Question 1

Which of the following is true?

Accepted Answer

A)  International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.
B)  International trade requires that a country's production possibilities exceed its consumption possibilities.
C)  A country's production possibilities always equal its consumption possibilities.
D)  A country's consumption possibilities can never equal its production possibilities because of leakages in the system.
E)  As long as there is full employment of resources, a country's production possibilities will exceed its consumption possibilities even with trade.F) All of the above
G) C) and D)

Question 2

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour. What is the opportunity cost of producing one walking stick?

Accepted Answer

A)  40 boomerangs
B)  10 boomerangs
C)  4 boomerangs
D)  1/4 of a boomerang
E)  1/2 workerF) B) and E)
G) B) and C)

Question 3

A tariff is a tax on either imports or exports.

Accepted Answer

A) True 
 B)False

Question 4

A lump-sum tax per unit on imports is known as

Accepted Answer

A)  a specific tariff
B)  an effective tariff
C)  a specific quota
D)  an effective quota
E)  an ad valorem quotaF) B) and C)
G) D) and E)

Question 5

If an established domestic industry is in jeopardy of being displaced by lower-priced imports, there could be a rationale for

Accepted Answer

A)  permanent import restrictions to prevent the decline of the domestic industry
B)  temporary import restrictions to allow the orderly adjustment of the domestic industry
C)  permanent import restrictions based on the infant industry argument
D)  temporary import restrictions based on the infant industry argument
E)  temporary import restrictions that will be replaced by permanent tax breaks for the domestic industryF) B) and D)
G) D) and E)

Question 6

An effective import quota

Accepted Answer

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 tax revenues
E)  lowers the quantity demanded of the imported goodF) B) and D)
G) A) and D)

Question 7

Domestic producers of goods that compete with imports benefit from protectionism in the short run.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 18-8 
-If the country in Exhibit 18-8 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted, the welfare loss resulting from higher domestic production costs is represented by area

Accepted Answer

A)  a
B)  b
C)  c + d
D)  b + d
E)  eF) A) and B)
G) B) and C)

Question 9

Tina Makumbi imports sesame oil from Ethiopia and sells to a market that has a downward sloping demand curve. The demand curve indicates that some consumers are willing to pay $1.50 or more per pound for the first few pounds, but every consumer gets to buy at the market clearing price of $0.50 per pound. The difference between the most that consumers would pay and the actual amount they do pay is called

Accepted Answer

A)  exporter surplus
B)  trade balance
C)  producer surplus
D)  consumer equilibrium
E)  consumer surplusF) A) and B)
G) B) and D)

Question 10

If the United States has an absolute advantage in producing computer components, it should export them worldwide.

Accepted Answer

A) True 
 B)False

Question 11

In determining comparative advantage, cost is measured in terms of

Accepted Answer

A)  foreign currency
B)  domestic currency
C)  gold only
D)  units of weight and measure
E)  opportunities forgoneF) B) and E)
G) A) and B)

Question 12

The United States exports more raw materials than finished products.

Accepted Answer

A) True 
 B)False

Question 13

Low wages may be traceable to all of the following except one. Which is the exception?

Accepted Answer

A)  low productivity
B)  too much saving
C)  unstable business climate
D)  poor education and training
E)  lack of adequate physical capital supplied to laborF) B) and E)
G) A) and D)

Question 14

U.S. consumers would be better off if they bought only U.S.-produced goods.

Accepted Answer

A) True 
 B)False

Question 15

The term autarky refers to

Accepted Answer

A)  equilibrium after trade begins between two countries
B)  the gains received from trade
C)  self-sufficiency
D)  political isolationism
E)  the recognition that mutually beneficial trade is not possible between two countriesF) D) and E)
G) C) and E)

Question 16

A country should export only those goods for which, relative to its trading partners, it has the

Accepted Answer

A)  absolute advantage
B)  highest opportunity cost
C)  lowest production possibilities
D)  strongest demand
E)  lowest opportunity costF) All of the above
G) C) and D)

Question 17

To be effective, an import quota must

Accepted Answer

A)  reduce the price and increase the quantity of imports
B)  set the price of the imported good higher than the domestic equilibrium price
C)  restrict imports to less than would be imported under free trade
D)  restrict imports to less than exports in trade with that particular country
E)  be directed at the product of a specific countryF) A) and D)
G) None of the above

Question 18

The Doha Round of talks led to a widely accepted agreement on international trade issues.

Accepted Answer

A) True 
 B)False

Question 19

Over the past decade, U.S. steel producers

Accepted Answer

A)  have benefited from vigorous international trade
B)  have suffered declining sales and a series of bankruptcies
C)  have formed a cartel -- the Organization of Steel Exporting Firms (OSEF) 
D)  have dramatically cut prices and invested in new equipment
E)  have dramatically raised prices and invested in new equipmentF) C) and E)
G) A) and B)

Question 20

Which of the following is not a type of trade restriction?

Accepted Answer

A)  low-interest loans to foreign buyers
B)  export subsidies to domestic producers
C)  restrictive health and safety standards
D)  domestic content requirements
E)  economies of scaleF) C) and D)
G) B) and E)

Exam 18: International Trade

A lump-sum tax per unit on imports is known as

Correct Answer
verified

The Doha Round of talks led to a widely accepted agreement on international trade issues.

Correct Answer
verified

Over the past decade, U.S. steel producers

Correct Answer
verified

Low wages may be traceable to all of the following except one. Which is the exception?

Correct Answer
verified

In determining comparative advantage, cost is measured in terms of

Correct Answer
verified

If the United States has an absolute advantage in producing computer components, it should export them worldwide.

Correct Answer
verified

The term autarky refers to

Correct Answer
verified

A country should export only those goods for which, relative to its trading partners, it has the

Correct Answer
verified

To be effective, an import quota must

Correct Answer
verified

An effective import quota

Correct Answer
verified

Domestic producers of goods that compete with imports benefit from protectionism in the short run.

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

If an established domestic industry is in jeopardy of being displaced by lower-priced imports, there could be a rationale for

Correct Answer
verified

Which of the following is not a type of trade restriction?

Correct Answer
verified

Exhibit 18-8 -If the country in Exhibit 18-8 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted, the welfare loss resulting from higher domestic production costs is represented by area

Correct Answer
verified

The United States exports more raw materials than finished products.

Correct Answer
verified

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour. What is the opportunity cost of producing one walking stick?

Correct Answer
verified

A tariff is a tax on either imports or exports.

Correct Answer
verified

U.S. consumers would be better off if they bought only U.S.-produced goods.

Correct Answer
verified

Correct Answer
verified

Exam 18: International Trade

A lump-sum tax per unit on imports is known as

Correct AnswerverifiedShow Answer

The Doha Round of talks led to a widely accepted agreement on international trade issues.

Correct AnswerverifiedShow Answer

Over the past decade, U.S. steel producers

Correct AnswerverifiedShow Answer

Low wages may be traceable to all of the following except one. Which is the exception?

Correct AnswerverifiedShow Answer

In determining comparative advantage, cost is measured in terms of

Correct AnswerverifiedShow Answer

If the United States has an absolute advantage in producing computer components, it should export them worldwide.

Correct AnswerverifiedShow Answer

The term autarky refers to

Correct AnswerverifiedShow Answer

A country should export only those goods for which, relative to its trading partners, it has the

Correct AnswerverifiedShow Answer

To be effective, an import quota must

Correct AnswerverifiedShow Answer

An effective import quota

Correct AnswerverifiedShow Answer

Domestic producers of goods that compete with imports benefit from protectionism in the short run.

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

If an established domestic industry is in jeopardy of being displaced by lower-priced imports, there could be a rationale for

Correct AnswerverifiedShow Answer

Which of the following is not a type of trade restriction?

Correct AnswerverifiedShow Answer

Exhibit 18-8 -If the country in Exhibit 18-8 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted, the welfare loss resulting from higher domestic production costs is represented by area

Correct AnswerverifiedShow Answer

The United States exports more raw materials than finished products.

Correct AnswerverifiedShow Answer

In New Zealand one worker can produce 40 walking sticks or 10 boomerangs each hour. What is the opportunity cost of producing one walking stick?

Correct AnswerverifiedShow Answer

A tariff is a tax on either imports or exports.

Correct AnswerverifiedShow Answer

U.S. consumers would be better off if they bought only U.S.-produced goods.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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