Question 1

When a nation starts opening up to international trade, it will see falling prices for

Accepted Answer

A)   goods that it exports.
B)   goods that it imports.
C)   goods that it has a comparative advantage in.
D)   all goods traded.E) A) and C)
F) B) and C)

Question 2

Benefits from international trade are based on differences in the following areas, except

Accepted Answer

A)   resource endowments.
B)   technological capabilities.
C)   product quality and other attributes.
D)   income levels.E) B) and C)
F) A) and D)

Question 3

The law of increasing opportunity costs limits international specialization.

Accepted Answer

A) True 
 B)False

Question 4

In 2015, the United States

Accepted Answer

A)   imported more services than it exported.
B)   imported more goods than it exported.
C)   traded mainly with developing nations such as Mexico and India.
D)   had a small trade surplus in goods and services.E) A) and B)
F) B) and D)

Question 5

Economists generally view offshoring as detrimental to the U.S. economy.

Accepted Answer

A) True 
 B)False

Question 6

If two nations have straight-line production possibilities curves,

Accepted Answer

A)   then their trading possibilities curves must lie inside the production possibilities curves.
B)   there will be no basis for mutually advantageous trade.
C)   there will be a basis for mutually advantageous trade whether the slopes are equal or not.
D)   there will be a basis for mutually advantageous trade provided the slopes differ.E) A) and D)
F) B) and C)

Question 7

Specialization and trade between individuals or between nations leads to

Accepted Answer

A)   greater self-sufficiency.
B)   higher product prices.
C)   higher utilization of resources.
D)   higher total output.E) C) and D)
F) A) and B)

Question 8

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Accepted Answer

A)   only an outflow of jobs away from the U.S.
B)   no possible expansion of jobs in the U.S.
C)   huge losses to consumers in the U.S.
D)   both an outflow as well as an inflow of jobs in the U.S.E) B) and C)
F) B) and D)

Question 9

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n)

Accepted Answer

A)   protective tariff.
B)   revenue tariff.
C)   voluntary export restriction.
D)   import quota.E) A) and B)
F) All of the above

Question 10

The basic difference in the economic effects of a tariff compared with a quota is that a

Accepted Answer

A)   quota reduces domestic consumption of the product, but a tariff does not.
B)   tariff allows imports to increase if demand increases, whereas a quota does not.
C)   tariff raises product prices, but a quota does not.
D)   quota raises product prices, but a tariff does not.E) None of the above
F) A) and B)

Question 11

Trade adjustment assistance provides subsidies to companies that have lost business to foreign firms.

Accepted Answer

A) True 
 B)False

Question 12

Tariffs and quotas are costly to consumers because

Accepted Answer

A)   the price of the imported good falls.
B)   the supply of the imported good increases.
C)   import competition increases for domestic goods.
D)   consumers have to switch to higher-priced domestic goods.E) B) and D)
F) C) and D)

Question 13

A nation will import a particular product if the world price is less than the domestic price.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following best describes economists' general assessment of the impacts of offshoring?

Accepted Answer

A)   Offshoring has an overall negative impact on the U.S. economy because of the significant domestic job losses it causes.
B)   Offshoring benefits the U.S. economy by promoting greater specialization and exchange of goods and services based on comparative advantage.
C)   Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers.
D)   Job losses from offshoring are magnified by job losses in complementary industries.E) B) and C)
F) B) and D)

Question 15

In a two-nation model, the equilibrium world price will occur where

Accepted Answer

A)   one nation's export supply curve intersects the other nation's import demand curve.
B)   exports are exactly twice the level of imports.
C)   both nations' export supply curves are horizontal.
D)   both nations' import demand curves are vertical.E) A) and D)
F) A) and B)

Question 16

The World Trade Organization was established as a successor to

Accepted Answer

A)   GATT.
B)   NAFTA.
C)   the EU.
D)   the Doha Development Agenda.E) All of the above
F) C) and D)

Question 17

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade, then we can say that the gains from specialization and trade are 10X and 10Y.

Accepted Answer

A) True 
 B)False

Question 18

The World Trade Organization was established by the United States to force other nations to open their markets to U.S. goods.

Accepted Answer

A) True 
 B)False

Question 19

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.   Ouantity  Ouantity ( Supplied  Demanded  (Domestic)   Price  (Domestic)  12$52104473742111116\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} Ouantity ( Supplied  (Domestic)  1210741​ Price $54321​ Ouantity  Demanded  (Domestic)  2471116​​  If the economy was opened to free trade and the world price of $1 prevailed, the price and quantity sold of this product would be

Accepted Answer

A)   $1 and 1 unit.
B)   $1 and 16 units.
C)   $3 and 7 units.
D)   $2 and 11 units. E) None of the above
F) A) and B)

Question 20

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
If these two nations specialize based on comparative advantage,

Accepted Answer

A)   Singsong will both produce chicken and catch fish.
B)   Harmony will both produce chicken and catch fish.
C)   Harmony will produce chicken and Singsong will catch fish.
D)   Singsong will produce chicken and Harmony will catch fish.E) A) and B)
F) C) and D)

Exam 26: International Trade

When a nation starts opening up to international trade, it will see falling prices for

Correct Answer
verified

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n)

Correct Answer
verified

Correct Answer
verified

The basic difference in the economic effects of a tariff compared with a quota is that a

Correct Answer
verified

The World Trade Organization was established as a successor to

Correct Answer
verified

In 2015, the United States

Correct Answer
verified

Trade adjustment assistance provides subsidies to companies that have lost business to foreign firms.

Correct Answer
verified

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Correct Answer
verified

The World Trade Organization was established by the United States to force other nations to open their markets to U.S. goods.

Correct Answer
verified

If two nations have straight-line production possibilities curves,

Correct Answer
verified

Tariffs and quotas are costly to consumers because

Correct Answer
verified

Specialization and trade between individuals or between nations leads to

Correct Answer
verified

Correct Answer
verified

In a two-nation model, the equilibrium world price will occur where

Correct Answer
verified

Economists generally view offshoring as detrimental to the U.S. economy.

Correct Answer
verified

The law of increasing opportunity costs limits international specialization.

Correct Answer
verified

Correct Answer
verified

Which of the following best describes economists' general assessment of the impacts of offshoring?

Correct Answer
verified

A nation will import a particular product if the world price is less than the domestic price.

Correct Answer
verified

Benefits from international trade are based on differences in the following areas, except

Correct Answer
verified

Exam 26: International Trade

When a nation starts opening up to international trade, it will see falling prices for

Correct AnswerverifiedShow Answer

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The basic difference in the economic effects of a tariff compared with a quota is that a

Correct AnswerverifiedShow Answer

The World Trade Organization was established as a successor to

Correct AnswerverifiedShow Answer

In 2015, the United States

Correct AnswerverifiedShow Answer

Trade adjustment assistance provides subsidies to companies that have lost business to foreign firms.

Correct AnswerverifiedShow Answer

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Correct AnswerverifiedShow Answer

The World Trade Organization was established by the United States to force other nations to open their markets to U.S. goods.

Correct AnswerverifiedShow Answer

If two nations have straight-line production possibilities curves,

Correct AnswerverifiedShow Answer

Tariffs and quotas are costly to consumers because

Correct AnswerverifiedShow Answer

Specialization and trade between individuals or between nations leads to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a two-nation model, the equilibrium world price will occur where

Correct AnswerverifiedShow Answer

Economists generally view offshoring as detrimental to the U.S. economy.

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs limits international specialization.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following best describes economists' general assessment of the impacts of offshoring?

Correct AnswerverifiedShow Answer

A nation will import a particular product if the world price is less than the domestic price.

Correct AnswerverifiedShow Answer

Benefits from international trade are based on differences in the following areas, except

Correct AnswerverifiedShow Answer

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