Question 1

Free trade based on comparative advantage is economically beneficial because:

Accepted Answer

A)  it promotes an efficient allocation of world resources.
B)  it increases competition.
C)  it provides consumers with a wider range of products.
D)  of all of the above reasons.E) A) and B)
F) A) and C)

Question 2

The terms of trade will favour a larger nation over a smaller nation.

Accepted Answer

A) True 
 B)False

Question 3

An excise tax that is applied to imported products which are not produced domestically is a(n) :

Accepted Answer

A)  protective tariff.
B)  revenue tariff.
C)  import quota.
D)  nontariff barrier.E) B) and C)
F) B) and D)

Question 4

d and Dd are the domestic supply and demand for a product and Pc is the world price of that product.With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be: A) v and vz. B) w and wy. C) w and wz. D) vx and xz." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product.With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Accepted Answer

A)  v and vz.
B)  w and wy.
C)  w and wz.
D)  vx and xz.E) A) and D)
F) B) and D) A

Question 5

Which one of the following would best describe a protective tariff?

Accepted Answer

A)  an excise tax that is usually applied to products which are not produced domestically in order to raise revenues for government
B)  an excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets
C)  a specification of the maximum amount of a product that may be imported in any period of time which is often used to protect domestic producers of a product
D)  such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for quality or safety in order to restrict imports and protect domestic marketsE) All of the above
F) A) and B)

Question 6

Export supply curves are _____________ import demand curves are __________.

Accepted Answer

A)  horizontal; vertical
B)  vertical; horizontal
C)  downsloping; upward sloping
D)  upward sloping; downslopingE) C) and D)
F) B) and D)

Question 7

Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product.The export supply curves for the two nations are represented by lines:

Accepted Answer

A)  5 and 7.
B)  5 and 6.
C)  6 and 8.
D)  7 and 8.E) B) and C)
F) A) and C)

Question 8

Which of the following was the most important good traded by Canada in 2016?largest, using Table 17.1 for principal exports/imports of good in 2016?

Accepted Answer

A)  Automotive products
B)  Energy products
C)  Metals and non-metallic minerals
D)  Forestry productsE) C) and D)
F) A) and C)

Question 9

The data embodied in the below diagrams suggest that:

Accepted Answer

A)  Italy should export X and Greece should export Y.
B)  Greece should export X and Italy should export Y.
C)  production in both countries is subject to increasing costs.
D)  Italy should import both X and Y from Greece.E) None of the above
F) C) and D) A

Question 10

Differences in production efficiencies among nations in producing a particular good result from:

Accepted Answer

A)  different amounts of skilled labour.
B)  different climatic conditions.
C)  different levels of technological knowledge.
D)  all of the above.E) B) and D)
F) B) and C) D

Question 11

The following data is for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. s is domestic quantity supplied and Qd is domestic quantity demanded.   Refer to the above data.The equilibrium world price must be higher than $1 because at $1: A) Beta wants to import more than Alpha. B) Alpha wants to export more than Beta. C) both nations want to export steel. D) both nations want to import steel." class="answers-bank-image d-inline" rel="preload" > Refer to the above data.The equilibrium world price must be higher than $1 because at $1:

Accepted Answer

A)  Beta wants to import more than Alpha.
B)  Alpha wants to export more than Beta.
C)  both nations want to export steel.
D)  both nations want to import steel.E) B) and D)
F) B) and C)

Question 12

Import quotas produce the same amount of revenue for government as protective tariffs.

Accepted Answer

A) True 
 B)False

Question 13

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Accepted Answer

A)  labour costs and product prices are not related.
B)  there is no discernible relationship between wage rates and labour productivity.
C)  wage rates and labour productivity are directly related.
D)  wage rates and labour productivity are inversely related.E) C) and D)
F) A) and C)

Question 14

In effect tariffs on imports are:

Accepted Answer

A)  special taxes on domestic producers.
B)  subsidies to domestic consumers.
C)  subsidies to foreign producers.
D)  subsidies for domestic producers.E) B) and D)
F) All of the above

Question 15

The bulk of Canadian export and import trade is with:

Accepted Answer

A)  Japan
B)  China
C)  the United States
D)  EnglandE) A) and C)
F) All of the above

Question 16

Which is responsible for the major decrease in trade barriers since World War II?

Accepted Answer

A)  the North American Free Trade Agreement
B)  the General Agreement on Tariffs and Trade
C)  the granting of most-favoured nation status
D)  the World Trade OrganizationE) All of the above
F) C) and D)

Question 17

The basic difference in the economic effects of a tariff compared with a quota is that a:

Accepted Answer

A)  quota generates revenue for the government.
B)  tariff generates revenue for the government.
C)  tariff raises product prices, but a quota does not raise product prices.
D)  quota raises product prices, but a tariff does not raise product prices.E) B) and C)
F) A) and B)

Question 18

The following data is for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. s is domestic quantity supplied and Qd is domestic quantity demanded.   Refer to the above data.At the equilibrium world price: A) both nations will export steel. B) both nations will import steel. C) Alpha will export steel and Beta will import steel. D) Beta will export steel and Alpha will import steel." class="answers-bank-image d-inline" rel="preload" > Refer to the above data.At the equilibrium world price:

Accepted Answer

A)  both nations will export steel.
B)  both nations will import steel.
C)  Alpha will export steel and Beta will import steel.
D)  Beta will export steel and Alpha will import steel.E) None of the above
F) A) and C)

Question 19

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are, 60X and 40Y.Refer to the above information.If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade, then we can say that the gains from specialization and trade are 10X and 10Y.

Accepted Answer

A) True 
 B)False

Question 20

The law of increasing opportunity costs:

Accepted Answer

A)  applies to land-intensive commodities, but not to labour-intensive or capital-intensive commodities.
B)  results in straight-line production possibilities curves rather than curves which are bowed outward as viewed from the origin.
C)  refutes the principle of comparative advantage.
D)  may limit the extent to which a nation specializes in producing a particular product.E) A) and B)
F) None of the above

Exam 17: B: International Trade

Free trade based on comparative advantage is economically beneficial because:

Correct Answer
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The terms of trade will favour a larger nation over a smaller nation.

Correct Answer
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An excise tax that is applied to imported products which are not produced domestically is a(n) :

Correct Answer
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Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product.With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct Answer
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A

Which one of the following would best describe a protective tariff?

Correct Answer
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Export supply curves are ___ import demand curves are .

Correct Answer
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Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product.The export supply curves for the two nations are represented by lines:

Correct Answer
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Which of the following was the most important good traded by Canada in 2016?largest, using Table 17.1 for principal exports/imports of good in 2016?

Correct Answer
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The data embodied in the below diagrams suggest that:

Correct Answer
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A

Differences in production efficiencies among nations in producing a particular good result from:

Correct Answer
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D

The following data is for the hypothetical nations of Alpha and Beta.Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. Refer to the above data.The equilibrium world price must be higher than $1 because at $1:

Correct Answer
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Import quotas produce the same amount of revenue for government as protective tariffs.

Correct Answer
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A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Correct Answer
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In effect tariffs on imports are:

Correct Answer
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The bulk of Canadian export and import trade is with:

Correct Answer
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Which is responsible for the major decrease in trade barriers since World War II?

Correct Answer
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The basic difference in the economic effects of a tariff compared with a quota is that a:

Correct Answer
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The following data is for the hypothetical nations of Alpha and Beta.Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. Refer to the above data.At the equilibrium world price:

Correct Answer
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Correct Answer
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The law of increasing opportunity costs:

Correct Answer
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Exam 17: B: International Trade

Free trade based on comparative advantage is economically beneficial because:

Correct AnswerverifiedShow Answer

The terms of trade will favour a larger nation over a smaller nation.

Correct AnswerverifiedShow Answer

An excise tax that is applied to imported products which are not produced domestically is a(n) :

Correct AnswerverifiedShow Answer

Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product.With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct AnswerverifiedA

Which one of the following would best describe a protective tariff?

Correct AnswerverifiedShow Answer

Export supply curves are _____________ import demand curves are __________.

Correct AnswerverifiedShow Answer

Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product.The export supply curves for the two nations are represented by lines:

Correct AnswerverifiedShow Answer

Which of the following was the most important good traded by Canada in 2016?largest, using Table 17.1 for principal exports/imports of good in 2016?

Correct AnswerverifiedShow Answer

The data embodied in the below diagrams suggest that:

Correct AnswerverifiedA

Differences in production efficiencies among nations in producing a particular good result from:

Correct AnswerverifiedD

The following data is for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. Refer to the above data.The equilibrium world price must be higher than $1 because at $1:

Correct AnswerverifiedShow Answer

Import quotas produce the same amount of revenue for government as protective tariffs.

Correct AnswerverifiedShow Answer

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Correct AnswerverifiedShow Answer

In effect tariffs on imports are:

Correct AnswerverifiedShow Answer

The bulk of Canadian export and import trade is with:

Correct AnswerverifiedShow Answer

Which is responsible for the major decrease in trade barriers since World War II?

Correct AnswerverifiedShow Answer

The basic difference in the economic effects of a tariff compared with a quota is that a:

Correct AnswerverifiedShow Answer

The following data is for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. Refer to the above data.At the equilibrium world price:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs:

Correct AnswerverifiedShow Answer

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Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product.With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct Answer
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A

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Export supply curves are ___ import demand curves are .

Correct Answer
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Correct Answer
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A

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D

The following data is for the hypothetical nations of Alpha and Beta.Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. Refer to the above data.The equilibrium world price must be higher than $1 because at $1:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The following data is for the hypothetical nations of Alpha and Beta.Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. Refer to the above data.At the equilibrium world price:

Correct Answer
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Correct Answer
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Correct Answer
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