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Test Canvas : TestBanks Chapter 08: International Trade
Microeconom ics, 3e
Test Canvas: TestBanks Chapter 08: International Trade
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1. True/False: Although U.S. exports and imports hav...
Question Although U.S. exports and imports have grown substantially in absolute terms since
the 1960s, the share of exports and imports in total output has fallen significantly
over the past few decades.
2. True/False: Relative to the size of their economy...
Question Relative to the size of their economy, many other countries engage in more foreign
3. True/False: France and England both produce wine ...
Question France and England both produce wine and cloth under conditions of constant
opportunity costs. If opportunity costs in the two countries are different and France
has a comparative advantage in wine production, then England must have a
comparative advantage in cloth production.
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4. True/False: In autarky, a country's production an...
Question In autarky, a country's production and consumption points must be identical.
5. True/False: International trade based on comparat...
Question International trade based on comparative advantage allows a country to produce
outside its production possibility frontier.
6. True/False: The Ricardian model of international ...
Question The Ricardian model of international trade assumes that countries have the usual
bowed-out (concave to the origin) production possibility frontiers.
7. True/False: If Indonesia has lower wage rates tha...
Question If Indonesia has lower wage rates than India, trade between these two nations will
make India worse off.
8. True/False: The Heckscher–Ohlin model canno...
Question The Heckscher–Ohlin model cannot explain United States–Mexico trade, since the
United States has more labor and more land than Mexico.
9. True/False: Since the production of clothing is l...
Question Since the production of clothing is labor-intensive relative to the production of wheat
and China is labor-abundant relative to most countries, we would expect China to
export clothing.
10. True/False: Mexico has an abundance of unskilled ...
Question Mexico has an abundance of unskilled labor and the United States has an
abundance of skilled labor. The Heckscher–Ohlin model implies that trade between
the United States and Mexico will lead to a decrease in the wages of unskilled labor
in the United States and an increase in the wages of skilled labor in the United
States.
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11. True/False: Exports increase producer surplus but...
Question Exports increase producer surplus but decrease consumer surplus and decrease
total surplus.
12. True/False: Evidence shows that increased interna...
Question Evidence shows that increased international trade has increased the wages of
unskilled workers in the United States.
13. True/False: Since labor is relatively scarce in C...
Question Since labor is relatively scarce in Canada, free trade should cause the wages paid to
Canadian labor to rise.
14. True/False: When a country moves from autarky to ...
Question When a country moves from autarky to free international trade, consumers and
producers in the import and export sectors all gain (i.e., consumer surplus increases
and producer surplus increases in both sectors).
15. True/False: While the United States generally fol...
Question While the United States generally follows a policy of free trade, this is so particularly
for agriculture and textiles, in which all restrictions on international trade have been
removed.
16. True/False: Import tariffs benefit domestic produ...
Question Import tariffs benefit domestic producers more than they hurt domestic consumers.
17. True/False: In practice much trade protection ref...
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Question In practice much trade protection reflects the political influence of import-competing
producers.
18. True/False: The United States and the European Un...
Question The United States and the European Union place heavy import tariffs on agricultural
products, which hurt many poor farmers from the very poorest countries in the world.
19. True/False: When a country joins the World Trade ...
Question When a country joins the World Trade Organization, it gives up all of its ability to
determine its trade policy.
20. True/False: Suppose in a single year, Brazil can ...
Question Suppose in a single year, Brazil can produce 100 tons of beef or 1,000 boxes of
tulips. Suppose in the world market, one ton of beef costs 8 boxes of tulips. Then
Brazil will import beef.
21. Multiple Choice: Goods and services purchased from abr...
Question Goods and services purchased from abroad are ________, while goods and services
sold abroad are ________.
Answer exports; imports
22. Multiple Choice: Over the past 40 years in the United ...
Question Over the past 40 years in the United States, as a percentage of gross domestic
product:
Answer exports have grown and imports have remained constant.
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23. Multiple Choice: Which of the following is true of the...
Question Which of the following is true of the trends for imports and exports (as measured by
a percentage of the entire economy) in the United States?
24. Multiple Choice: Goods and services purchased from abr...
Question Goods and services purchased from abroad are ________; goods and services sold
abroad are ________.
25. Multiple Choice: France and England both produce wine ...
Question France and England both produce wine and clothing under conditions of constant
opportunity costs. France will have a comparative advantage in wine production if:
Answer it can produce more wine than England.
26. Multiple Choice: In a single year, the Netherlands can...
Question
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In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes
of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce
750 boxes of tulips. From this information, we know that:
27. Multiple Choice: In a Ricardian model of international...
Question In a Ricardian model of international trade, the production possibility frontiers are
________, indicating that the opportunity cost of increasing the production of one
item relative to another ________.
28. Multiple Choice: France and England both produce wine ...
Question France and England both produce wine and cloth under conditions of constant
opportunity costs. France can produce 150 barrels of wine if it produces no cloth or
100 bolts of cloth if it produces no wine. England can produce 50 barrels of wine if it
produces no cloth or 100 bolts of cloth if it produces no wine. Using this information,
we can conclude that:
29. Multiple Choice: In a single year, the Netherlands can...
Question In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes
of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce
750 boxes of tulips. In autarky the price of beef:
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30. Multiple Choice: In a single year, the Netherlands can...
Question In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes
of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce
750 boxes of tulips. In autarky, the price of one ton of beef in the Netherlands is:
31. Multiple Choice: Production possibility frontiers:
Question Production possibility frontiers:
32. Multiple Choice: The absolute value of the slope of th...
Question The absolute value of the slope of the production possibility frontier at any point:
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33. Multiple Choice: At the point at which it is currently...
Question At the point at which it is currently producing, Britain must give up the production of
75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats
is ________ sweaters.
34. Multiple Choice: At the point at which it is currently...
Question At the point at which it is currently producing, Britain must give up the production of
75 hats to produce 25 additional sweaters. The opportunity cost of producing 4
sweaters is ________ hats.
35. Multiple Choice: At the point at which it is currently...
Question At the point at which it is currently producing, the United States must give up the
production of 500 bicycles to produce 20 additional tractors. The opportunity cost of
producing 100 bicycles is ________ tractor(s).
36. Multiple Choice: At the point at which it is currently...
Question At the point at which it is currently producing, the United States must give up the
production of 500 bicycles to produce 20 additional tractors. The opportunity cost of
producing 5 tractors is ________ bicycles.
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37. Multiple Choice: On a production possibility frontier,...
Question On a production possibility frontier, opportunity cost is:
38. Multiple Choice: Reference: Ref 8-1 (Table: The Produ...
Question
Reference: Ref 8-1
(Table: The Production Possibilities for Cars and Leather Boots) Look at the table
The Production Possibilities for Cars and Leather Boots. Given the opportunity costs
of production:
39. Multiple Choice: Reference: Ref 8-1 (Table: The Produ...
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Question
Reference: Ref 8-1
(Table: The Production Possibilities for Cars and Leather Boots) Look at the table
The Production Possibilities for Cars and Leather Boots. The opportunity cost of
producing one car in Canada is:
40. Multiple Choice: The ________ analyzes trade under the...
Question The ________ analyzes trade under the assumption that opportunity costs are
constant and therefore production possibility frontiers are straight lines.
41. Multiple Choice: If the opportunity costs of productio...
Question If the opportunity costs of production are constant, then the production possibility
frontier is:
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42. Multiple Choice: The term autarky refers to a situatio...
Question The term autarky refers to a situation in which a country:
43. Multiple Choice: Japan, at the point at which it is cu...
Question Japan, at the point at which it is currently producing, must give up the production of
75 computers to produce 25 additional cellular telephones. Which of the following is
the opportunity cost of producing 3 computers?
44. Multiple Choice: If Japan, at the point where it is cu...
Question If Japan, at the point where it is currently producing, must give up the production of
75 computers to produce 25 additional cellular telephones, the opportunity cost of
producing 4 cellular telephones is ________ computers.
45. Multiple Choice: The United States, at the point where...
Question The United States, at the point where it is currently producing, must give up the
production of 300 motorcycles to produce 15 additional SUVs with the same
resources. Which of the following is the opportunity cost of producing 100
motorcycles?
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46. Multiple Choice: The United States, at the point where...
Question The United States, at the point where it is currently producing, must give up the
production of 300 motorcycles to produce 20 additional SUVs with the same
resources. In this case, the opportunity cost of producing 5 SUVs is
________________ motorcycles.
47. Multiple Choice: Reference: Ref 8-2 (Table: Productio...
Question
Reference: Ref 8-2
(Table: Production Possibilities for Machinery and Petroleum) Look at the table
Production Possibilities for Machinery and Petroleum. The table shows the number
of units of machinery each country would have to forgo in order to produce additional
petroleum, assuming constant costs at its current levels of production. Based on the
information in the table, it is true that:
48. Multiple Choice: Reference: Ref 8-2 (Table: Productio...
Question
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Reference: Ref 8-2
(Table: Production Possibilities for Machinery and Petroleum) Look at the table
Production Possibilities for Machinery and Petroleum. The table shows the number
of units of machinery each country would have to forgo in order to produce additional
petroleum, assuming constant costs at its current level of production. Based on the
information in the table, it is true that:
49. Multiple Choice: Reference: Ref 8-2 (Table: Productio...
Question
Reference: Ref 8-2
(Table: Production Possibilities for Machinery and Petroleum) Look at the table
Production Possibilities for Machinery and Petroleum. The table shows the number
of units of machinery each country would have to forgo in order to produce additional
petroleum, assuming constant costs at all levels of production. The opportunity cost
in the United States of producing 40 units of machinery is ________ units of
petroleum.
50. Multiple Choice: Reference: Ref 8-2 (Table: Productio...
Question
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Reference: Ref 8-2
(Table: Production Possibilities for Machinery and Petroleum) Look at the table
Production Possibilities for Machinery and Petroleum. The table shows the number
of units of machinery each country would have to forgo in order to produce additional
petroleum, assuming constant costs at all levels of production. The opportunity cost
in the United States of producing 30 units of petroleum is ________ units of
machinery.
51. Multiple Choice: Reference: Ref 8-2 (Table: Productio...
Question
Reference: Ref 8-2
(Table: Production Possibilities for Machinery and Petroleum) Look at the table
Production Possibilities for Machinery and Petroleum. The table shows the number
of units of machinery each country would have to forgo in order to produce additional
petroleum assuming constant costs at all levels of production. The opportunity cost
in Mexico of producing 10 units of machinery is ________ units of petroleum.
52. Multiple Choice: Reference: Ref 8-2 (Table: Productio...
Question
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Reference: Ref 8-2
(Table: Production Possibilities for Machinery and Petroleum) Look at the table
Production Possibilities for Machinery and Petroleum. The table shows the number
of units of machinery each country would have to forgo in order to produce additional
petroleum, assuming constant costs at all levels of production. The opportunity cost
in Mexico of producing 105 units of petroleum is ________ units of machinery.
53. Multiple Choice: Countries that engage in trade will t...
Question Countries that engage in trade will tend to specialize in goods in which they have
________ and will ________ those goods.
54. Multiple Choice: Taken collectively, people in nations...
Question Taken collectively, people in nations that engage in international trade are not likely
to:
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55. Multiple Choice: In a single year, the Netherlands can...
Question In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes
of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce
750 boxes of tulips. At which of these prices will trade occur between the two
countries?
56. Multiple Choice: France and England both produce wine ...
Question France and England both produce wine and cloth under conditions of constant
opportunity costs. France can produce 150 barrels of wine if it produces no cloth or
100 bolts of cloth if it produces no wine. England can produce 50 barrels of wine if it
produces no cloth or 150 bolts of cloth if it produces no wine. When international
trade takes place, each country specializes in the production of the good in which it
has a comparative advantage—1 barrel of wine exchanges for 1 bolt of cloth—and
France exports 50 units of wine. We can conclude that France produces ________
units of wine and ________ units of cloth and that France consumes ________ units
of wine and ________ units of cloth.
57. Multiple Choice: If the United States can produce 30 c...
Question If the United States can produce 30 computers for every car it produces and Japan
can produce 15 computers for every car it produces, we can conclude that:
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58. Multiple Choice: The United States can produce 30 comp...
Question The United States can produce 30 computers for every car it produces, and Japan
can produce 15 computers for every car it produces. Based on this information,
which of the following statements is incorrect?
59. Multiple Choice: The belief that trade must be bad for...
Question The belief that trade must be bad for exporting countries because those workers are
paid very low wages by our standards is the:
60. Multiple Choice: Saudi Arabia has a tremendous compara...
Question Saudi Arabia has a tremendous comparative advantage in petroleum. Which of the
following is a source of this comparative advantage?
61. Multiple Choice: Lower wages in China reflect ________...
Question Lower wages in China reflect ________ labor productivity in China than in the United
States. This means that if the United States moved high-tech industries to China,
the overall cost of production would be ________ in China than in the United States.
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62. Multiple Choice: According to the Heckscher–Ohli...
Question According to the Heckscher–Ohlin model, Brazil will have a comparative advantage
in oranges if the factors ________ in the production of oranges are ________.
63. Multiple Choice: China, which is labor-abundant, has a...
Question China, which is labor-abundant, has a comparative advantage in clothing production,
which is labor-intensive. Which of the following models explains this pattern of
comparative advantage?
64. Multiple Choice: Bangladesh exports shirts, the making...
Question Bangladesh exports shirts, the making of which is labor-intensive, to the United
States. The likely source of Bangladesh's comparative advantage in shirts is:
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65. Multiple Choice: An urbanized country has 100 million ...
Question An urbanized country has 100 million workers living on 100 square miles of land. A
country that is principally rural has 1 million workers living on 10 square miles of
land. From this information we know that the urbanized country is ________ relative
to the rural country.
66. Multiple Choice: Which of the following trade patterns...
Question Which of the following trade patterns is best explained by increasing returns?
67. Multiple Choice: The Leontief paradox is the surprisin...
Question The Leontief paradox is the surprising discovery by the economist Wassily Leontief
in 1951 that:
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68. Multiple Choice: If the ________ differ(s) between two...
Question If the ________ differ(s) between two countries, this suggests the possibility for
mutually advantageous trade.
69. Multiple Choice: Chile has a comparative advantage ove...
Question Chile has a comparative advantage over the United States in copper. Which of the
following is a source of this comparative advantage?
70. Multiple Choice: Mexico is relatively labor-abundant w...
Question Mexico is relatively labor-abundant when compared with the United States.
Therefore, Mexico has a comparative advantage in ________ compared with the
United States.
Answer all goods
71. Multiple Choice: Which model states that nations that ...
Question Which model states that nations that are abundant in a factor will have a
comparative advantage in a good whose production is intensive in that factor?
Answer the pauper labor fallacy model.
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