Deck 4: Demand and Supply, Offer Curves, and the Terms of Trade

Question 1

At a relative commodity price above equilibrium

A)the excess demand for a commodity exceeds the excess supply of the commodity
B)the quantity demanded of imports exceeds the quantity supplied of exports
C)the commodity price will fall
D)all of the above

Answer 1

C

Question 2

Export prices must rise for a nation to increase its exports because the nation:

A)incurs increasing opportunity costs in export production
B)faces decreasing opportunity costs in producing import substitutes
C)faces decreasing marginal rate of substitution in consumption
D)all of the above

Answer 2

D

Question 3

If the tastes for a nation import commodity increases,trade volume:

A)increases
B)declines
C)remains unchanged
D)any of the above

Answer 3

A

Question 4

Which of the following statements regarding partial equilibrium analysis is true?

A)The demand and supply curve are derived from the nation's production frontier and indifference map
B)It shows the same basic information as offer curves
C)It shows the same equilibrium relative commodity prices as with offer curves
D)all of the above

Question 5

If the nation's tastes for its import commodity increases:

A)the nation's offer curve rotates toward the axis measuring its import commodity
B)the partner's offer curve rotates toward the axis measuring its import commodity
C)the partner's offer curve rotates toward the axis measuring its export commodity
D)the nation's offer curve rotates toward the axis measuring its export commodity

Question 6

Which of the following statements regarding partial equilibrium analysis is false?

A)It relies on traditional demand and supply curves
B)it isolates for study one market
C)it can be used to determine the equilibrium relative commodity price but not the equilibrium quantity with trade
D)none of the above

Question 7

If the terms of trade increase in a two-nation world,those of the trade partner:

A)deteriorate
B)improve
C)remain unchanged
D)any of the above

Question 8

The offer curve of a nation bulges toward the axis measuring the nations

A)import commodity
B)export commodity
C)export or import commodity
D)nontraded commodity

Question 9

A deterioration of a nation's terms of trade causes the nation's welfare to:

A)deteriorate
B)improve
C)remain unchanged
D)any of the above

Question 10

If a nation does not affect world prices by its trading,its offer curve:

A)is a straight line
B)bulges toward the axis measuring the import commodity
C)intersects the straight-line segment of the world's offer curve
D)intersects the positively-sloped portion of the world's offer curve

Question 11

The offer curve of a nation shows:

A)the supply of a nation's imports
B)the demand for a nation's exports
C)the trade partner's demand for imports and supply of exports
D)the nation's demand for imports and supply of exports

Question 12

In what way does partial equilibrium analysis differ from general equilibrium analysis?

A)The former but not the latter can be used to determine the equilibrium price with trade
B)the former but not the latter can be used to determine the equilibrium quantity with trade
C)the former but not the latter takes into consideration the interaction among all markets in the economy
D)the former gives only an approximation to the answer sought.

Question 13

If the nation's tastes for its import commodity increases:

A)the nation's terms of trade remain unchanged
B)the nation's terms of trade deteriorate
C)the partner's terms of trade deteriorate
D)any of the above

Question 14

Which of the following statements is correct?

A)The demand for imports is given by the excess demand for the commodity
B)the supply of exports is given by the excess supply of the commodity
C)the supply curve of exports is flatter than the total supply curve of the commodity
D)all of the above

Question 15

If the terms of trade of a nation are 1.5 in a two-nation world,those of the trade partner are:

A)3/4
B)2/3
C)3/2
D)4/3