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1. An important factor in the decline of the U.S. textile industry over the past 100 or so years is
a.
foreign competitors that can produce quality textile goods at low cost.
b.
lower prices of goods that are substitutes for clothing.
c.
a decrease in Americans’ demand for clothing, due to increased incomes and the fact that clothing is an
inferior good.
d.
the fact that the minimum wage in the U.S. has failed to keep pace with the cost of living.
2. With which of the Ten Principles of Economics is the study of international trade most closely connected?
a.
People face tradeoffs.
b.
Trade can make everyone better off.
c.
Governments can sometimes improve market outcomes.
d.
Prices rise when the government prints too much money.
3. Which of the following tools and concepts is useful in the analysis of international trade?
a.
total surplus
b.
domestic supply
c.
equilibrium price
d.
All of the above are correct.
4. A logical starting point from which the study of international trade begins is
a.
the recognition that not all markets are competitive.
b.
the recognition that government intervention in markets sometimes enhances the economic welfare of the
society.
c.
the principle of absolute advantage.
d.
the principle of comparative advantage.
5. Which of the following is not an important question for economic policy raised by the experience of the textile
industry?
a.
How does international trade affect consumer well-being?
b.
Who gains and who loses from free trade among countries?
c.
How do the gains from trade compare to the losses?
d.
Which argument for restricting free trade is politically feasible?
