Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment.
C)   The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment.
D)   Major American firms have produced many products in other countries and would not hire more domestic labor when trade barriers are imposed.E) A) and B)
F) All of the above

Exam 26: International Trade

The primary gain from international trade is

Correct Answer
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Correct Answer
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The World Trade Organization is the successor to the

Correct Answer
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Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = ²/₃Y.

Correct Answer
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Economists who criticize trade adjustment assistance argue that

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

Correct Answer
verified

One main point of Frederic Bastiat's satire is that

Correct Answer
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Correct Answer
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What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Correct Answer
verified

Countries engaged in international trade specialize in production based on

Correct Answer
verified

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Correct Answer
verified

Correct Answer
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The ratio at which nations will exchange one product for another is known as the

Correct Answer
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Tariffs create larger gains to domestic producers than losses to domestic consumers.

Correct Answer
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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
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Which of the following statements is false?

Correct Answer
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Employing all its available resources, Nation Alpha can produce 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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Import tariffs benefit the consumers of the product involved.

Correct Answer
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The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Correct Answer
verified

The number of countries belonging to the World Trade Organization (WTO) , as of 2015, is about

Correct Answer
verified

Exam 26: International Trade

The primary gain from international trade is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The World Trade Organization is the successor to the

Correct AnswerverifiedShow Answer

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = 2/3Y.

Correct AnswerverifiedShow Answer

Economists who criticize trade adjustment assistance argue that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One main point of Frederic Bastiat's satire is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Correct AnswerverifiedShow Answer

Countries engaged in international trade specialize in production based on

Correct AnswerverifiedShow Answer

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ratio at which nations will exchange one product for another is known as the

Correct AnswerverifiedShow Answer

Tariffs create larger gains to domestic producers than losses to domestic consumers.

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

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Employing all its available resources, Nation Alpha can produce 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

Import tariffs benefit the consumers of the product involved.

Correct AnswerverifiedShow Answer

The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Correct AnswerverifiedShow Answer

The number of countries belonging to the World Trade Organization (WTO) , as of 2015, is about

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade at, or close to, 1X = ²/₃Y.

Correct Answer
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