Question 1

The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good.  If this economy's government decides to impose a quota instead of a tariff:

Accepted Answer

A)  areas F and H will become deadweight loss instead of transferred surplus.
B)  area E will represent tax revenues instead of transferred surplus.
C)  areas F + G + H will become deadweight loss instead of tax revenues.
D)  area G will represent quota rents instead of tax revenues.E) All of the above
F) A) and B)

Question 2

Both countries can benefit from trade when:

Accepted Answer

A)  at least one country produces the good for which it has an absolute advantage.
B)  each country specializes in producing the good for which it has a comparative advantage.
C)  each country specializes in producing the good for which it has an absolute advantage.
D)  there are no trade barriers put in place by either country.E) A) and C)
F) None of the above

Question 3

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 go from autarky to free trade, domestic production would _______ and domestic consumption would _______.

Accepted Answer

A)  fall by 60 units; increase by 30 units
B)  increase by 30 units; increase by 30 units
C)  increase by 90 units; fall by 90 units
D)  increase by 30 units; fall by 60 unitsE) None of the above
F) A) and C)

Question 4

Absolute 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 can.
D)  more of a good at a lower cost than others can.E) All of the above
F) A) and B)

Question 5

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 open to free trade, it would _______ the good, because the _______ price is greater than the _______ price.

Accepted Answer

A)  import; domestic; world
B)  export; domestic; world
C)  import; world; domestic
D)  export; world; domesticE) B) and C)
F) A) and D)

Question 6

Technology or production processes developed in a particular country:

Accepted Answer

A)  may give that country a temporary comparative advantage.
B)  may set that country back until they earn back the research and development costs.
C)  will give that country a permanent comparative advantage.
D)  generally are not transferrable to other nations.E) A) and D)
F) All of the above

Question 7

The fair trade movement:

Accepted Answer

A)  attempts to inform and influence consumers' choices.
B)  is a set of laws around production processes in other nations.
C)  is designed to stop unfair trade practices.
D)  is a major hindrance to international trade.E) B) and C)
F) B) and D)

Question 8

As the workforce in a country with a comparative advantage in labor-intensive products becomes more educated, cheap labor becomes:

Accepted Answer

A)  less abundant relative to skilled labor.
B)  more abundant relative to skilled labor.
C)  more abundant relative to capital.
D)  None of these are true.E) C) and D)
F) B) and D)

Question 9

The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.  If the economy decides to impose a tariff, the government can expect to raise how much in government revenue?

Accepted Answer

A)  $19,500
B)  $27,000
C)  $34,500
D)  $37,500E) A) and D)
F) B) and D)

Question 10

Which of the following is not an effect of engaging in international trade?

Accepted Answer

A)  Altered prices in different countries
B)  Altered labor markets in different countries
C)  Increased number of goods and services we can consume in different countries
D)  Less efficient use of resourcesE) All of the above
F) B) and D)

Question 11

For a single country to influence the price of a particular good in the world market:

Accepted Answer

A)  the country must be considered a price taker.
B)  the quantity of the good produced and consumed by the country must be small relative to the total amount bought and sold worldwide.
C)  the quantity of the good produced and consumed by the country must be large relative to the total amount bought and sold worldwide.
D)  the country must be large relative to other nations in the world.E) A) and C)
F) None of the above

Question 12

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 open to trade, domestic producers would:

Accepted Answer

A)  transfer the surplus in areas D + E to consumers.
B)  transfer the surplus in areas D + E to foreign producers.
C)  lose the surplus in areas F + G to deadweight loss.
D)  lose the surplus in area F + G to foreign producers.E) None of the above
F) All of the above

Question 13

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)  national economies often are perfectly free markets.
B)  there is perfectly free trade between national economies.
C)  specialization is commonly limited by trade agreements.
D)  All of these are true.E) B) and D)
F) B) and C)

Question 14

Voluntary exchanges between _______ generate surplus.

Accepted Answer

A)  firms
B)  countries
C)  individuals
D)  All of these are true.E) A) and D)
F) None of the above

Question 15

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 go from autarky to free trade, which of the following statements is true?The country will import 160 units.Producers will produce 80 units.Total surplus will be $4,000.

Accepted Answer

A)  I only
B)  II and III only
C)  II only
D)  I, II, and IIIE) B) and C)
F) A) and D)

Question 16

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:

Accepted Answer

A)  total surplus will increase by $135.
B)  consumer surplus will increase by $270.
C)  deadweight loss will be $270.
D)  producer surplus will stay the same.E) B) and D)
F) A) and D)

Question 17

As the workforce in a country with a comparative advantage in labor-intensive products becomes more educated, the country's comparative advantage for the production of those labor-intensive goods shifts toward countries that have:

Accepted Answer

A)  lower quantities of cheap labor relative to the other factors of production.
B)  less capital for production.
C)  higher quantities of cheap labor relative to the other factors of production.
D)  more capital for production.E) A) and B)
F) A) and C)

Question 18

The graph shown demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.  If the economy was originally operating in autarky, after moving to free trade the overall impact on surplus would be a net:

Accepted Answer

A)  gain of areas F + G + I + J + K + L.
B)  loss of areas F + G + I + J + K + L.
C)  gain of areas F + G + J + K.
D)  loss of areas F + G + J + K.E) A) and B)
F) None of the above

Question 19

The restriction or prohibition of trade in order to put political pressure on a country is:

Accepted Answer

A)  a tariff.
B)  unfair practice.
C)  a source of quota rent.
D)  an embargo.E) A) and C)
F) A) and B)

Question 20

The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good.  If this economy's government imposes the quota, consumer surplus will:

Accepted Answer

A)  decrease by areas E + F + G + H.
B)  increase by areas E + F + G + H.
C)  decrease by areas F + G.
D)  increase by areas A + B + C + D.E) A) and B)
F) All of the above

Exam 17: International Trade

The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If this economy's government decides to impose a quota instead of a tariff:

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 were to open to trade, domestic producers would:

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 were open to free trade, it would ___ the good, because the _ price is greater than the _____ price.

Correct Answer
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Technology or production processes developed in a particular country:

Correct Answer
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Correct Answer
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The restriction or prohibition of trade in order to put political pressure on a country is:

Correct Answer
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The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If this economy's government imposes the quota, consumer surplus will:

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. If the economy was originally operating in autarky, after moving to free trade the overall impact on surplus would be a net:

Correct Answer
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Which of the following is not an effect of engaging in international trade?

Correct Answer
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Absolute advantage is the ability to produce:

Correct Answer
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As the workforce in a country with a comparative advantage in labor-intensive products becomes more educated, cheap labor becomes:

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

Correct Answer
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Voluntary exchanges between _______ generate surplus.

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 were to go from autarky to free trade, domestic production would _ and domestic consumption would _.

Correct Answer
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Both countries can benefit from trade when:

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. If the economy decides to impose a tariff, the government can expect to raise how much in government revenue?

Correct Answer
verified

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:

Correct Answer
verified

As the workforce in a country with a comparative advantage in labor-intensive products becomes more educated, the country's comparative advantage for the production of those labor-intensive goods shifts toward countries that have:

Correct Answer
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The fair trade movement:

Correct Answer
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For a single country to influence the price of a particular good in the world market:

Correct Answer
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Exam 17: International Trade

The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If this economy's government decides to impose a quota instead of a tariff:

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 were to open to trade, domestic producers would:

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 were open to free trade, it would _______ the good, because the _______ price is greater than the _______ price.

Correct AnswerverifiedShow Answer

Technology or production processes developed in a particular country:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The restriction or prohibition of trade in order to put political pressure on a country is:

Correct AnswerverifiedShow Answer

The graph shown demonstrates the domestic demand and supply for a good, as well as a quota and the world price for that good. If this economy's government imposes the quota, consumer surplus will:

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. If the economy was originally operating in autarky, after moving to free trade the overall impact on surplus would be a net:

Correct AnswerverifiedShow Answer

Which of the following is not an effect of engaging in international trade?

Correct AnswerverifiedShow Answer

Absolute advantage is the ability to produce:

Correct AnswerverifiedShow Answer

As the workforce in a country with a comparative advantage in labor-intensive products becomes more educated, cheap labor becomes:

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

Voluntary exchanges between _______ generate surplus.

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 were to go from autarky to free trade, domestic production would _______ and domestic consumption would _______.

Correct AnswerverifiedShow Answer

Both countries can benefit from trade when:

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. If the economy decides to impose a tariff, the government can expect to raise how much in government revenue?

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 trade:

Correct AnswerverifiedShow Answer

As the workforce in a country with a comparative advantage in labor-intensive products becomes more educated, the country's comparative advantage for the production of those labor-intensive goods shifts toward countries that have:

Correct AnswerverifiedShow Answer

The fair trade movement:

Correct AnswerverifiedShow Answer

For a single country to influence the price of a particular good in the world market:

Correct AnswerverifiedShow Answer

Correct Answer
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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 were open to free trade, it would ___ the good, because the _ price is greater than the _____ price.

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 were to go from autarky to free trade, domestic production would _ and domestic consumption would _.

Correct Answer
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