Maximum Feasible Hourly Production Rates (in Tons) of Either
Wine or Beef Using All Available Resources
Product Argentina France
Wine (gallons) 30 60
Beef (pounds) 10 30
281)
Use the above table. Assuming constant opportunity costs, if Argentina and France specialize based
on comparative advantage, then they will trade if the rate of exchange
281)
A)
0.4 pounds of beef for 1 gallon of wine, and France imports wine.
B)
0.25 gallons of wine for 1 pound of beef, and France imports beef.
C)
is 7 gallons of wine for 1 pound of beef, and Argentina imports beef.
D)
0.25 pounds of beef for 1 gallon of wine, and Argentina imports wine.
282)
Mason and Chloe each produce two goods. According to the principle of comparative advantage,
the total output produced by these individuals will be greatest
282)
A)
if Mason produces both goods and Chloe produces nothing.
B)
if Chloe produces both goods and Mason produces nothing.
C)
if each good is produced by the individual who has the lower opportunity cost of producing
that good.
D)
if each good is produced by the individual who has the higher absolute cost of producing that
good.
283)
In international trade the term “dumping” means
283)
A)
selling goods on the black market to avoid paying taxes.
B)
selling goods in a foreign market for a price less than on the home market.
C)
price discrimination by domestic producers.
D)
selling goods in a home market for a price less than on the foreign market.
Maximum Feasible Hourly Production Rate
Chen Holly
Units of Good X 50 40
Units of Good Y 25 100
284)
According to the above table, which assumes that opportunity costs of producing goods X and Y
are constant, the opportunity cost of producing one unit of Good Y is ________ units of Good X for
Chen and ________ units of Good X for Holly.
284)
A)
25; 10
B)
1/2; 2 1/2
C)
50; 40
D)
2; 2/5
285)
All of the following are cited as factors in explaining U.S. competitiveness EXCEPT
285)
A)
large investments in scientific research.
B)
reducing the federal deficit.
C)
economic restructuring.
D)
widespread entrepreneurship.
286)
The highest tariff rates of the twentieth century in the United States arose as a result of which law?
286)
A)
the Tariff of Abominations Act
B)
the Wheeler–Lea Act
C)
the Robinson–Patman Act
D)
the Smoot–Hawley Act
287)
Consider a world of two countries facing opportunity costs and producing only wheat and cloth. In
one hour, residents of Country A can produce a maximum of either 1 unit of wheat or 0.5 unit of
cloth, whereas residents of Country B can produce a maximum of either 0.3 unit of wheat or 0.4
unit of cloth. Country B should export
287)
A)
cloth and country A should export wheat.
B)
wheat and cloth; country A should not export anything.
C)
wheat and country A should export cloth.
D)
nothing and country A should export both wheat and cloth.
The Number of Worker Days to Produce One
Cuckoo Clock or Movie Using All Available Resources
U.S. Switzerland
Product (Worker–Days) (Worker–Days)
Cuckoo Clocks 8 6
Movies 12 4
288)
Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of
producing one cuckoo clock in the United States is ________, and the opportunity cost of producing
one cuckoo clock in Switzerland is ________.
288)
A)
3 movies; 1.33 cuckoo clocks
B)
0.33 movies; 0.67 cuckoo clocks
C)
1.5 movies; 0.67 movie
D)
0.67 movie; 1.5 movies
289)
A tariff is
289)
A)
a government–imposed restriction on the quantity of a specific good that can be imported into
the country.
B)
a subsidy on domestically produced goods.
C)
a voluntary agreement to restrict exports.
D)
a tax on imported goods.
Maximum Feasible Hourly Production Rates for either
Computers or Bicycles Using All Available Resources
Product United States Mexico
Computers 8 2
Bicycles 6 4
290)
According to the above table, if these two countries trade
290)
A)
the United States should specialize in both computers and bicycles.
B)
Mexico should specialize in computers and the United States in bicycles.
C)
the United States should specialize in computers and Mexico should specialize in bicycles.
D)
we cannot tell which country should specialize in which good without knowing the amount
of labor utilized in each country.
291)
Quotas and tariffs both serve the purpose of
291)
A)
restricting foreign trade.
B)
causing domestic producers to lose revenues.
C)
lowering prices on imported goods.
D)
increasing foreign trade.
292)
In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or
inspect 20 parts in an hour.
292)
A)
Jim has a comparative advantage over Jane in soldering while Jane has a comparative
advantage in inspecting.
B)
Jane has a comparative advantage over Jim in both soldering and inspecting.
C)
Jim had a comparative advantage over Jane in both soldering and inspecting.
D)
Jane has a comparative advantage over Jim in soldering while Jim has a comparative
advantage in inspecting.
293)
One problem with the infant industry argument is that
293)
A)
it must be approved by the Federal Reserve Board.
B)
it must be approved by the IMF and the World Bank.
C)
it fails to protect domestic industries from foreign competition.
D)
the protection is typically never removed, creating a domestic monopoly.
294)
Today, the share of international trade in U.S. GDP is
294)
A)
about 10 percent.
B)
close to 30 percent.
C)
almost 0 percent.
D)
more than 99 percent.
295)
If country A exports good X to country B and country B exports good Y to country A, it is most
likely that
295)
A)
B is producing less of good Y than in the no–trade case.
B)
B has a comparative advantage in the production of good Y.
C)
the opportunity cost of domestic production of good Y for country A is lowered with trade.
D)
A has an absolute advantage in the production of good X.
296)
Which of the following is NOT a true statement regarding free trade?
296)
A)
Free trade may stimulate economic growth through export sales.
B)
Free trade generally reduces the domestic prices of imports.
C)
Every individual in a country gains short–term benefits from free trade.
D)
Free trade promotes specialization and efficient production.
297)
Suppose that opportunity costs in India and Australia are constant. In India, maximum feasible
hourly production rates are either 0.3 unit of cloth or 0.2 unit of food. In Australia, maximum
feasible hourly production rates are either 0.5 unit of cloth or 0.5 unit of food. It is correct to state
that
297)
A)
India has no comparative advantage in producing cloth or wheat.
B)
India has a comparative advantage in producing cloth.
C)
India has a comparative advantage in producing both cloth and wheat.
D)
Australia has a comparative advantage in producing cloth.
298)
Restrictions on imports
298)
A)
usually have no permanent effects on an economy.
B)
protect United States jobs.
C)
is the best way to increase exports.
D)
eventually reduce exports.
299)
If a good sells for $10 domestically and the same good sells for $7 abroad, then this firm is engaging
in
299)
A)
dumping.
B)
price differentiation.
C)
marginal cost selling.
D)
price discrimination.
300)
Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or
three cakes in a day. Ethel can produce a maximum of eight pies or two cakes in a day. Fred has an
comparative advantage in the production of
300)
A)
pies.
B)
cakes.
C)
both cakes and pies.
D)
neither cakes nor pies.
301)
Explain the infant industry argument.
302)
What is GATT and what happened to tariff rates as a result of GATT?
303)
Why is trade based on comparative advantage?
304)
Discuss the relationship between world trade and world Gross Domestic Product (GDP) since the early 1950s.
305)
“The United States has fallen behind Japan and most of Europe in terms of competitiveness.” Do you agree or
disagree? Why?
306)
“Everybody has a comparative advantage in something.” Do you agree or disagree? Why?
307)
Why is it impossible to make everyone better off in the long run by imposing import restrictions?
308)
What are the effects of a tariff on a good?
309)
How can comparative advantage yield gains from trade?
310)
What must a government know for the infant industry argument to be a valid reason for imposing tariffs?
311)
“International trade bestows benefits on countries through the international transmission of ideas.” Do you
agree or disagree? Explain.
312)
Discuss the relationship between U.S. competitiveness relative to other countries and standards of living in the
United States.
313)
“It is possible to restrict imports and still maintain a fixed level of exports.” Do you agree or disagree? Why?
314)
What is the relationship between imports and employment?
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