1
Copyright © 2011 Pearson Education, Inc.
Foundations of Microeconomics, 5e (Bade/Parkin)
Chapter 9 Global Markets in Action
9.1 How Global Markets Work
1) Goods and services that the United States buys from other nations are called
A) exports.
B) imports.
C) bartered goods.
D) exchanges.
E) world goods.
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: JC
AACSB: Reflective thinking
2) Imports are defined as the goods and services that we
A) produce and consume in the United States.
B) sell to other countries.
C) buy from other countries.
D) partially produce in both the United States and another country.
E) produce abroad using U.S. owned factories and then consume in the United States.
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: NAU
AACSB: Reflective thinking
3) Goods and services that the United States sells to other nations are called
A) exports.
B) imports.
C) bartered goods.
D) exchanges.
E) world goods.
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: JC
AACSB: Reflective thinking
2
Copyright © 2011 Pearson Education, Inc.
4) If you buy a DVD player produced in Japan, a
A) good was exported by Japan and imported by the United States.
B) good was imported by Japan and by the United States.
C) service was imported by Japan and exported by the United States.
D) service was exported by Japan and imported by the United States.
E) good was exported by Japan and by the United States.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TS
AACSB: Reflective thinking
5) The United States exports
A) goods only.
B) services only.
C) manufactured goods only.
D) goods and services.
E) only agricultural products and high-tech goods.
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: NAU
AACSB: Reflective thinking
6) Of the following, ________ accounts for the largest share of imports into the United States.
A) food and drinks
B) fuels
C) crude oil
D) semiconductors
E) chemicals
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: TPS
AACSB: Reflective thinking
3
Copyright © 2011 Pearson Education, Inc.
7) The fundamental force that generates international trade is
A) the need for more goods and services.
B) absolute advantage.
C) the sea rule.
D) comparative advantage.
E) the existence of tariffs.
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: WM
AACSB: Reflective thinking
8) The fundamental force that drives trade between nations is
A) the government.
B) NAFTA.
C) absolute advantage.
D) comparative advantage.
E) legal treaties.
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: MR
AACSB: Reflective thinking
9) One of the major reasons why the United States exports jet airplanes is because Boeing faces
________ opportunity cost than firms in other nations in the production of such aircraft.
A) a higher
B) an unrelated
C) a lower
D) a nonexistent
E) an identical
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: JC
AACSB: Reflective thinking
4
Copyright © 2011 Pearson Education, Inc.
10) A nation has a comparative advantage in a good when it has a
A) lower absolute cost of producing the good.
B) higher opportunity cost of producing the good.
C) lower opportunity cost of producing the good.
D) higher absolute cost of producing the good.
E) tariff in place protecting the producers of the good.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: WM
AACSB: Reflective thinking
11) How can a domestic producer determine whether or not it has a comparative advantage in the
production of a good or service?
A) It cannot.
B) by comparing the price it receives to the prices of other domestic producers
C) by comparing the price it receives to the world price
D) by comparing the quantity it produces to the quantity produced in the world
E) by comparing the total domestic quantity to the total world quantity
Skill: Level 1: Definition
Section: Checkpoint 9.1
Author: TS
AACSB: Reflective thinking
12) A country exports the goods
A) for which its domestic prices are very high compared to the world prices.
B) that the economy can produce the most of.
C) that the economy can produce at relatively lowest opportunity cost.
D) that it cannot sell domestically.
E) in which it has a comparative disadvantage.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TPS
AACSB: Reflective thinking
5
Copyright © 2011 Pearson Education, Inc.
13) If a nation can produce a good or service at the lowest opportunity cost, then it
A) can sell the product at a lower price than other nations.
B) does not want to export the good because the low cost means it makes only a low profit.
C) is best for the nation to not trade the good internationally.
D) will definitely import the good because it can beat other countries’ prices.
E) might export or import the good, depending on whether or not it has a comparative advantage
in the production of the good.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TPS
AACSB: Reflective thinking
14) The country with a comparative advantage in the production of a good has a
A) lower opportunity cost of production.
B) higher opportunity cost of production.
C) horizontal production possibilities frontier.
D) vertical production possibilities frontier.
E) linear production possibilities frontier.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: SB
AACSB: Reflective thinking
15) The United States imports t-shirts because
A) it is a dangerous job to produce them.
B) foreign nations have a lower opportunity cost of production.
C) the United States has a lower opportunity cost of production.
D) foreign economies have an absolute advantage in their production.
E) the United States must import goods and services from other countries so that they can
develop economically.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: WM
AACSB: Reflective thinking
6
Copyright © 2011 Pearson Education, Inc.
16) If the United States starts to import a good that had previously been produced in the United
States, the market price of the good in the United States
A) rises.
B) falls.
C) remains constant.
D) either remains constant or rises, depending on how whether the supply of the good stays the
same or increases.
E) There is not enough information to answer the question because we need to know if the
market price in the United States had been above or below the world market price before trade
began.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TS
AACSB: Analytical reasoning
17) If the United States imports purses, then the quantity of purses produced in the United States
will ________ and the quantity of purses purchased by consumers in the United States will
________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) not change; increase
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: MR
AACSB: Analytical reasoning
18) Most t-shirts bought by Americans are made in Asia. As a result of free trade, the production
of t-shirts in America has
A) increased.
B) stayed the same.
C) decreased.
D) been taken over by the government.
E) might change, but more information about what else the United States imports is needed to
determine if U.S. production increased, decreased, or did not change.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: JC
AACSB: Analytical reasoning
7
Copyright © 2011 Pearson Education, Inc.
19) The United States imports t-shirts from Asia. As a result, U.S. consumers pay ________
otherwise and Asian producers receive ________ otherwise.
A) a higher price than; a higher price than
B) a higher price than; a lower price than
C) a lower price than; a higher price than
D) a lower price than; a lower price than
E) the same price as; the same price as
Skill: Level 3: Using models
Section: Checkpoint 9.1
Author: SB
AACSB: Analytical reasoning
20) If the world price of a good is below the no-trade domestic price, a country
A) will benefit from exporting the good.
B) will benefit from importing the good.
C) cannot benefit from trade.
D) has a comparative advantage in the production of that good.
E) will not engage in trade for that good.
Skill: Level 3: Using models
Section: Checkpoint 9.1
Author: SB
AACSB: Reflective thinking
21) Suevania opens its doors to trade with Barvania. Barvania has a comparative advantage in
the production of machinery. Hence, once trade occurs Suevania’s consumers will buy ________
machinery and pay ________ before.
A) more; a higher price than
B) more; a lower price than
C) less; a higher price than
D) less; a lower price than
E) the same amount of; the same price as
Skill: Level 3: Using models
Section: Checkpoint 9.1
Author: SB
AACSB: Analytical reasoning
8
Copyright © 2011 Pearson Education, Inc.
22) If a nation imports a good that can be domestically produced, what happens to the quantity
consumed of the good and why?
A) The quantity consumed increases because the market price decreases.
B) The quantity consumed decreases because the market price increases.
C) The quantity consumed remains constant because the price is unchanged.
D) The quantity consumed increases because the market price increases.
E) The quantity consumed decreases because the market price decreases.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TS
AACSB: Analytical reasoning
23) A country will export a good if it
A) can sell the good to a foreigner at a higher price than the no-trade price.
B) can sell the good to a foreigner at a lower price than the no-trade price.
C) can dump the good on the world market.
D) has a high opportunity cost of production.
E) is impossible to import the good.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: NAU
AACSB: Reflective thinking
24) A country exports a good if
A) it has a high opportunity cost of production.
B) the world price of the good is below the country’s no-trade equilibrium price.
C) the world price of the good is above the country’s no-trade equilibrium price.
D) the quantity demanded of the good in the country is greater than the quantity supplied at the
world price.
E) it cannot import the good.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: NAU
AACSB: Reflective thinking
9
Copyright © 2011 Pearson Education, Inc.
25) A nation will export a good if its
A) no-trade, domestic price is equal to the world price.
B) no-trade, domestic price is less than the world price
C) no-trade, domestic price is greater than the world price.
D) no-trade, domestic quantity is less than the world quantity.
E) no-trade, domestic quantity is greater than the world quantity.
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TS
AACSB: Reflective thinking
26) As a result of importing a good, domestic consumers ________ the quantity consumed and
the price of the good ________.
A) increase; rises
B) increase; falls
C) decrease; rises
D) decrease; falls
E) increase; does not change
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: TS
AACSB: Analytical reasoning
27) As a result of importing a good, domestic producers ________ the quantity produced and the
price of the good ________.
A) increase; rises
B) increase; falls
C) decrease; rises
D) decrease; falls
E) decrease; does not change
Skill: Level 2: Using definitions
Section: Checkpoint 9.1
Author: MR
AACSB: Analytical reasoning
10
Copyright © 2011 Pearson Education, Inc.
28) The above figure shows the U.S. market for flip-flops. When there is no international trade,
the U.S. price is ________ per flip-flop and the U.S. quantity is ________ flip-flops.
A) $12; 300,000
B) $14; 500,000
C) $12; 700,000
D) $14; 300,000
E) $14; 700,000
Skill: Level 3: Using models
Section: Checkpoint 9.1
Author: KG
AACSB: Analytical reasoning
29) The above figure shows the U.S. market for flip-flops. With international trade, the
equilibrium price in the United States is ________ and the United States ________ flip-flops.
A) $12; imports
B) $12; exports
C) $12; exports
D) $14; imports
E) $14; does not trade
Skill: Level 3: Using models
Section: Checkpoint 9.1
Author: KG
AACSB: Analytical reasoning