Deck 18: International Trade and Finance

Question 1

$\begin{array}{|l|c|c|}\hline & \text { Kites /hour } & \begin{array}{c}\text { Snowboards } \\\text { hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3\\\hline\end{array}$
Table 18.2

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.2 shows how much of each good Jesse and April can paint in one hour. Which of the following is true?

A)April has both an absolute and comparative advantage in painting kites.
B)April has both an absolute and comparative advantage in painting snowboards.
C)April has neither an absolute nor comparative advantage in painting kites.
D)April has neither an absolute nor a comparative advantage in painting snowboards.

Answer 1

April has both an absolute and comparative advantage in painting snowboards.

Question 2

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Based on the data in Table 18.1

A)Jesse should specialize in painting kites and trade for snowboards.
B)Jesse should specialize in painting snowboards and trade for kites.
C)April should specialize in both goods.
D)Jesse should specialize in both goods.

Answer 2

Jesse should specialize in painting kites and trade for snowboards.

Question 3

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.1 shows how much of each good Jesse and April can paint in one hour. Jesse?s opportunity cost of painting one snowboard is painting

A)1/8 of a kite.
B)1.5 kites.
C)8 kites.
D)12 kites.

Answer 3

8 kites.

Question 4

The ability of one person or nation to produce a good at a lower absolute cost than another is called an)

A)market advantage.
B)comparative advantage.
C)absolute advantage.
D)specialization advantage.

Question 5

To explore the rationale for specialization, economists use the

A)marginal principle.
B)principle of opportunity cost.
C)real-nominal principle.
D)principle of self-interest.

Question 6

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Nigel?s opportunity cost of producing one bandana is

A)1/4 of a hair pin.
B)2/5 of a hair pin.
C)2.5 hair pins.
D)4 hair pins.

Question 7

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.1 shows how much of each good Jesse and April can paint in one hour. April?s opportunity cost of painting one kite is painting

A)1/12 of a snowboard.
B)1/4 of a snowboard.
C)3 snowboards.
D)4 snowboards.

Question 8

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Mia?s opportunity cost of producing one bandana is

A)1/3 of a hair pin.
B)2.5 hair pins.
C)3 hair pins.
D)9 hair pins.

Question 9

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.1 shows how much of each good Jesse and April can paint in one hour. Jesse?s opportunity cost of painting one kite is painting

A)1/12 of a snowboard.
B)1/8 of a snowboard.
C)1/3 of a snowboard.
D)3 snowboards.

Question 10

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Based on the data in Table 18.1, if Jesse and April choose to specialize and trade, then

A)April will specialize in painting kites and trade kites for snowboards.
B)April will specialize in painting snowboards and trade snowboards for kites.
C)Jesse will specialize in painting snowboards and trade snowboards for kites.
D)None of the above; specialization and trade are not beneficial for Jesse and April.

Question 11

Markets exist

A)so people can buy and sell things.
B)because people are self-sufficient.
C)because people specialize in the production of many products.
D)as an arrangement where buyers do not interact with sellers.

Question 12

An individual or country that has a comparative advantage in the production of one good

A)must have an absolute advantage in the goodʹs production.
B)must not have an absolute advantage in the goodʹs production.
C)may or may not have an absolute advantage in the goodʹs production.
D)must not have an absolute advantage in the production of the other good.

Question 13

$\begin{array}{|l|c|c|}\hline & \text { Kites /hour } & \begin{array}{c}\text { Snowboards } \\\text { hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3\\\hline\end{array}$
Table 18.2

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.2 shows how much of each good Jesse and April can paint in one hour. Which of the following is true?

A)Jesse has an absolute advantage in painting kites but not snowboards.
B)Jesse has an absolute advantage in painting snowboards but not kites.
C)Jesse has an absolute advantage in painting both goods.
D)Jesse has an absolute advantage in painting neither good.

Question 14

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Nigel?s opportunity cost of producing one hair pin is

A)1/3 of a bandana.
B)2.5 of a bandanas.
C)3 bandanas.
D)10 bandanas.

Question 15

$\begin{array}{|l|c|c|}\hline & \text { Kites /hour } & \begin{array}{c}\text { Snowboards } \\\text { hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3\\\hline\end{array}$
Table 18.2

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.2 shows how much of each good Jesse and April can paint in one hour. Which of the following is true?

A)April has a comparative advantage in painting kites but not snowboards.
B)April has a comparative advantage in painting snowboards but not kites.
C)April has a comparative advantage in painting both goods.
D)April does not have a comparative advantage in painting either good.

Question 16

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Mia?s opportunity cost of producing one hair pin is

A)1/3 of a bandana.
B)2.5 of a bandanas.
C)3 bandanas.
D)10 bandanas.

Question 17

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.1 shows how much of each good Jesse and April can paint in one hour. April?s opportunity cost of painting one snowboard is painting

A)1.5 kites.
B)3 kites.
C)4 kites.
D)12 kites.

Question 18

The ability of one person or nation to produce a good at a lower opportunity cost than another is called an)

A)market advantage.
B)comparative advantage.
C)absolute advantage.
D)specialization advantage.

Question 19

$\begin{array}{|l|c|c|}\hline & \text { Kites /hour } & \begin{array}{c}\text { Snowboards } \\\text { hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3\\\hline\end{array}$
Table 18.2

-Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 18.2 shows how much of each good Jesse and April can paint in one hour. Which of the following is true?

A)April has an absolute advantage in painting kites but not snowboards.
B)April has an absolute advantage in painting snowboards but not kites.
C)April has an absolute advantage in painting both goods.
D)April does not have an absolute advantage in painting either good.

Question 20

$\begin{array}{|l|c|c|}\hline & \text { Kites/ hour } & \begin{array}{c}\text { Snowboards } \\\text { /hour }\end{array} \\\hline \text { Jesse } & 8 & 1 \\\hline \text { April } & 12 & 3 \\\hline\end{array}$
Table 18.1

-Based on the data in Table 18.1

A)April should specialize in painting kites and trade for snowboards.
B)April should specialize in painting snowboards and trade for kites.
C)Jesse should specialize in both goods.
D)April should specialize in both goods.

Question 21

If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Tina has a comparative advantage in producing milk shakes.

Question 22

Explain what is meant by the economic principle of voluntary exchange.

Question 23

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Which of the following is true?

A)Mia has an absolute advantage in producing hair pins but not bandanas.
B)Mia has an absolute advantage in producing bandanas but not hair pins.
C)Mia has an absolute advantage in producing both goods.
D)Mia does not have an absolute advantage in producing either good.

Question 24

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Jimbo has a comparative advantage over Ned in producing a good if

A)Jimbo can produce more of the good than Ned can in a given time period.
B)Jimbo has a lower opportunity cost of producing the good than does Ned.
C)Jimbo has to trade off more than Ned does to produce the good.
D)Jimbo has a higher opportunity cost of producing the good than does Ned.

Question 25

If a person has a comparative advantage in some activity, she must have an absolute advantage in that activity as well.

Question 26

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Which of the following is true?

A)Nigel has an absolute advantage in producing hair pins but not bandanas.
B)Nigel has an absolute advantage in producing bandanas but not hair pins.
C)Nigel has an absolute advantage in producing both goods.
D)Nigel does not have an absolute advantage in producing either good.

Question 27

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Which of the following is true?

A)Nigel has a comparative advantage in producing hair pins but not bandanas.
B)Nigel has a comparative advantage in producing bandanas but not hair pins.
C)Nigel has a comparative advantage in producing both goods.
D)Nigel does not have a comparative advantage in producing either good.

Question 28

If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Tina has a comparative advantage in producing banana splits.

Question 29

What does it mean for a nation to have an absolute advantage in producing a product?

Question 30

Absolute advantage occurs when one producer has greater productivity compared to another producing the same product.

Question 31

What does it mean for a person or nation to have a comparative advantage in producing a product?

Question 32

$\begin{array}{|l|c|c|} \hline & \text { Wind Chimes } & \text { Sundials } \\\hline \text { Deena } & 9 & 12 \\\hline \text { Artie } & 6 & 8\\\hline \end{array}$
Table 18.4

-Consider two individuals, Artie and Deena, who produce wind chimes and sundials. Artie?s and Deena?s weekly productivity are shown in Table 18.4. Which of the following is true?

A)Artie has a comparative advantage in producing wind chimes but not sundials.
B)Artie has a comparative advantage in producing sundials but not wind chimes.
C)Artie has a comparative advantage in producing both goods.
D)Artie does not have a comparative advantage in producing either good.

Question 33

If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Eddie has a comparative advantage in producing milk shakes.

Question 34

If a person has an absolute advantage in some activity, she must have a comparative advantage in that activity as well.

Question 35

Consider two individuals, Ozzy and Sharon, who produce toy boats and yo -yos. Ozzyʹs and Sharonʹs hourly productivity are as follows:
Who has the absolute advantage or comparative advantage in the production of yo -yos or boats?

Question 36

If Libby can produce 20 gallons of beer or 5 gallons of wine per hour, her opportunity cost of one gallon of beer is 4 gallons of wine.

Question 37

A comparative advantage is the ability of one person or nation to produce a good at an opportunity cost that is lower than that of another person or nation.

Question 38

If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Eddie has a comparative advantage in producing banana splits.

Question 39

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3

-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Which of the following is true?

A)Nigel has both an absolute and comparative advantage in hair pin production.
B)Nigel has both an absolute and comparative advantage in bandana production.
C)Nigel has neither an absolute nor comparative advantage in hair pin production.
D)Nigel has neither an absolute nor a comparative advantage in bandana production.

Question 40

$\begin{array}{|l|c|c|} \hline & \text { Wind Chimes } & \text { Sundials } \\\hline \text { Deena } & 9 & 12 \\\hline \text { Artie } & 6 & 8\\\hline \end{array}$
Table 18.4

-Consider two individuals, Artie and Deena, who produce wind chimes and sundials. Artie?s and Deena?s weekly productivity are shown in Table 18.4. Which of the following is true?

A)Deena has an absolute advantage in producing both goods, and a comparative advantage in producing wind chimes.
B)Deena has an absolute advantage in producing both goods, and a comparative advantage in producing sundials.
C)Deena has an absolute and a comparative advantage in producing both goods.
D)Deena has an absolute advantage in producing both goods, but no one has a comparative advantage in producing either good.

Question 41

For country A an import is a good produced in

A)country B and purchased by residents of country B.
B)country B and purchased by residents of country A.
C)country A and purchased by residents of country B.
D)country A and purchased by residents of country A.

Question 42

Recall the Application about U.S. candy manufacturers shifting production to Mexico and other countries
due to high sugar prices in the U.S. to answer the following question(s). According to the Application, the
U.S. government protects the domestic sugar industry from foreign competition by restricting sugar
imports, keeping the price of sugar in the U.S. artificially high. In 2003, the cost of sugar was $0.06 per
pound in Mexico and $0.21 per pound in the U.S.
According to this Application, by protecting the domestic sugar industry from foreign competition, the U.S. government is essentially

A)protecting an industry in which the U.S. has a comparative advantage in production.
B)guaranteeing that domestic sugar prices will remain competitive with international sugar prices.
C)ensuring that the supply of sugar in the U.S. will remain high.
D)sacrificing jobs in one domestic industry for jobs in another domestic industry.

Question 43

Trade will be beneficial for a nation with a comparative advantage in producing a certain product.

Question 44

A rich nation will trade with a poor nation because the

A)rich nation has the absolute advantage in all products.
B)poor nation has the absolute advantage in all products.
C)poor nation has the comparative advantage in a product.
D)rich nation has the comparative advantage in all products.

Question 45

An import is a product

A)produced in and purchased by residents of the home country.
B)produced in and sold to the residents of a foreign country.
C)produced in the home country and sold in another country.
D)produced in a foreign country and purchased by the residents of the home country.

Question 46

Consider two individuals, Celia and Sondra, who produce bracelets and pendants. Celiaʹs and Sondraʹs hourly productivity are as follows:
Who has the absolute advantage or comparative advantage in the production of bracelets or pendants?

Question 47

Recall the Application about U.S. candy manufacturers shifting production to Mexico and other countries
due to high sugar prices in the U.S. to answer the following question(s). According to the Application, the
U.S. government protects the domestic sugar industry from foreign competition by restricting sugar
imports, keeping the price of sugar in the U.S. artificially high. In 2003, the cost of sugar was $0.06 per
pound in Mexico and $0.21 per pound in the U.S.
According to this Application, by shifting production to other countries, U.S. candy manufacturers are able to reduce costs by taking advantage of other countriesʹ

A)trade imbalances.
B)market failures.
C)diminishing returns.
D)comparative advantages.

Question 48

Summary of the article:
Tribune to cut, outsource 250 call-center jobs
Reuters
Chicago Business
August 25, 2006
In a move to cut costs and increase the value of its stock, Tribune Co. announced plans to cut 250 jobs at its
newspaper call-centers and transfer those services overseas. APAC Customer Services of Deerfield, Illinois
will run the call center, with calls being routed to its operations in the Philippines.
Of the 250 jobs to be cut, 120 are full-time positions and 130 part-time. The job cuts represent approximately
1 percent of Tribune’s publishing operations. Newspaper operations that will be affected include The
Chicago Tribune and The Baltimore Sun. Tribune has already outsourced its call-center for The Los Angeles
Times.
Other measures Tribune has either taken or is considering in its attempt to trim costs and increase its value
include stock buy-backs, the sale of assets and spinning off its broadcasting division.
Tribune Co. is attempting to cut costs by shifting some of its services to the Philippines. This process of shifting production of products or services overseas to cut costs often results in

A)greater potential for market failure for those products and services.
B)greater economic uncertainty in the market for those products and services.
C)lower consumer prices on those products or services.
D)lower production quantities of those products or services.

Question 49

Trade results from

A)comparative advantage.
B)absolute advantage.
C)self-sufficiency.
D)diminishing returns.

Question 50

The principles of comparative advantage and specialization only apply to trade between different nations.

Question 51

Recall the Application about U.S. candy manufacturers shifting production to Mexico and other countries
due to high sugar prices in the U.S. to answer the following question(s). According to the Application, the
U.S. government protects the domestic sugar industry from foreign competition by restricting sugar
imports, keeping the price of sugar in the U.S. artificially high. In 2003, the cost of sugar was $0.06 per
pound in Mexico and $0.21 per pound in the U.S.
According to this Application, when domestic candy manufacturers shift production to other countries, they are

A)importing their production.
B)outsourcing their production.
C)enforcing rules of exchange.
D)facilitating the exportation of public goods.

Question 52

The cost savings from outsourcing often lead to _______ for consumers and _______ for the outsourcing company.

A)lower prices; less output
B)lower prices; more output
C)higher prices; less output
D)higher prices; more output

Question 53

Imports are products produced in the home country and sold in another country.

Question 54

Exports are products produced in the home country and sold in another country.

Question 55

Summary of the article:
Tribune to cut, outsource 250 call-center jobs
Reuters
Chicago Business
August 25, 2006
In a move to cut costs and increase the value of its stock, Tribune Co. announced plans to cut 250 jobs at its
newspaper call-centers and transfer those services overseas. APAC Customer Services of Deerfield, Illinois
will run the call center, with calls being routed to its operations in the Philippines.
Of the 250 jobs to be cut, 120 are full-time positions and 130 part-time. The job cuts represent approximately
1 percent of Tribune’s publishing operations. Newspaper operations that will be affected include The
Chicago Tribune and The Baltimore Sun. Tribune has already outsourced its call-center for The Los Angeles
Times.
Other measures Tribune has either taken or is considering in its attempt to trim costs and increase its value
include stock buy-backs, the sale of assets and spinning off its broadcasting division.
By shifting its call-center operations overseas to reduce costs, Tribune, Co. is applying the economic concept of

A)thinking at the margin.
B)comparative advantage.
C)diminishing returns.
D)using assumptions to simplify.

Question 56

An export is a product

A)produced in and purchased by residents of the home country.
B)produced in and sold to the residents of a foreign country.
C)produced in the home country and sold in another country.
D)produced in a foreign country and purchased by the residents of the home country.

Question 57

Outsourcing allows a company to take advantage of the _______ of other countries, and in doing so it can produce its products at a lower cost.

A)comparative advantages
B)diminishing returns
C)trade imbalances
D)market failures

Question 58

Jobs lost to outsourcing can be partially offset by jobs gained from

A)higher production costs.
B)higher opportunity costs.
C)greater trade imbalances.
D)increased output from another industry.

Question 59

Summary of the article:
Tribune to cut, outsource 250 call-center jobs
Reuters
Chicago Business
August 25, 2006
In a move to cut costs and increase the value of its stock, Tribune Co. announced plans to cut 250 jobs at its
newspaper call-centers and transfer those services overseas. APAC Customer Services of Deerfield, Illinois
will run the call center, with calls being routed to its operations in the Philippines.
Of the 250 jobs to be cut, 120 are full-time positions and 130 part-time. The job cuts represent approximately
1 percent of Tribune’s publishing operations. Newspaper operations that will be affected include The
Chicago Tribune and The Baltimore Sun. Tribune has already outsourced its call-center for The Los Angeles
Times.
Other measures Tribune has either taken or is considering in its attempt to trim costs and increase its value
include stock buy-backs, the sale of assets and spinning off its broadcasting division.
By shifting some of its services to the Philippines, Tribune Co. is engaging in

A)outsourcing.
B)insourcing.
C)self-sufficiency.
D)involuntary exchange.

Question 60

For country A an export is a good produced in

A)country B and purchased by residents of country B.
B)country B and purchased by residents of country A.
C)country A and purchased by residents of country B.
D)country A and purchased by residents of country A.

Question 61

Figure 18.1
Refer to Figure 18.1. With free trade, what is the equilibrium price of gloves in Duckland?

A)$0
B)$8
C)$9
D)$11

Question 62

Which of the following benefits from a quota or VER?

A)consumers
B)domestic producers
C)the government
D)all of the above

Question 63

Which of the following situations will arise in the domestic market following the imposition of a tariff?

A)imports decrease, domestic production increases, prices increase
B)imports increase, domestic production increases, prices increase
C)imports increase, domestic production decreases, prices decrease
D)imports decrease, domestic production increases, prices decrease

Question 64

Define the term ?import.?

Question 65

A(n) _______ is a trade policy by which a nation agrees to limit its exports of a good in order to avoid more restrictive trade policies.

A)tariff
B)voluntary export restraint
C)import quota
D)import ban

Question 66

Trade is only beneficial if a nation has an absolute advantage in producing all products.

Question 67

Voluntary export restraints

A)have the same effect as an import ban.
B)are illegal under the international trading rules.
C)violate the spirit of international trade agreements.
D)all of the above

Question 68

Figure 18.1
Refer to Figure 18.1. With free trade, what is the equilibrium quantity of gloves in Duckland?

A)100
B)80
C)60
D)40

Question 69

Which of the following situations will arise in the domestic market following the imposition of a voluntary export restraint?

A)imports increase, domestic production increases, prices increase
B)imports decrease, domestic production increases, prices increase
C)imports increase, domestic production decreases, prices decrease
D)imports decrease, domestic production increases, prices decrease

Question 70

Which of the following situations will arise in the domestic market following the imposition of an import ban?

A)imports increase, domestic production increases, prices increase
B)imports increase, domestic production decreases, prices decrease
C)imports decrease, domestic production increases, prices increase
D)imports decrease, domestic production increases, prices decrease

Question 71

A(n) _______ is a tax on an imported good.

A)tariff
B)import quota
C)voluntary export restraint
D)export quota

Question 72

An import ban results in

A)a decrease in the supply of the product.
B)an increase in the productʹs price.
C)a decrease in the quantity of the product bought and sold.
D)all of the above

Question 73

Imagine two countries, Zorba and Anduluvia. Zorba is producing everything at a lower absolute cost than Anduluvia. If the two countries trade what is the reason?

Question 74

Import bans, import quotas, voluntary export restraints, and tariffs on goods all

A)increase imports and raise prices for consumers.
B)reduce imports and prices for consumers.
C)reduce imports and raise prices for consumers.
D)increase imports and reduce prices for consumers.

Question 75

Which of the following situations will arise in the domestic market following the removal of an import quota?

A)imports increase, domestic production increases, prices increase
B)imports increase, domestic production decreases, prices decrease
C)imports decrease, domestic production increases, prices decrease
D)imports decrease, domestic production decreases, prices increase

Question 76

Exporting nations often agree to voluntary export restraints in an attempt to

A)employ more workers in the importing nation.
B)avoid more restrictive trade policies.
C)increase global welfare.
D)decrease inflation.

Question 77

Import bans, import quotas, voluntary export restraints, and tariffs on goods all

A)increase equilibrium quantity and prices.
B)decrease equilibrium quantity and prices.
C)increase equilibrium quantities, but decrease prices.
D)decrease equilibrium quantities, but increase prices.

Question 78

Which of the following situations will arise in the domestic market following the imposition of an import quota?

A)imports increase, domestic production decreases, prices decrease
B)imports decrease, domestic production increases, prices decrease
C)imports decrease, domestic production decreases, prices increase
D)imports decrease, domestic production increases, prices increase

Question 79

An import quota

A)limits the amount of a good that can be imported, thus decreasing prices.
B)limits the amount of a good that can be imported, thus increasing prices.
C)increases the amount of a good imported, thus decreasing prices.
D)increases the amount of a good imported, thus increasing prices.

Question 80

Define the term ?export.?