Exam 19: International Trade

A) Each country's consumption possibilities are the same as its production possibilities.
B) Equilibrium is attained with the maximum gains from specialization and trade.
C) There is no legal limit on the amount of a commodity that can be imported.
D) Countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
E) World price is determined by the world supply and demand for a product.

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A) To help foster the study of the Spanish language as a means to trade with all Spanish-speaking countries
B) To increase immigration into the United States
C) To gain increased access to Mexican consumers
D) To attract more Mexican investment
E) To achieve political union with Mexico

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A) lowers the price of imports.
B) lowers the price of domestic goods competing with imports.
C) increases the variety of goods available to the consumer.
D) increases federal revenues.
E) lowers the quantity of the imported good.

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A) produce 7,000, consume 10,000, and export 3,000 tulips.
B) produce 10,000 and consume 10,000 tulips.
C) produce 9,000, consume 6,000, and export 6,000 tulips.
D) import all of the tulips that it consumes.
E) consume all of the tulips that it produces.

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E

A) autarky is always preferred to trade
B) differences in the opportunity cost of production between the two countries ensure that specialization and trade result in mutual gains
C) the country with the lowest opportunity cost of production is the least competitive in international markets
D) the countries gain from mutual trade as long as tastes differ across countries
E) the countries gain from specialization and exchange as long as they are the same size

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A) only the tariff results in a higher domestic price.
B) only the quota decreases the amount of goods imported.
C) the decrease in producer surplus is smaller with the quota.
D) under a quota, part of the decrease in consumer surplus is redistributed to foreign producers; under a tariff, it is redistributed to the domestic government.
E) under a tariff, part of the decrease in consumer surplus is redistributed to foreign producers; under a quota, it is redistributed to the domestic government.

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D

A) Differences in resource endowments​
B) Economies of scale
C) Differences in tastes
D) Import quota
E) Import tariffs

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A) 4,000
B) 6,000
C) 8,000
D) 10,000
E) 12,000​

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True

A) became, in 1995, the institutionalized and more comprehensive successor to the General Agreement on Tariffs and Trade (GATT) .
B) was established in 1947 by 23 member countries to reduce trade restrictions.
C) was established in 1980 to oppose and counteract the policies of the General Agreement on Tariffs and Trade (GATT) .
D) meets in different countries every few years to analyze each country's trade policies and restrictions.
E) was based on an international treaty that expired in 1990.

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A) World Bank Act.
B) General Agreement on Tariffs and Trade (GATT) .
C) International Association for Free Trade (IAFT) .
D) Countries United for Free Trade (CUFT) .
E) International Development Fund.

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A) 4,000
B) 6,000
C) 8,000
D) 10,000
E) 12,000

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A) Preserving national security
B) Preventing dumping
C) Increasing consumer surplus
D) Protecting infant industries
E) Protecting declining industries

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A) In the country where products are dumped, consumer surplus grows as a result of the dumping.
B) Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries.
C) Critics of dumping recommend applying a tariff as a correct antidumping measure.
D) A major difficulty with dumping by firms in other countries is that it drives up prices for the domestic consumer.
E) Predatory dumping is often aimed at driving domestic producers out of business.

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A) 1870 to protect U.S. industries and decrease world trade.
B) 1921 to manage legal and accounting requirements for U.S. tariffs and quotas.
C) 1947 by 23 countries to reduce trade restrictions.
D) 1973 to increase trade restrictions, after OPEC significantly raised oil prices.
E) 1990 to develop a free trade zone across 50 states.

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A) 4,000
B) 6,000
C) 8,000
D) 10,000
E) 12,000

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A) an embargo has been established​
B) a quota has been imposed
C) the manufacturer is engaged in dumping
D) there has been an improvement in the terms of trade
E) tariffs have been reduced

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