Question 1

Table 34-4  Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If Japan and the United States trade with each other, which country will export television sets and how many?

Accepted Answer

A)  Japan will export 20,000 television sets to the United States.
B)  Japan will export 30,000 television sets to the United States.
C)  The United States will export 20,000 television sets to Japan.
D)  The United States will export 40,000 television sets to Japan.E) B) and C)
F) A) and D)

Question 2

The infant industry argument is valid when

Accepted Answer

A)  a new industry is suffering financial losses.
B)  a new industry is less efficient than foreign competitors.
C)  the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected.
D)  the industry is not likely to be profitable in the future.E) C) and D)
F) A) and B)

Question 3

If every country uses tariffs, everyone is likely to lose.

Accepted Answer

A) True 
 B)False

Question 4

Absolute advantage is a comparison among producers based on productivity.

Accepted Answer

A) True 
 B)False

Question 5

Carefully define the following terms and explain their importance to the study of economics. 
a. Specialization 
b. Absolute advantage 
c. Comparative advantage 
d. Quota 
e. Trade adjustment assistance

Accepted Answer

a. Specialization means that a country d...

Question 6

One reason why nations trade is because

Accepted Answer

A)  trading provides opportunities to earn profits.
B)  the rate of interest is not the same in all countries.
C)  resources are not equally distributed to all nations.
D)  some nations like to build one thing while others like to build another.E) A) and B)
F) C) and D)

Question 7

If nations begin to specialize in production for the purpose of trade,

Accepted Answer

A)  the utility from consumption will increase, but not the total output.
B)  total world output will increase, as well as well-being from consumption.
C)  total world output will increase, but well-being from consumption will not.
D)  neither total output nor well-being from consumption will change.
E)  the impact on total output and well-being cannot be predicted.F) B) and D)
G) B) and E)

Question 8

The United States is known worldwide as being a low-tariff nation.

Accepted Answer

A) True 
 B)False

Question 9

If the production possibilities curves of two countries have the same slope,

Accepted Answer

A)  neither has a comparative advantage, and there are no gains from trade.
B)  although there is no comparative advantage, there are potential gains if there are differences in absolute advantage.
C)  neither has an absolute advantage, and there cannot be gains from trade.
D)  both have an absolute advantage and can gain from trade.E) A) and B)
F) A) and C)

Question 10

The trade philosophy of the Clinton administration is best characterized as

Accepted Answer

A)  protectionist.
B)  mercantilist.
C)  free trade.
D)  strategic trade.E) A) and D)
F) A) and C)

Question 11

Table 34-4  Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If Japan and the United States trade with each other, what will be the equilibrium price in the world market for television sets?

Accepted Answer

A)  $100
B)  $200
C)  $300
D)  $400E) None of the above
F) B) and C)

Question 12

In the long run, foreign labor remains cheap when and if

Accepted Answer

A)  it becomes highly efficient and competes successfully internationally.
B)  countries erect barriers to trade between poor countries.
C)  productivity increases more rapidly in poor countries than in rich countries.
D)  it remains inefficient compared to other countries' labor.E) A) and B)
F) A) and C)

Question 13

If a nation can produce greater quantities of a good than another nation, it has a(n)

Accepted Answer

A)  comparative advantage.
B)  absolute advantage.
C)  declarative advantage.
D)  entire advantage.E) A) and C)
F) A) and D)

Question 14

Which of the following is true?

Accepted Answer

A)  A nation cannot have a comparative advantage in the production of every good.
B)  A nation cannot have an absolute advantage in the production of every good.
C)  A nation can have a comparative advantage in the production of every good, but not an absolute advantage.
D)  A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.
E)  A nation cannot have an absolute advantage in the production of a good unless it also has a comparative advantage.F) A) and E)
G) A) and B)

Question 15

Trade adjustment assistance provides special unemployment benefits, loans, retraining programs, and other aid to workers and firms that are harmed by foreign competition.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products. How would the analysis used to explain international trade apply?

Accepted Answer

The analysis is identical. If nations an...

Question 17

Table 34-1  From Table 34-1, the opportunity cost of one bushel of wheat in Great Britain is

Accepted Answer

A)  1\4 yard of textiles.
B)  3 yards of textiles.
C)  12 yards of textiles.
D)  4 yards of textiles.E) A) and B)
F) A) and C)

Question 18

If a country 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 19

Assume that a country imposes a tariff in order to gain a price advantage on an item. What is the typical response from the exporting country?

Accepted Answer

A)  It accepts the situation and does nothing about it.
B)  It seeks greater efficiency in order to offset the tariff.
C)  It refuses to sell to the country that imposes the tariff.
D)  It retaliates by imposing tariffs or quotas on items from the other country.E) B) and C)
F) A) and D)

Question 20

A quota is

Accepted Answer

A)  a tax on exported items.
B)  a tax on imported items.
C)  a limit on the amount of imports.
D)  a subsidy to export.E) A) and D)
F) None of the above

Exam 21: International Trade and Comparative Advantage

The United States is known worldwide as being a low-tariff nation.

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Which of the following is true?

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If the production possibilities curves of two countries have the same slope,

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If a country 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

If a nation can produce greater quantities of a good than another nation, it has a(n)

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Trade adjustment assistance provides special unemployment benefits, loans, retraining programs, and other aid to workers and firms that are harmed by foreign competition.

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Table 34-1 From Table 34-1, the opportunity cost of one bushel of wheat in Great Britain is

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If every country uses tariffs, everyone is likely to lose.

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A quota is

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Table 34-4 Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If Japan and the United States trade with each other, what will be the equilibrium price in the world market for television sets?

Correct AnswerverifiedShow Answer

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products. How would the analysis used to explain international trade apply?

Correct AnswerverifiedThe analysis is identical. If nations an...View AnswerShow Answer

One reason why nations trade is because

Correct AnswerverifiedShow Answer

Table 34-4 Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If Japan and the United States trade with each other, which country will export television sets and how many?

Correct AnswerverifiedShow Answer

The infant industry argument is valid when

Correct AnswerverifiedShow Answer

If nations begin to specialize in production for the purpose of trade,

Correct AnswerverifiedShow Answer

In the long run, foreign labor remains cheap when and if

Correct AnswerverifiedShow Answer

Carefully define the following terms and explain their importance to the study of economics. a. Specialization b. Absolute advantage c. Comparative advantage d. Quota e. Trade adjustment assistance

Correct Answerverifieda. Specialization means that a country d...View AnswerShow Answer

Assume that a country imposes a tariff in order to gain a price advantage on an item. What is the typical response from the exporting country?

Correct AnswerverifiedShow Answer

The trade philosophy of the Clinton administration is best characterized as

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Absolute advantage is a comparison among producers based on productivity.

Correct AnswerverifiedShow Answer

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Table 34-1 $Table 34-1 From Table 34-1, the opportunity cost of one bushel of wheat in Great Britain is A) 1\4 yard of textiles. B) 3 yards of textiles. C) 12 yards of textiles. D) 4 yards of textiles.$ From Table 34-1, the opportunity cost of one bushel of wheat in Great Britain is

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The analysis is identical. If nations an...
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a. Specialization means that a country d...
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