Question 1

Even if there are big gains to be had from specialization and trade, countries generally don't produce only one good because:

Accepted Answer

A)  specialization is not limited by trade agreements.
B)  no national economy is a perfectly free market.
C)  there is perfectly free trade between national economies.
D)  consumers prefer a mix of goods and services.E) None of the above
F) C) and D)

Question 2

As a general rule, free trade:

Accepted Answer

A)  increases the supply of factors of production that are domestically abundant.
B)  increases the demand for factors of production that are domestically abundant.
C)  decreases the supply of factors of production that are domestically scarce.
D)  decreases the demand for factors of production that are domestically abundant.E) C) and D)
F) None of the above

Question 3

Who is likely to be in favor of a country that would be a net importer moving from autarky to free trade?

Accepted Answer

A)  Domestic producers
B)  Domestic consumers
C)  Foreign consumers
D)  Foreign governmentsE) A) and B)
F) All of the above

Question 4

An important determinant of comparative advantage is:

Accepted Answer

A)  homogeneity of climate and natural resources between countries.
B)  endowment of factors of production.
C)  equal technology levels across nations.
D)  well established governmental regulations on trade.E) A) and B)
F) A) and C)

Question 5

Laws limiting trade are often referred to as:

Accepted Answer

A)  trade protection.
B)  trade liberalization.
C)  trade enhancement.
D)  international policy.E) All of the above
F) A) and C)

Question 6

Comparative advantage is the ability to produce:

Accepted Answer

A)  more of a good than others with a given amount of resources.
B)  relatively more of one good than any other good with a given amount of resources.
C)  a good or service at a lower opportunity cost than others.
D)  more of a good at a lower cost than others.E) All of the above
F) A) and B)

Question 7

If Spain sells soccer balls to the United States, then Spain:

Accepted Answer

A)  has an absolute advantage over the United States in producing soccer balls.
B)  can produce more soccer balls than the United States given the same resources.
C)  has the ability to produce soccer balls at a lower opportunity cost than the United States can.
D)  does not have any trade barriers with the United States.E) None of the above
F) A) and B)

Question 8

An economy that is self-contained and does not engage in any trade with outsiders is a(n) :

Accepted Answer

A)  autarky.
B)  oligopoly.
C)  oligarchy.
D)  monarchy.E) A) and B)
F) A) and C)

Question 9

When a country has the ability to produce a good or service at a lower opportunity cost than others, it:

Accepted Answer

A)  has an absolute advantage.
B)  has a comparative advantage.
C)  is a free-trader.
D)  should remain self-sufficient.E) B) and D)
F) B) and C)

Question 10

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good.  If this economy decides to open to trade, which of the following statements is true? The country will import 5,000 units.Total surplus will increase by $15,000.Consumers will purchase 9,000 units.

Accepted Answer

A)  I and III only
B)  II only
C)  I only
D)  I, II, and IIIE) B) and C)
F) All of the above

Question 11

The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.  Consumer surplus is represented by areas A + B + C when the economy:

Accepted Answer

A)  practices free trade.
B)  is an autarky.
C)  has imposed a tariff on trade.
D)  None of these are true.E) C) and D)
F) A) and B)

Question 12

When each country specializes in producing the good for which it has a comparative advantage:

Accepted Answer

A)  all countries involved in trading may benefit.
B)  the countries involved in trading always enjoy equal gains from trade.
C)  the country that is bigger will gain more surplus.
D)  the country with the weaker economy will gain more surplus.E) A) and D)
F) B) and C)

Question 13

A country is likely to have a comparative advantage in a capital-intensive activity if it has a:

Accepted Answer

A)  lot of land relative to its population.
B)  large amount of capital relative to its landmass.
C)  higher opportunity cost of producing technology.
D)  higher amount of labor relative to its population.E) A) and B)
F) A) and C)

Question 14

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good.  If this economy decides to open to free trade, the good will:

Accepted Answer

A)  be imported.
B)  be exported.
C)  no longer be produced domestically.
D)  only be produced domestically, for domestic consumption.E) A) and D)
F) B) and C)

Question 15

The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.  Which area(s) represent the amount of surplus enjoyed by domestic consumers with free trade before the tariff is imposed?

Accepted Answer

A)  A
B)  A + B + C
C)  A + B + C + D + E + F + G
D)  A + B + C + D + E + F + G + H + I + J + K + LE) A) and D)
F) A) and C)

Question 16

An important determinant of comparative advantage is:

Accepted Answer

A)  diversity in climate and natural resources.
B)  endowment of financial capital.
C)  low governmental barriers to trade.
D)  well-established governmental regulations on trade.E) C) and D)
F) B) and D)

Question 17

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good.   If this economy were to engage in free trade, the good would:

Accepted Answer

A)  be imported.
B)  be exported.
C)  no longer be produced domestically.
D)  only be produced domestically for domestic consumption.E) None of the above
F) C) and D)

Question 18

Gains from trade is the:

Accepted Answer

A)  increase in welfare that both countries experience as a result of specialization and trade.
B)  transfer of surplus by the receiving country that results from trade.
C)  deadweight loss the losing country experiences as a result of trade.
D)  increased skills and human capital that result from specialization and trade.E) B) and D)
F) A) and D)

Question 19

Which of the following must be true for a country to be a price taker in the global market for a particular good?

Accepted Answer

A)  The quantity of the good produced and consumed must be very small relative to the total amount bought and sold worldwide.
B)  The quantity of the good produced and consumed must be very large relative to the total amount bought and sold worldwide.
C)  Many sellers must supply a very significant amount of the good to the market.
D)  Many buyers must consume a large amount of the good from the market.E) A) and B)
F) A) and C)

Question 20

Voluntary exchanges generate:

Accepted Answer

A)  surplus, leaving both participants better off than they were before.
B)  deadweight loss, leaving both participants worse off than they were before.
C)  deadweight loss, leaving at least one participant worse off than they were before.
D)  a transfer of surplus from one participant to another.E) B) and C)
F) A) and D)

Exam 17: International Trade

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to engage in free trade, the good would:

Correct Answer
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Voluntary exchanges generate:

Correct Answer
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The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy decides to open to free trade, the good will:

Correct Answer
verified

Laws limiting trade are often referred to as:

Correct Answer
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Gains from trade is the:

Correct Answer
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Comparative advantage is the ability to produce:

Correct Answer
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When each country specializes in producing the good for which it has a comparative advantage:

Correct Answer
verified

As a general rule, free trade:

Correct Answer
verified

Who is likely to be in favor of a country that would be a net importer moving from autarky to free trade?

Correct Answer
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Correct Answer
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Which of the following must be true for a country to be a price taker in the global market for a particular good?

Correct Answer
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When a country has the ability to produce a good or service at a lower opportunity cost than others, it:

Correct Answer
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A country is likely to have a comparative advantage in a capital-intensive activity if it has a:

Correct Answer
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An economy that is self-contained and does not engage in any trade with outsiders is a(n) :

Correct Answer
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An important determinant of comparative advantage is:

Correct Answer
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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. Which area(s) represent the amount of surplus enjoyed by domestic consumers with free trade before the tariff is imposed?

Correct Answer
verified

An important determinant of comparative advantage is:

Correct Answer
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The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. Consumer surplus is represented by areas A + B + C when the economy:

Correct Answer
verified

If Spain sells soccer balls to the United States, then Spain:

Correct Answer
verified

Even if there are big gains to be had from specialization and trade, countries generally don't produce only one good because:

Correct Answer
verified

Exam 17: International Trade

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy were to engage in free trade, the good would:

Correct AnswerverifiedShow Answer

Voluntary exchanges generate:

Correct AnswerverifiedShow Answer

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good. If this economy decides to open to free trade, the good will:

Correct AnswerverifiedShow Answer

Laws limiting trade are often referred to as:

Correct AnswerverifiedShow Answer

Gains from trade is the:

Correct AnswerverifiedShow Answer

Comparative advantage is the ability to produce:

Correct AnswerverifiedShow Answer

When each country specializes in producing the good for which it has a comparative advantage:

Correct AnswerverifiedShow Answer

As a general rule, free trade:

Correct AnswerverifiedShow Answer

Who is likely to be in favor of a country that would be a net importer moving from autarky to free trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following must be true for a country to be a price taker in the global market for a particular good?

Correct AnswerverifiedShow Answer

When a country has the ability to produce a good or service at a lower opportunity cost than others, it:

Correct AnswerverifiedShow Answer

A country is likely to have a comparative advantage in a capital-intensive activity if it has a:

Correct AnswerverifiedShow Answer

An economy that is self-contained and does not engage in any trade with outsiders is a(n) :

Correct AnswerverifiedShow Answer

An important determinant of comparative advantage is:

Correct AnswerverifiedShow Answer

The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. Which area(s) represent the amount of surplus enjoyed by domestic consumers with free trade before the tariff is imposed?

Correct AnswerverifiedShow Answer

An important determinant of comparative advantage is:

Correct AnswerverifiedShow Answer

The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good. Consumer surplus is represented by areas A + B + C when the economy:

Correct AnswerverifiedShow Answer

If Spain sells soccer balls to the United States, then Spain:

Correct AnswerverifiedShow Answer

Even if there are big gains to be had from specialization and trade, countries generally don't produce only one good because:

Correct AnswerverifiedShow Answer

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