Consider this diagram of the market for pocket calculators in Venezuela.. Consider this diagram of the market for pocket calculators in Venezuela.. the domestic production of shoes in a
Trang 1Application: International Trade
1 Nations would gain from trade if a(n) exists
a absolute advantage
b specialization
c comparative advantage
d infant industry
ANSWER: c comparative advantage
SECTION: 1 OBJECTIVE: 1
2 If Canada has a comparative advantage over Denmark in the production of wood, this implies that
a it requires fewer resources in Canada than in Denmark to produce wood
b the opportunity cost of producing wood in Canada is lower than in Denmark
c Denmark does not benefit by trading with Canada
d Canada should buy wood from Denmark
ANSWER: b the opportunity cost of producing wood in Canada is lower than in Denmark
SECTION: 1 OBJECTIVE: 1
3 If two countries specialize
a the other countries trading with them cannot specialize
b everyone in both countries benefits
c the total of goods produced increases
d all goods will be produced in both countries
ANSWER: c the total of goods produced increases
SECTION: 1 OBJECTIVE: 1
4 As a result of free trade in a commodity, the
a price of the commodity must be the same in all countries
b total quantity imported will exceed the total quantity exported
c price of the commodity will be higher in the producing country
d price of the commodity will be lower in the producing country
ANSWER: a price of the commodity must be the same in all countries
SECTION: 1 OBJECTIVE: 1
5 If at the world equilibrium price the U.S quantity demanded is greater than the U.S quantity supplied, then the
a United States will import the good
b United States will export the good
c world price will fall
d world price will rise
ANSWER: a United States will import the good
SECTION: 1 OBJECTIVE: 1
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Trang 26 Consider this diagram of the market for pocket calculators in Venezuela In the absence of trade, the price and quantity of calculators sold are
a $3.00 and 10 calculators
b $3.00 and 60 calculators
c $8.00 and 60 calculators
d $8.00 and 80 calculators
ANSWER: c $8.00 and 60 calculators
SECTION: 1 OBJECTIVE: 1
7 Consider this diagram of the market for pocket calculators in Venezuela With free trade, Venezuela produces , consumes , and imports
a 10 calculators; 80 calculators; 70 calculators
b 10 calculators; 110 calculators; 100 calculators
c 40 calculators; 40 calculators; 20 calculators
d 80 calculators; 110 calculators; 30 calculators
ANSWER: b 10 calculators; 110 calculators; 100 calculators
SECTION: 1 OBJECTIVE: 1
8 Consider this diagram of the market for pocket calculators in Venezuela With free trade, consumer surplus
a increases by 300
b increases by 425
c decreases by 125
d None of the above are correct
ANSWER: b increases by 425
SECTION: 1 OBJECTIVE: 2
9 Consider this diagram of the market for pocket calculators in Venezuela A tariff would completely eliminate imports of calculators if it equaled
a $2.00
b $3.00
c $4.00
d $5.00
ANSWER: d $5.00
SECTION: 2 OBJECTIVE: 4
Trang 310 Consider this diagram of the market for pocket calculators in Venezuela With a per-unit tariff of
$3.00, the Venezuelan government collects tariff revenues of
a $80.00
b $100.00
c $120.00
d $140.00
ANSWER: c $120.00
SECTION: 2 OBJECTIVE: 4
11 If the opportunity cost of a television set equals 20 cameras in China, but 10 cameras in Japan, then
we know
a China has a comparative advantage in producing cameras
b Japan has a comparative advantage in producing TV sets
c market exchange of 1 TV set for 15 cameras would produce not only mutually beneficial trade, but would also split the gains from trade equally between the two countries
d All of the above are correct
ANSWER: d All of the above are correct
SECTION: 2 OBJECTIVE: 2
12 When customers are free to buy at the lowest prices, they will
a purchase goods from the country that has a comparative advantage in producing it
b purchase only goods produced in their own country
c purchase only goods produced in their own local area
d prefer to purchase only well-made, foreign-produced goods
ANSWER: a purchase goods from the country that has a comparative advantage in producing it
SECTION: 2 OBJECTIVE: 2
13 With international trade
a producers and consumers in both countries must gain; otherwise, there would be no trade
b producers in both countries must gain
c consumers in both countries must gain
d consumer surplus in the country that imports the good rises
ANSWER: d consumer surplus in the country that imports the good rises
SECTION: 2 OBJECTIVE: 2
14 The United States is the world’s leading grain producing nation Exporting U.S grain causes the
a domestic consumption of grain to rise because of the added foreign demand
b price of grain in the domestic market to fall because foreigners are now taking some of the domestic demand
c price of grain to domestic consumers to rise because of the added foreign demand
d U.S standard of living to improve but reduces the standard of living of foreigners
ANSWER: c price of grain to domestic consumers to rise because of the added foreign demand
SECTION: 2 OBJECTIVE: 2
15 If the United States imports shoes in a free-trade situation, we can infer that
a the domestic production of shoes in a no-trade situation is lower than if there is free trade
b domestic consumption of shoes is higher in a no-trade situation than if there is free trade
c the domestic price of shoes in a no-trade situation is higher than the free-trade world price
d the domestic price of shoes in a no-trade situation is lower than the free-trade world price ANSWER: c the domestic price of shoes in a no-trade situation is higher than the free-trade world price SECTION: 2 OBJECTIVE: 2
Trang 416 Domestic producers gain from the opportunity to export goods to foreign countries because
a the free-trade price of the good is higher than the domestic price in the absence of trade
b producers are able to reach a wider market
c although the free-trade price is lower than in the absence of trade, producers are able to sell a greater quantity
d production rises, although there is no change in the price of the good compared to the no-trade situation
ANSWER: a the free-trade price of the good is higher than the domestic price in the absence of trade SECTION: 2 OBJECTIVE: 2
17 Consider this diagram of the market for tea in China If the world price is $20, consumer surplus is
a $60
b $600
c $900
d $1800
ANSWER: c $900
SECTION: 2 OBJECTIVE: 2
18 Consider this diagram of the market for tea in China If the government imposes a quota of 10 units
of tea per day, the consumer surplus will
a $50
b $625
c $900
d $1250
ANSWER b $625
SECTION: 2 OBJECTIVE: 4
Trang 519 Consider this diagram of the market for tea in China If the government imposes a quota of 10 units
of tea per day, the import license holders receive
a $50
b $100
c $625
d $225
ANSWER: b $100
SECTION: 2 OBJECTIVE: 4
20 Consider this diagram of the market for tea in China If the government imposes a quota of 10 units
of tea per day, the deadweight loss will be
a $50
b $100
c $225
d $275
ANSWER: a $50
SECTION: 2 OBJECTIVE: 4
21 One big difference between tariffs and quotas is that tariffs
a raise the price of a good while quotas lower it
b generate tax revenues while quotas do not
c stimulate international trade while quotas inhibit it
d hurt domestic producers while quotas help them
ANSWER: b generate tax revenues while quotas do not
SECTION: 3 OBJECTIVE: 5
22 Suppose the United States decides to impose a $1,000 tax on every Japanese minivan sold in the United States This is an example of
a a tariff
b a subsidy
c comparative disadvantage
d a quota
ANSWER: a a tariff
SECTION: 3 OBJECTIVE: 5
23 The U.S military aircraft industry sought protection from foreign competition by using the
argument to persuade Congress to impose trade restrictions
a infant industries
b national security
c unfair competition
d protection-as-bargaining-chip
ANSWER: b national security
SECTION: 3 OBJECTIVE: 5
24 A less-developed country would probably use to argue for trade restrictions
a national security
b infant industry
c increased efficiency
d unfair competition
ANSWER: b infant industry
SECTION: 3 OBJECTIVE: 5
Trang 625 Many U.S producers complain about limited access to the Japanese market They say that they cannot export to Japan because Japanese import restrictions are so severe Who gains? Who loses?
a Everyone loses
b Japanese producers gain, U.S producers and Japanese consumers lose
c Japanese producers and consumers gain, U.S producers and consumers lose
d Japanese consumers and U.S consumers gain, Japanese producers lose
ANSWER: b Japanese producers gain, U.S producers and Japanese consumers lose
SECTION: 3 OBJECTIVE: 5
26 Textile workers in the U.S complain that they cannot compete with low-cost, foreign textile producers While some U.S textile workers may lose their jobs, an advantage is
a the United States gets cheaper textiles
b U.S imports will become more expensive so U.S domestic producers gain
c workers in other countries will buy more U.S clothing
d the United States can retaliate with punishing trade policies
ANSWER: a the United States gets cheaper textiles
SECTION: 3 OBJECTIVE: 5