Question 1

An important determinant of comparative advantage is:

Accepted Answer

A)  diversity in climate and natural resources.
B)  endowment of factors of production.
C)  technology.
D)  All of these are important determinants of comparative advantage.E) A) and B)
F) A) and C)

Question 2

When trade is possible,each country can produce the goods that it has:

Accepted Answer

A)  a comparative advantage at producing,rather than the exact combination of goods its consumers want.
B)  an absolute advantage at producing,rather than the exact combination of goods its consumers want.
C)  an absolute advantage at producing,rather than the goods it has a comparative advantage in.
D)  None of these is true.E) A) and D)
F) A) and C)

Question 3

In reality,international free trade:

Accepted Answer

A)  allows everyone involved to gain surplus.
B)  can have individual winners and losers of surplus within a country.
C)  creates surplus only for the producers in a country.
D)  creates surplus only for the consumers in a country.E) C) and D)
F) A) and D)

Question 4

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. 
According to the graph shown,if this economy were open to free trade,domestic consumers would consume how many units?

Accepted Answer

A)  60
B)  115
C)  150
D)  90E) C) and D)
F) None of the above

Question 5

A country with a lot of land relative to its population may have a comparative advantage in:

Accepted Answer

A)  land-intensive activities.
B)  capital-intensive activities.
C)  labor-intensive activities.
D)  technology-intensive activities.E) All of the above
F) None of the above

Question 6

The Multifibre Arrangement (MFA) :

Accepted Answer

A)  was a group of separate treaties between individual countries.
B)  set limits on how much of what type of clothing could be traded between which countries.
C)  was written on a level of detail that seems ridiculous in retrospect.
D)  All of these are true.E) A) and D)
F) A) and C)

Question 7

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. 
According to the graph shown,the area ABC represents consumer surplus with:

Accepted Answer

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

Question 8

A country that would be a net-exporter of tea if it moved from autarky to free trade would cause what reaction?

Accepted Answer

A)  Domestic tea producers would be opposed.
B)  Foreign tea producers would be opposed.
C)  Foreign tea consumers would be opposed.
D)  All of these are true.E) A) and B)
F) A) and C)

Question 9

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. 
According to the graph shown,the change to government revenue brought about by the imposition of the tariff to an economy once operating under free trade is:

Accepted Answer

A)  an increase of area JK.
B)  an increase of area FGJK.
C)  an increase of area IJKL.
D)  a decrease of area IL.E) B) and D)
F) C) and D)

Question 10

A national characteristic that affects the cost of producing goods in a particular country is:

Accepted Answer

A)  natural resources and climate.
B)  endowment of factors of production.
C)  technology.
D)  All of these affect the cost of producing goods.E) None of the above
F) B) and C)

Question 11

Suppose a country,whose production and consumption of cell phones is large relative to the world market,has just entered the global market.If the country is a net-importer of cell phones,we would expect:

Accepted Answer

A)  an increase in both world price and quantity of cell phones.
B)  an increase in world price and decrease in world quantity of cell phones.
C)  a decrease in both world price and quantity of cell phones.
D)  a decrease in world price,and increase in world quantity of cell phones.E) B) and C)
F) None of the above

Question 12

A common tool for restricting trade is:

Accepted Answer

A)  a tariff.
B)  immigration restrictions.
C)  international waters use policies.
D)  All of these are used to limit trade.E) A) and D)
F) A) and C)

Question 13

Over time,technology tends to:

Accepted Answer

A)  spread from country to country,equalizing opportunity costs.
B)  set countries apart in terms of productivity.
C)  allow developing nations to experience the "catch-up" effect.
D)  None of these is true.E) A) and D)
F) A) and B)

Question 14

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. 
According to given graph shown,what is the world price?

Accepted Answer

A)  $23
B)  $16
C)  $11
D)  $45E) None of the above
F) B) and C)

Question 15

A preference for policies that place limits on trade is called:

Accepted Answer

A)  protectionism.
B)  liberalization.
C)  free trade.
D)  autarky.E) All of the above
F) A) and D)

Question 16

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)  All of these are true.E) A) and D)
F) B) and C)

Question 17

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)  None of these is true.E) A) and D)
F) None of the above

Question 18

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. 
According to the graph shown,if the economy were to open to free trade,it would become:

Accepted Answer

A)  a net-importer.
B)  a net-exporter.
C)  an autarky.
D)  None of these is true.E) C) and D)
F) B) and D)

Question 19

This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good. 
According to the graph shown,once this economy decides to restrict its free trade,area G represents:

Accepted Answer

A)  quota rents,which go to domestic producers.
B)  quota rents,which go to foreign firms or governments.
C)  government tax revenues,which go to the domestic government.
D)  government tax revenues,which go to the foreign government.E) C) and D)
F) A) and C)

Question 20

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

Accepted Answer

A)  Japan's climate is more suitable.
B)  Japan has more land available to build manufacturing plants on.
C)  Japan has more advanced electronics technology.
D)  All of these are true.E) None of the above
F) B) and C)

Exam 17: International Trade

In reality,international free trade:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,if the economy were to open to free trade,it would become:

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A national characteristic that affects the cost of producing goods in a particular country is:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,the change to government revenue brought about by the imposition of the tariff to an economy once operating under free trade is:

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This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good. According to the graph shown,once this economy decides to restrict its free trade,area G represents:

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When trade is possible,each country can produce the goods that it has:

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A preference for policies that place limits on trade is called:

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Technology or production processes developed in a particular country:

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This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,the area ABC represents consumer surplus with:

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The Multifibre Arrangement (MFA) :

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

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A country with a lot of land relative to its population may have a comparative advantage in:

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Over time,technology tends to:

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Suppose a country,whose production and consumption of cell phones is large relative to the world market,has just entered the global market.If the country is a net-importer of cell phones,we would expect:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to the graph shown,if this economy were open to free trade,domestic consumers would consume how many units?

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The fair trade movement:

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A common tool for restricting trade is:

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This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good. According to given graph shown,what is the world price?

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A country that would be a net-exporter of tea if it moved from autarky to free trade would cause what reaction?

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An important determinant of comparative advantage is:

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