Question 1

Imports are goods and services that are:

Accepted Answer

A)  produced in other countries and consumed domestically.
B)  consumed in other countries and produced domestically.
C)  produced and consumed in other countries.
D)  produced and consumed domestically.E) A) and B)
F) None of the above

Question 2

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, the amount of the good consumed domestically will:

Accepted Answer

A)  increase by 35.
B)  increase by 90.
C)  decrease by 35.
D)  decrease by 90.E) B) and C)
F) A) and D)

Question 3

We might predict that Japan has a comparative advantage in the production of hi-tech electronics compared to Russia because Japan has:

Accepted Answer

A)  a climate that is more suitable for electronic production.
B)  more land available for building manufacturing plants.
C)  more advanced electronics technology.
D)  more unskilled labor available for production.E) B) and D)
F) A) and D)

Question 4

If England buys hockey sticks from Canada, then:

Accepted Answer

A)  England has an absolute advantage over Canada in producing hockey sticks.
B)  Canada has an absolute advantage over England in producing hockey sticks.
C)  England has a comparative advantage over Canada in producing hockey sticks.
D)  Canada has a comparative advantage over England in producing hockey sticks.E) B) and D)
F) B) and C)

Question 5

In general, one of the results of free trade is that the owners of domestically _______ factors of production will _______ due to _______.

Accepted Answer

A)  scarce; lose; increased competition.
B)  abundant; lose; increased demand
C)  scarce; win; increased demand
D)  abundant; win; decreased demandE) None of the above
F) A) and B)

Question 6

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, the domestic price will:

Accepted Answer

A)  be $16 for domestically produced units and $23 for imported units.
B)  be $23 for all units.
C)  be $16, with more units sold overall.
D)  be $11 for all units.E) A) and B)
F) C) and D)

Question 7

Import standards on specific countries usually address issues affecting:

Accepted Answer

A)  domestic consumers.
B)  domestic producers.
C)  foreign production practices.
D)  how goods and services flow from one nation to another.E) All of the above
F) C) and D)

Question 8

The graph shown demonstrates the domestic demand and supply for a good, as well as the world price for that good.   If this country is an autarky, what amount of the good is consumed domestically, and at what price?

Accepted Answer

A)  60 units at $10 each
B)  60 units at $17 each
C)  115 units at $14 each
D)  150 units at $10 eachE) A) and D)
F) A) and B)

Question 9

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, what would happen to surplus?

Accepted Answer

A)  Total surplus would increase overall.
B)  Producer surplus would decrease.
C)  Surplus would transfer from producers to consumers.
D)  Consumer surplus would increase.E) C) and D)
F) B) and D)

Question 10

Only a firm with ______________ at producing a particular good will be able to produce that good profitably.

Accepted Answer

A)  the highest opportunity cost of production
B)  a comparative advantage
C)  an absolute advantage
D)  low variable costsE) 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 the world price for that good.   If this economy were an autarky, producer surplus would consist of which area(s) ?

Accepted Answer

A)  B + C + E + F + G
B)  B + C + D + E + F + G
C)  G
D)  E + F + GE) All of the above
F) C) and D)

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 open to free trade, how many units of the good would be imported?

Accepted Answer

A)  60
B)  115
C)  150
D)  90E) A) and D)
F) B) and D)

Question 13

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, the amount of the good consumed domestically will:

Accepted Answer

A)  increase by 35.
B)  increase by 40.
C)  decrease by 40.
D)  increase by 75.E) A) and D)
F) B) and D)

Question 14

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 under free trade, after the introduction of the tariff the overall impact on surplus would be a net:

Accepted Answer

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

Question 15

An import quota is:

Accepted Answer

A)  a tax on goods or services that are imported.
B)  a limit on the amount of a particular good that can be exported.
C)  a limit on the amount of a particular good that can be imported.
D)  None of these are true.E) C) and D)
F) B) and C)

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 country is an autarky, what amount of the good is produced and sold domestically?

Accepted Answer

A)  60
B)  115
C)  160
D)  90E) B) and C)
F) A) and D)

Question 17

If Colombia has a comparative advantage over Mexico in the production of coffee, then:

Accepted Answer

A)  Colombia likely sells coffee to Mexico.
B)  Mexico is more productive at making coffee than Colombia.
C)  Colombia has the ability to produce more coffee than Mexico with the same resources.
D)  Mexico should trade coffee to Colombia.E) A) and D)
F) A) and B)

Question 18

A country may gain a temporary comparative advantage if it:

Accepted Answer

A)  remains self-sufficient until it stockpiles enough inventory to supply the world.
B)  is the first to discover and implement a new technology or production process.
C)  remains a political ally to all other countries.
D)  All of these are true.E) A) and B)
F) All of the above

Question 19

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)  rise by 2,000 units; stay the same
B)  rise by 5,000 units; fall by 5,000 units
C)  fall by 3,000 units; fall by 3,000 units
D)  rise by 2,000 units; fall by 3,000 unitsE) A) and B)
F) A) and C)

Question 20

Theoretically, Americans whose jobs have been lost to free trade should:

Accepted Answer

A)  exit the workforce in the long run.
B)  gain surplus, as the income effect outweighs the price effect of their labor.
C)  be able to find new jobs, given time.
D)  experience extended bouts of unemployment due to static job skills.E) A) and B)
F) All of the above

Exam 17: International Trade

Imports are goods and services that are:

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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 trade, the amount of the good consumed domestically will:

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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 an autarky, producer surplus would consist of which area(s) ?

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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, how many units of the good would be imported?

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Theoretically, Americans whose jobs have been lost to free trade should:

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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 country is an autarky, what amount of the good is produced and sold domestically?

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If England buys hockey sticks from Canada, then:

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An import quota is:

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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 country is an autarky, what amount of the good is consumed domestically, and at what price?

Correct AnswerverifiedShow Answer

Import standards on specific countries usually address issues affecting:

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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 _______.

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We might predict that Japan has a comparative advantage in the production of hi-tech electronics compared to Russia because Japan has:

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A country may gain a temporary comparative advantage if it:

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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 under free trade, after the introduction of the tariff the overall impact on surplus would be a net:

Correct AnswerverifiedShow Answer

Only a firm with ______________ at producing a particular good will be able to produce that good profitably.

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If Colombia has a comparative advantage over Mexico in the production of coffee, then:

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In general, one of the results of free trade is that the owners of domestically _______ factors of production will _______ due to _______.

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, the amount of the good consumed domestically will:

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, what would happen to surplus?

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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 trade, the domestic price will:

Correct AnswerverifiedShow 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 _.

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In general, one of the results of free trade is that the owners of domestically ___ factors of production will _ due to _____.

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