Question 1

Refer to the information provided in Table 19.1 below to answer the questions that follow.
Table 19.1
 
-Refer to Table 19.1.For both countries to benefit from trade,the terms of trade must be between ________ bushel(s) of oranges to bushel(s) of bananas.

Accepted Answer

A)  1:1/2 and 1:4
B)  2:3 and 2:1
C)  1:1 and 1:1/2
D)  1:1 and 1:2.E) A) and B)
F) All of the above

Question 2

If a country's imports are greater than its exports,a country has a trade deficit.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the information provided in Figure 19.4 below to answer the questions that follow.
  Figure 19.4
-Refer to Figure 19.4.The domestic price of a leather wallet is $20.With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15.With the tariff domestic production is

Accepted Answer

A)  100.
B)  150.
C)  200.
D)  300.E) A) and B)
F) A) and C)

Question 4

When countries specialize in producing those goods in which they have a comparative advantage,they

Accepted Answer

A)  maximize their combined output,but they do not necessarily allocate their resources more efficiently.
B)  maximize their combined output and allocate their resources more efficiently.
C)  allocate their resources more efficiently,but they do not necessarily maximize their combined output.
D)  do not necessarily maximize their combined output,and they also do not necessarily allocate their resources more efficiently.E) A) and C)
F) A) and D)

Question 5

According to the theory of comparative advantage,a country should

Accepted Answer

A)  specialize and export goods with the highest opportunity cost.
B)  specialize and export goods with the lowest production cost.
C)  specialize and export goods with the lowest opportunity cost.
D)  specialize and export goods with the lowest average cost.E) B) and C)
F) A) and D)

Question 6

The Heckscher-Ohlin theorem says that a country is likely to have a comparative advantage in a labor intensive product,if it has a large labor supply.

Accepted Answer

A) True 
 B)False

Question 7

A country has a trade deficit when

Accepted Answer

A)  its exports exceed its imports.
B)  its exports equal its imports.
C)  its exports are less than its imports.
D)  government spending is greater than tax receipts.E) B) and C)
F) A) and C)

Question 8

Refer to the information provided in Table 19.2 below to answer the questions that follow.
Table 19.2
 
-Refer to Table 19.2.In Thailand,the opportunity cost of

Accepted Answer

A)  a motorcycle is 1/15 of a tractor.
B)  a motorcycle is 15 tractors.
C)  a motorcycle is 1/30 of a tractor.
D)  a tractor is 20 motorcycles.E) B) and C)
F) C) and D)

Question 9

It costs a computer manufacturer $1,000 to produce a personal computer.This manufacturer sells these computers abroad for $600.This is an example of

Accepted Answer

A)  a negative tariff.
B)  export subsidy.
C)  dumping.
D)  a trade-related economy of scale.E) B) and D)
F) A) and C)

Question 10

Which of the following can be considered a free-trade zone?

Accepted Answer

A)  countries that are members of GATT
B)  the European Union
C)  all English-speaking nations
D)  the industrialized OECD nationsE) B) and D)
F) B) and C)

Question 11

For any pair of nations and goods,if each country has an absolute advantage in the production of one product,it is reasonable to expect that specialization and trade will benefit both countries.

Accepted Answer

A) True 
 B)False

Question 12

Protection makes the people of a country better off.

Accepted Answer

A) True 
 B)False

Question 13

If a country's imports are less than its exports,a country has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 14

A country's trade is balanced when

Accepted Answer

A)  its imports exceeds its exports.
B)  its government expenditures are equal to its tax revenues.
C)  its net exports equal to zero.
D)  its net exports are greater than zero.E) A) and D)
F) B) and C)

Question 15

The idea of the U.S.-Canadian Free-Trade Agreement that removed all barriers to trade including tariffs and quotas between the United States and Canada by 1998 was to

Accepted Answer

A)  increase the price of Canadian goods sold in the United States.
B)  increase the price of U.S.goods sold in Canada.
C)  increase the amount that the United States exports to Canada and the amount that the United States imports from Canada.
D)  increase the amount that the United States exports to Canada and decrease the amount that the United States imports from Canada.E) B) and D)
F) All of the above

Question 16

In 2003,the WTO ruled that U.S.tariffs on ________ were unfair and allowed retaliatory tariffs on U.S.products.

Accepted Answer

A)  steel imported from the EU
B)  beef imported from Argentina
C)  automobiles imported from Japan
D)  diamonds imported from South AfricaE) All of the above
F) C) and D)

Question 17

Dumping involves a country selling its exports

Accepted Answer

A)  at a price lower than its cost of production.
B)  to nations without a comparative advantage in producing the products.
C)  to nations that regularly impose tariffs.
D)  to nations that have no need for the products.E) A) and D)
F) B) and D)

Question 18

Refer to the information provided in Figure 19.1 below to answer the questions that follow.
  Figure 19.1
-Refer to Figure 19.1.Which of the following statements is TRUE?

Accepted Answer

A)  The United States has both an absolute advantage and a comparative advantage in the production of soybeans and alfalfa.
B)  The United States has an absolute advantage in the production of soybeans and alfalfa,but a comparative advantage only in the production of soybeans.
C)  The United States has an absolute advantage in the production of soybeans and alfalfa,but a comparative advantage only in the production of alfalfa.
D)  The United States has a comparative advantage in the production of both soybeans and alfalfa,but an absolute advantage only in the production of soybeans.E) A) and B)
F) None of the above

Question 19

Refer to the information provided in Figure 19.4 below to answer the questions that follow.
  Figure 19.4
-Refer to Figure 19.4.The domestic price of a leather wallet is $20.With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15.After the tariff is imposed,tariff revenue in this country will be

Accepted Answer

A)  $50.
B)  $250.
C)  $500.
D)  $750.E) A) and B)
F) None of the above

Question 20

Free trade allows the people of a country to consume outside their production possibility frontier.

Accepted Answer

A) True 
 B)False

Exam 19: International Trade, comparative Advantage, and Protectionism

Correct Answer
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A country's trade is balanced when

Correct Answer
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If a country's imports are less than its exports,a country has a trade surplus.

Correct Answer
verified

In 2003,the WTO ruled that U.S.tariffs on ________ were unfair and allowed retaliatory tariffs on U.S.products.

Correct Answer
verified

Which of the following can be considered a free-trade zone?

Correct Answer
verified

Free trade allows the people of a country to consume outside their production possibility frontier.

Correct Answer
verified

The idea of the U.S.-Canadian Free-Trade Agreement that removed all barriers to trade including tariffs and quotas between the United States and Canada by 1998 was to

Correct Answer
verified

When countries specialize in producing those goods in which they have a comparative advantage,they

Correct Answer
verified

For any pair of nations and goods,if each country has an absolute advantage in the production of one product,it is reasonable to expect that specialization and trade will benefit both countries.

Correct Answer
verified

If a country's imports are greater than its exports,a country has a trade deficit.

Correct Answer
verified

Correct Answer
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Refer to the information provided in Table 19.1 below to answer the questions that follow. Table 19.1 -Refer to Table 19.1.For both countries to benefit from trade,the terms of trade must be between ________ bushel(s) of oranges to bushel(s) of bananas.

Correct Answer
verified

Refer to the information provided in Table 19.2 below to answer the questions that follow. Table 19.2 -Refer to Table 19.2.In Thailand,the opportunity cost of

Correct Answer
verified

Protection makes the people of a country better off.

Correct Answer
verified

A country has a trade deficit when

Correct Answer
verified

The Heckscher-Ohlin theorem says that a country is likely to have a comparative advantage in a labor intensive product,if it has a large labor supply.

Correct Answer
verified

It costs a computer manufacturer $1,000 to produce a personal computer.This manufacturer sells these computers abroad for $600.This is an example of

Correct Answer
verified

Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1.Which of the following statements is TRUE?

Correct Answer
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Dumping involves a country selling its exports

Correct Answer
verified

According to the theory of comparative advantage,a country should

Correct Answer
verified

Exam 19: International Trade, comparative Advantage, and Protectionism

Correct AnswerverifiedShow Answer

A country's trade is balanced when

Correct AnswerverifiedShow Answer

If a country's imports are less than its exports,a country has a trade surplus.

Correct AnswerverifiedShow Answer

In 2003,the WTO ruled that U.S.tariffs on ________ were unfair and allowed retaliatory tariffs on U.S.products.

Correct AnswerverifiedShow Answer

Which of the following can be considered a free-trade zone?

Correct AnswerverifiedShow Answer

Free trade allows the people of a country to consume outside their production possibility frontier.

Correct AnswerverifiedShow Answer

The idea of the U.S.-Canadian Free-Trade Agreement that removed all barriers to trade including tariffs and quotas between the United States and Canada by 1998 was to

Correct AnswerverifiedShow Answer

When countries specialize in producing those goods in which they have a comparative advantage,they

Correct AnswerverifiedShow Answer

For any pair of nations and goods,if each country has an absolute advantage in the production of one product,it is reasonable to expect that specialization and trade will benefit both countries.

Correct AnswerverifiedShow Answer

If a country's imports are greater than its exports,a country has a trade deficit.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the information provided in Table 19.1 below to answer the questions that follow. Table 19.1 -Refer to Table 19.1.For both countries to benefit from trade,the terms of trade must be between ________ bushel(s) of oranges to bushel(s) of bananas.

Correct AnswerverifiedShow Answer

Refer to the information provided in Table 19.2 below to answer the questions that follow. Table 19.2 -Refer to Table 19.2.In Thailand,the opportunity cost of

Correct AnswerverifiedShow Answer

Protection makes the people of a country better off.

Correct AnswerverifiedShow Answer

A country has a trade deficit when

Correct AnswerverifiedShow Answer

The Heckscher-Ohlin theorem says that a country is likely to have a comparative advantage in a labor intensive product,if it has a large labor supply.

Correct AnswerverifiedShow Answer

It costs a computer manufacturer $1,000 to produce a personal computer.This manufacturer sells these computers abroad for $600.This is an example of

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1.Which of the following statements is TRUE?

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Dumping involves a country selling its exports

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According to the theory of comparative advantage,a country should

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