Question 1

When countries trade with one another in a particular industry, there may be job losses and plant closures in the country in which the industry is not as competitive.

Accepted Answer

A) True 
 B)False

Question 2

Because a country does not want to risk being vulnerable to being dependent on imports for something as important as energy, it bans oil and coal imports. As a result, energy is so expensive that homes are cold during the winter and hot during the summer. The rationale for this policy would be most closely related to what argument for trade restriction?

Accepted Answer

A)   need to protect domestic jobs
B)   protecting infant industries
C)   need for national defense
D)   protection against dumpingE) A) and B)
F) None of the above

Question 3

Tariffs are not used to generate revenues.

Accepted Answer

A) True 
 B)False

Question 4

(Table)  Macrostan and Econostan are neighboring countries with populations of about 10 million people each and land area of 30 to 31 million square miles each. The table shows total output of cheese and wool if each country splits its resources evenly toward the production of both products. Who is likely to be the exporter of each product if voluntary trade is based on comparative advantage?

Accepted Answer

A)   Macrostan will export both cheese and wool.
B)   Macrostan will export cheese and Econostan will export wool.
C)   Macrostan will export wool and Econostan will export cheese.
D)   Econostan will export both cheese and wool.E) None of the above
F) A) and D)

Question 5

When a tariff or a quota is imposed on an import, the domestic industry benefits from higher prices and increased output.

Accepted Answer

A) True 
 B)False

Question 6

One reason consumers do not lobby to have tariffs and quotas removed is that

Accepted Answer

A)   they often do not have the incentive to organize politically.
B)   government officials believe that corporations are more important to the economy.
C)   tariffs and quotas impose no cost on consumers.
D)   they are willing to pay the higher price in support of domestic businesses.E) None of the above
F) A) and B)

Question 7

If free trade occurs, consumers in the net exporting country will be _____ off, and consumers in the net importing country will be _____ off than before trade.

Accepted Answer

A)   better; worse
B)   worse; better
C)   better; better
D)   worse; worseE) B) and D)
F) A) and D)

Question 8

How would the terms of trade be defined in a country with one export and one import?

Accepted Answer

A)   Pexport × Pimport
B)   Pexport/Pimport
C)   Pimport + Pexport
D)   The terms of trade cannot be determined.E) A) and B)
F) A) and C)

Question 9

(Table)  Referring to the table, we see that England will be able to consume _____ units of wine after trade.

Accepted Answer

A)   15
B)   20
C)   40
D)   60E) A) and B)
F) A) and C)

Question 10

Trade between nations is a zero-sum game.

Accepted Answer

A) True 
 B)False

Question 11

Which statement describes one benefit of low foreign wages?

Accepted Answer

A)   Domestic jobs are destroyed.
B)   Many domestic workers must be retrained.
C)   Domestic consumers pay lower prices.
D)   Domestic firms that compete with the imports lose profit.E) None of the above
F) B) and C)

Question 12

Dumping is a form of international price discrimination.

Accepted Answer

A) True 
 B)False

Question 13

Dumping occurs when goods are sold at higher prices abroad than in their home markets.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that the United States has a comparative advantage over Japan in producing a particular good. Describe the process by which the terms of trade are determined. Support your response with a graph.

Accepted Answer

Panel A of the figure below shows the de...

Question 15

Which of these is NOT a globalization concern about free trade?

Accepted Answer

A)   the infant industry argument
B)   domestic employment concerns
C)   environmental concerns
D)   the impact of trade on working conditions in developing nationsE) A) and C)
F) B) and D)

Question 16

Which statement regarding workers is TRUE?

Accepted Answer

A)   An important reason workers in developing countries earn low wages is because of limited investment in human capital.
B)   Cutting off trade with countries in which workers are paid low wages improves the economic condition of these workers.
C)   Competition from low-wage nations does not cost U.S. workers their jobs.
D)   Living conditions in poor countries are unrelated to the degree of economic freedom and a strong and fair legal system.E) None of the above
F) A) and B)

Question 17

Which result is NOT an objective of a tariff?

Accepted Answer

A)   raising revenue
B)   encouraging more exports
C)   raising the price of imports
D)   protecting domestic producers from foreign competitionE) None of the above
F) A) and B)

Question 18

From a practical perspective, trade restrictions are often placed because

Accepted Answer

A)   the World Trade Organization supports restrictions.
B)   the United Nations mandates restrictions.
C)   losses from implementing the restrictions are diffused among many buyers, while gains from restrictions are concentrated among small groups of workers and producers.
D)   buyers are altruistic and want to see domestic jobs protected.E) A) and B)
F) None of the above

Question 19

Even if country A has an absolute advantage over country B, country A can still receive benefits from trade.

Accepted Answer

A) True 
 B)False

Question 20

The figure below shows the production possibility frontiers for two countries, A and B. Suppose each country produces 100 tons of coffee and 200 tons of tea. How would total production rise if they were to specialize?
​

Accepted Answer

If they each produce 100 tons of coffee ...

Exam 15: International Trade

Dumping occurs when goods are sold at higher prices abroad than in their home markets.

Correct Answer
verified

Tariffs are not used to generate revenues.

Correct Answer
verified

Even if country A has an absolute advantage over country B, country A can still receive benefits from trade.

Correct Answer
verified

If free trade occurs, consumers in the net exporting country will be _ off, and consumers in the net importing country will be _ off than before trade.

Correct Answer
verified

The figure below shows the production possibility frontiers for two countries, A and B. Suppose each country produces 100 tons of coffee and 200 tons of tea. How would total production rise if they were to specialize?

Correct Answer
verified
If they each produce 100 tons of coffee ...
View Answer

Correct Answer
verified

One reason consumers do not lobby to have tariffs and quotas removed is that

Correct Answer
verified

From a practical perspective, trade restrictions are often placed because

Correct Answer
verified

Which statement regarding workers is TRUE?

Correct Answer
verified

Dumping is a form of international price discrimination.

Correct Answer
verified

Suppose that the United States has a comparative advantage over Japan in producing a particular good. Describe the process by which the terms of trade are determined. Support your response with a graph.

Correct Answer
verified
Panel A of the figure below shows the de...
View Answer

(Table) Referring to the table, we see that England will be able to consume _____ units of wine after trade.

Correct Answer
verified

Which result is NOT an objective of a tariff?

Correct Answer
verified

Which statement describes one benefit of low foreign wages?

Correct Answer
verified

How would the terms of trade be defined in a country with one export and one import?

Correct Answer
verified

When a tariff or a quota is imposed on an import, the domestic industry benefits from higher prices and increased output.

Correct Answer
verified

Which of these is NOT a globalization concern about free trade?

Correct Answer
verified

Correct Answer
verified

When countries trade with one another in a particular industry, there may be job losses and plant closures in the country in which the industry is not as competitive.

Correct Answer
verified

Trade between nations is a zero-sum game.

Correct Answer
verified

Exam 15: International Trade

Dumping occurs when goods are sold at higher prices abroad than in their home markets.

Correct AnswerverifiedShow Answer

Tariffs are not used to generate revenues.

Correct AnswerverifiedShow Answer

Even if country A has an absolute advantage over country B, country A can still receive benefits from trade.

Correct AnswerverifiedShow Answer

If free trade occurs, consumers in the net exporting country will be _____ off, and consumers in the net importing country will be _____ off than before trade.

Correct AnswerverifiedShow Answer

The figure below shows the production possibility frontiers for two countries, A and B. Suppose each country produces 100 tons of coffee and 200 tons of tea. How would total production rise if they were to specialize? ​

Correct AnswerverifiedIf they each produce 100 tons of coffee ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

One reason consumers do not lobby to have tariffs and quotas removed is that

Correct AnswerverifiedShow Answer

From a practical perspective, trade restrictions are often placed because

Correct AnswerverifiedShow Answer

Which statement regarding workers is TRUE?

Correct AnswerverifiedShow Answer

Dumping is a form of international price discrimination.

Correct AnswerverifiedShow Answer

Suppose that the United States has a comparative advantage over Japan in producing a particular good. Describe the process by which the terms of trade are determined. Support your response with a graph.

Correct AnswerverifiedPanel A of the figure below shows the de...View AnswerShow Answer

(Table) Referring to the table, we see that England will be able to consume _____ units of wine after trade.

Correct AnswerverifiedShow Answer

Which result is NOT an objective of a tariff?

Correct AnswerverifiedShow Answer

Which statement describes one benefit of low foreign wages?

Correct AnswerverifiedShow Answer

How would the terms of trade be defined in a country with one export and one import?

Correct AnswerverifiedShow Answer

When a tariff or a quota is imposed on an import, the domestic industry benefits from higher prices and increased output.

Correct AnswerverifiedShow Answer

Which of these is NOT a globalization concern about free trade?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When countries trade with one another in a particular industry, there may be job losses and plant closures in the country in which the industry is not as competitive.

Correct AnswerverifiedShow Answer

Trade between nations is a zero-sum game.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If free trade occurs, consumers in the net exporting country will be _ off, and consumers in the net importing country will be _ off than before trade.

Correct Answer
verified

The figure below shows the production possibility frontiers for two countries, A and B. Suppose each country produces 100 tons of coffee and 200 tons of tea. How would total production rise if they were to specialize?

Correct Answer
verified
If they each produce 100 tons of coffee ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Panel A of the figure below shows the de...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified