Question 1

If the world price of a product rises relative to the domestic price in a trading nation, then, for that product,

Accepted Answer

A)   exports and imports will increase.
B)   exports and imports will decrease.
C)   exports will increase and imports will decrease.
D)   imports will increase and exports will decrease.E) A) and B)
F) All of the above

Question 2

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Accepted Answer

A)   Nation A has the absolute advantage over Nation B in producing cloth.
B)   Nation B has the absolute advantage over Nation A in producing cloth.
C)   Nation A has the comparative advantage over Nation B in producing cloth.
D)   Nation B has the comparative advantage over Nation A in producing cloth.E) All of the above
F) C) and D)

Question 3

Accepted Answer

A)   lower domestic price and increase domestic consumption.
B)   increase the revenues of domestic producers by areas E + F + K.
C)   increase the revenues of domestic producers by areas G + H.
D)   increase the revenues of domestic producers by areas E + F + G + H + J.E) A) and B)
F) A) and C)

Question 4

If a nation has a comparative advantage in the production of X, this means the nation

Accepted Answer

A)   cannot beneﬁt by producing and trading this product.
B)   must give up less of other goods than other nations in producing a unit of X.
C)   has a production possibilities curve identical to those of other nations.
D)   is not subject to increasing opportunity costs.E) A) and B)
F) All of the above

Question 5

Refer to the diagram, where  SdS _ { d }Sd​  and
 DdD _ { d }Dd​  are the domestic supply and demand for a product and
 PcP _ { c }Pc​  is
The world price of that product. If the economy is opened to free trade, the price and quantity sold of
This product would be

Accepted Answer

A)    Pc and vP _ { c } 	ext { and v} Pc​ and v 
B)    Pa and zP _ { a } 	ext { and } zPa​ and z 
C)    Pt and y. P _ { t } 	ext { and } y 	ext {. }Pt​ and y.  
D)    PC and zP _ { C } 	ext { and } zPC​ and zE) None of the above
F) C) and D)

Question 6

The law of increasing opportunity costs

Accepted Answer

A)   applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities.
B)   results in straight-line production possibilities curves rather than curves that are bowed outward from the origin.
C)   refutes the principle of comparative advantage.
D)   may limit the extent to which a nation specializes in producing a particular product.E) A) and B)
F) All of the above

Question 7

The impact of increasing, as opposed to constant, costs is to

Accepted Answer

A)   intensify and prolong the comparative advantages that any nation may have initially.
B)   expand the limits of the terms of trade.
C)   cause the bases for further specialization to disappear as nations specialize according to comparative advantage.
D)   cause nations to realize economies of scale in those products in which they specialize.E) A) and C)
F) All of the above

Question 8

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if

Accepted Answer

A)   Nation A produces products that are more capital-intensive and exports them to Nation B in return for products from Nation B that are more labor-intensive.
B)   Nation A produces products that are more labor-intensive and exports them to Nation B in return for products from Nation B that are more capital-intensive.
C)   Nation B produces products that are more labor-intensive and exports them to Nation A in return for products from Nation A that are more capital-intensive.
D)   Nations A and B each produce capital-intensive and labor-intensive goods and trade them with each other.E) A) and B)
F) A) and C)

Question 9

Which is an example of a nontariff barrier (NTB) ?

Accepted Answer

A)   an export subsidy
B)   an excise tax on the physical volume of imported goods
C)   box-by-box inspection requirements for imported fruit
D)   an excise tax on the dollar value of imported goodsE) A) and B)
F) All of the above

Question 10

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price for this product is $1.60, this nation will
Experience a domestic

Accepted Answer

A)   shortage of 160 units, which it will meet with 160 units of imports.
B)   shortage of 160 units, which will increase the domestic price to $1.60.
C)   surplus of 160 units, which it will export.
D)   surplus of 160 units, which will reduce the world price to $1.00.E) A) and C)
F) C) and D)

Question 11

Accepted Answer

A)   $600, but only $240 if the domestic market were open to international trade.
B)   $600, but only $120 if the domestic market were open to international trade.
C)   $500, but only $240 if the domestic market were open to international trade.
D)   $240, but only $120 if the domestic market were open to international trade.E) B) and D)
F) B) and C)

Question 12

List and describe the four basic types of trade barriers.

Accepted Answer

The four basic types of trade barriers a...

Question 13

Differences in production eﬃciencies among nations in producing a particular good result from

Accepted Answer

A)   different endowments of fertile soil.
B)   different amounts of skilled labor.
C)   different levels of technological knowledge.
D)   all of these.E) A) and C)
F) B) and D)

Question 14

Suppose the domestic price (no-international-trade price)  of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States
Will

Accepted Answer

A)   have a domestic shortage of wheat.
B)   export wheat.
C)   import wheat.
D)   neither export nor import wheat.E) All of the above
F) B) and C)

Question 15

An excise tax on imported items is known as a(n)

Accepted Answer

A)   quota.
B)   tariff.
C)   export restriction.
D)   price ceiling.E) A) and B)
F) All of the above

Question 16

When a tariff or quota on a product is removed, this policy action

Accepted Answer

A)   beneﬁts domestic producers of the product.
B)   beneﬁts consumers of the product.
C)   beneﬁts the government.
D)   hurts nations exporting the product.E) All of the above
F) B) and C)

Question 17

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based
On the assumption of

Accepted Answer

A)   imperfect substitutability of resources between beer and pizza production.
B)   constant costs.
C)   decreasing costs.
D)   increasing costs.E) A) and D)
F) A) and B)

Question 18

Refer to the diagram, which pertains to two nations and a speciﬁc product. Point G is the

Accepted Answer

A)   domestic price for the nation represented by lines FA and FC.
B)   world equilibrium price.
C)   domestic price for the nation represented by lines GB and GD.
D)   price above the world equilibrium price.E) A) and D)
F) None of the above

Question 19

Barriers to free trade impair eﬃciency in the international allocation of resources.

Accepted Answer

A) True 
 B)False

Question 20

As a percentage of GDP, U.S. exports are

Accepted Answer

A)   greater than U.S. imports.
B)   about 20 percent.
C)   considerably lower than in several other industrially advanced nations.
D)   higher than in Canada but lower than in Germany.E) A) and D)
F) All of the above

Exam 20: International Trade

Which is an example of a nontariff barrier (NTB) ?

Correct Answer
verified

The law of increasing opportunity costs

Correct Answer
verified

Correct Answer
verified

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States Will

Correct Answer
verified

Correct Answer
verified

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if

Correct Answer
verified

The impact of increasing, as opposed to constant, costs is to

Correct Answer
verified

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Correct Answer
verified

Barriers to free trade impair eﬃciency in the international allocation of resources.

Correct Answer
verified

An excise tax on imported items is known as a(n)

Correct Answer
verified

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based On the assumption of

Correct Answer
verified

If a nation has a comparative advantage in the production of X, this means the nation

Correct Answer
verified

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price for this product is $1.60, this nation will Experience a domestic

Correct Answer
verified

Correct Answer
verified

If the world price of a product rises relative to the domestic price in a trading nation, then, for that product,

Correct Answer
verified

List and describe the four basic types of trade barriers.

Correct Answer
verified
The four basic types of trade barriers a...
View Answer

When a tariff or quota on a product is removed, this policy action

Correct Answer
verified

Refer to the diagram, which pertains to two nations and a speciﬁc product. Point G is the

Correct Answer
verified

As a percentage of GDP, U.S. exports are

Correct Answer
verified

Differences in production eﬃciencies among nations in producing a particular good result from

Correct Answer
verified

Exam 20: International Trade

Which is an example of a nontariff barrier (NTB) ?

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States Will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if

Correct AnswerverifiedShow Answer

The impact of increasing, as opposed to constant, costs is to

Correct AnswerverifiedShow Answer

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Correct AnswerverifiedShow Answer

Barriers to free trade impair eﬃciency in the international allocation of resources.

Correct AnswerverifiedShow Answer

An excise tax on imported items is known as a(n)

Correct AnswerverifiedShow Answer

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based On the assumption of

Correct AnswerverifiedShow Answer

If a nation has a comparative advantage in the production of X, this means the nation

Correct AnswerverifiedShow Answer

Refer to the diagram, which shows the domestic demand and supply curves for a speciﬁc standardized product in a particular nation. If the world price for this product is $1.60, this nation will Experience a domestic

Correct AnswerverifiedShow Answer

Refer to the diagram, where SdS _ { d }Sd​ and DdD _ { d }Dd​ are the domestic supply and demand for a product and PcP _ { c }Pc​ is The world price of that product. If the economy is opened to free trade, the price and quantity sold of This product would be

Correct AnswerverifiedShow Answer

If the world price of a product rises relative to the domestic price in a trading nation, then, for that product,

Correct AnswerverifiedShow Answer

List and describe the four basic types of trade barriers.

Correct AnswerverifiedThe four basic types of trade barriers a...View AnswerShow Answer

When a tariff or quota on a product is removed, this policy action

Correct AnswerverifiedShow Answer

Refer to the diagram, which pertains to two nations and a speciﬁc product. Point G is the

Correct AnswerverifiedShow Answer

As a percentage of GDP, U.S. exports are

Correct AnswerverifiedShow Answer

Differences in production eﬃciencies among nations in producing a particular good result from

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The four basic types of trade barriers a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified