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Exam 26: International Trade

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Question 41

True/False

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Bastiat's "Petition of the Candlemakers," a classic reading in economics, presents a powerful argument in favor of protectionism.

A) True
B) False

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Question 42

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If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

A) price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported) would increase.
B) prices of wristwatches in Switzerland would rise, and that's how Switzerland would be hurt by the quota.
C) price of wristwatches in the United States would remain the same, but the quantity would fall as imports fell.
D) total quantity of wristwatches (domestic and imported) purchased would decline as prices rose.

E) B) and D)
F) C) and D)

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Question 43

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In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

The nation that has a comparative advantage in a particular product will be the only world exporter of that product.

A side benefit of international trade is that it links national interests and increases the opportunity costs of war.

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. $\begin{array}{|c|c|c|}\hline\text { Ouantity }&&\text { Ouantity }\\(\text { Supplied }&&\text { Demanded }\\\hline \text { (Domestic) } & \text { Price } & \text { (Domestic) } \\\hline 12 & \$ 5 & 2 \\\hline 10 & 4 & 4 \\\hline 7 & 3 & 7 \\\hline 4 & 2 & 11 \\\hline 1 & 1 & 16 \\\hline\end{array}$ With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers would be

An import-licensing requirement or import restrictions pertaining to the product quality and safety are examples of

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

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

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

Answer the question using the accompanying cost ratios for two products, fish (F) and chicken (C) , in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Which one of the following would not be feasible terms for trade between Singsong and Harmony?

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

A major goal of the World Trade Organization is to

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

Which of the following arguments contends that certain industries need to be protected in the interest of national security?