Question 1

Consider two countries which trade with each other.The degree of specialization according to their respective comparative advantages will be greater if the countries face:

Accepted Answer

A)   constant costs.
B)   high tariffs.
C)   low unemployment rates.
D)   increasing costs.E) None of the above
F) A) and B)

Question 2

Diversification for stability argument is given as an excuse for imposing tariff and quotas against imports in some countries.This argument is based on:

Accepted Answer

A)   the fact that some of the highly specialized economies such as Saudi Arabia are very dependent on international markets for their income.
B)   the fact that some highly specialized economies such as Cuba do not want any foreign income getting into their country.
C)   the fact that imposing such tariffs and quotas has little economic cost for the host country.
D)   the fact that Canada needs such tariff and quotas to protect its industries.E) A) and B)
F) A) and C)

Question 3

A high tariff on imported good X might reduce domestic employment in industry Y if:

Accepted Answer

A)   X is an input used domestically in producing Y.
B)   X and Y are substitute goods.
C)   X is an inferior good.
D)   Y is an inferior good.E) A) and C)
F) A) and D)

Question 4

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 prices of steel in Alpha and Beta are: A)  $3 and $2,respectively. B)  $2 and $4,respectively. C)  $4 and $5,respectively. D)  $1 and $2,respectively." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above data.The equilibrium prices of steel in Alpha and Beta are:

Accepted Answer

A)   $3 and $2,respectively.
B)   $2 and $4,respectively.
C)   $4 and $5,respectively.
D)   $1 and $2,respectively.E) All of the above
F) None of the above

Question 5

Country A limits other nation's exports to Country A to 1,000 tons of coal annually.This is an example of a(n) :

Accepted Answer

A)   protective tariff.
B)   export subsidy.
C)   import quota.
D)   voluntary export restriction.E) B) and C)
F) None of the above

Question 6

When a tariff or quota on a product is removed,the action:

Accepted Answer

A)   benefits producers in the protected industries.
B)   benefits consumers of the product.
C)   benefits the government.
D)   hurts nations exporting the product.E) B) and C)
F) A) and B)

Question 7

If a nation has a comparative advantage in the production of X,this means the nation:

Accepted Answer

A)   cannot benefit by producing and trading this product.
B)   must give up less of other goods than other nations in producing a unit of X.
C)   has a production possibilities curve identical to those of other nations.
D)   is not subject to increasing opportunity costs.E) B) and D)
F) None of the above

Question 8

d and Dd are the domestic supply and demand for a product and Pc is the world price of that product.With a per unit tariff in the amount PcPt,price and total quantity sold will be: A)  Pt and x. B)  Pc and z. C)  Pt and y. D)  Pa and x." 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 a per unit tariff in the amount PcPt,price and total quantity sold will be:

Accepted Answer

A)   Pt and x.
B)   Pc and z.
C)   Pt and y.
D)   Pa and x.E) A) and B)
F) B) and C)

Question 9

The data given is for two hypothetical nations,Wat and Xat.The nations have the Production Possibilities Curves (PPC) for units of rice and corn as given below.
 1/3 unit of corn and should not specialize in production of it if the two nations decide to trade with each other. C)  corn is 5 units of rice. D)  corn is 1/5 unit of rice." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above data,in country Wat,the comparative cost of 1 unit of:

Accepted Answer

A)   rice is 3 units of corn.
B)   rice is 1/3 unit of corn and should not specialize in production of it if the two nations decide to trade with each other.
C)   corn is 5 units of rice.
D)   corn is 1/5 unit of rice.E) A) and D)
F) A) and C)

Question 10

Studies show that:

Accepted Answer

A)   it is impossible to estimate the benefits of trade barriers.
B)   costs and benefits of trade barriers are about equal.
C)   benefits of trade barriers exceed their costs in less developed nations.
D)   costs of trade barriers exceed their benefits,creating an efficiency loss for society.E) B) and D)
F) B) and C)

Question 11

-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) None of the above
F) C) and D)

Question 12

Suppose the domestic price of wheat is $3.50 per bushel in Canada,while the world price is $4.00 per bushel.Assuming no transportation costs,Canada will:

Accepted Answer

A)   have a domestic shortage of wheat.
B)   export wheat.
C)   import wheat.
D)   neither export nor import wheat.E) B) and D)
F) B) and C)

Question 13

-Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The data contained in the production possibilities curves are based on the assumption of:

Accepted Answer

A)   imperfect substitutability of resources as between beer and pizza production.
B)   constant costs.
C)   decreasing costs.
D)   increasing costs.E) None of the above
F) All of the above

Question 14

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1.
 
-Refer to the above data.With a $1 per unit tariff,prices (revenue per unit) received by domestic and foreign producers respectively will be:

Accepted Answer

A)   $2 and $1.
B)   $1 and $2.
C)   $2 and $2.
D)   $3 and $2.E) None of the above
F) A) and D)

Question 15

-Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The data suggest that:

Accepted Answer

A)   West Lothian should specialize in,and export,beer.
B)   both countries will be better off if they do not engage in specialization and trade involving these two products.
C)   West Lothian should specialize in,and export,pizza.
D)   East Lothian should specialize in,and export,beer.E) All of the above
F) A) and C)

Question 16

-Refer to the above diagram pertaining to two nations and a specific product.Lines FA and GB are:

Accepted Answer

A)   domestic supply curves for two countries.
B)   domestic demand curves for two countries.
C)   import demand curves for two countries.
D)   export supply curves for two countries.E) A) and B)
F) A) and C)

Question 17

-Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The trading possibilities curves imply that:

Accepted Answer

A)   both countries are experiencing an excess of exports over imports which results in economic growth.
B)   the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources.
C)   world resources will be allocated more efficiently if the two nations specialize and trade in accordance with comparative advantage.
D)   both nations will be worse off as a result of international specialization and trade.E) C) and D)
F) B) and C)

Question 18

An excise tax on imported goods is known as a(n) :

Accepted Answer

A)   quota.
B)   tariff.
C)   export restriction.
D)   price ceiling.E) B) and C)
F) B) and D)

Question 19

Refer to the diagram below in which line AB is Canadian production possibility curve and AC is its trading possibilities curve.The international exchange ratio between beef and cheese (terms of trade) :

Accepted Answer

A)   is the absolute value of slope of line AB.
B)   is the absolute value of slope of line AC.
C)   could lie anywhere between the absolute value of the slopes of lines AB and AC.
D)   cannot be determined on the basis of this information.E) None of the above
F) A) and B)

Question 20

Which of the following is an example of a labour-intensive commodity?

Accepted Answer

A)   clothing
B)   beer
C)   Aspirin tablets
D)   gasolineE) All of the above
F) A) and B)

Exam 17: International Trade

-Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The trading possibilities curves imply that:

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-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 a per unit tariff in the amount PcPt,price and total quantity sold will be:

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The data given is for two hypothetical nations,Wat and Xat.The nations have the Production Possibilities Curves (PPC) for units of rice and corn as given below. -Refer to the above data,in country Wat,the comparative cost of 1 unit of:

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Consider two countries which trade with each other.The degree of specialization according to their respective comparative advantages will be greater if the countries face:

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When a tariff or quota on a product is removed,the action:

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Diversification for stability argument is given as an excuse for imposing tariff and quotas against imports in some countries.This argument is based on:

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Refer to the diagram below in which line AB is Canadian production possibility curve and AC is its trading possibilities curve.The international exchange ratio between beef and cheese (terms of trade) :

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The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. -Refer to the above data.With a $1 per unit tariff,prices (revenue per unit) received by domestic and foreign producers respectively will be:

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Country A limits other nation's exports to Country A to 1,000 tons of coal annually.This is an example of a(n) :

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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 prices of steel in Alpha and Beta are:

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Which of the following is an example of a labour-intensive commodity?

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-Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The data contained in the production possibilities curves are based on the assumption of:

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-Refer to the above diagram pertaining to two nations and a specific product.Lines FA and GB are:

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-Refer to the above diagrams.The solid lines are production possibilities curves;the dashed lines are trading possibilities curves.The data suggest that:

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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:

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Studies show that:

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A high tariff on imported good X might reduce domestic employment in industry Y if:

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An excise tax on imported goods is known as a(n) :

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Suppose the domestic price of wheat is $3.50 per bushel in Canada,while the world price is $4.00 per bushel.Assuming no transportation costs,Canada will:

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If a nation has a comparative advantage in the production of X,this means the nation:

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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 a per unit tariff in the amount P_cP_t,price and total quantity sold will be:

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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.The equilibrium prices of steel in Alpha and Beta are:

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