Deck 9: Global Markets in Action

Question 1

The country with a comparative advantage in the production of a good has a

A) lower opportunity cost of production.
B) higher opportunity cost of production.
C) horizontal production possibilities frontier.
D) vertical production possibilities frontier.
E) linear production possibilities frontier.

Answer 1

lower opportunity cost of production.

Question 2

Goods and services that the United States sells to other nations are called

A) exports.
B) imports.
C) bartered goods.
D) exchanges.
E) world goods.

Answer 2

exports.

Question 3

One of the major reasons why the United States exports jet airplanes is because Boeing faces ________ opportunity cost compared with firms in other nations in the production of such aircraft.

A) a higher
B) an unrelated
C) a lower
D) a nonexistent
E) an identical

Answer 3

a lower

Question 4

Of the following,________ account(s)for the largest share of imports into the United States.

A) food and drinks
B) clothing and footwear
C) crude oil
D) computers
E) chemicals

Question 5

All of the following statements about the United States are true EXCEPT:

A) The largest imports are services like royalties, license fees, and financial services, and the largest exports are goods like crude oil, automobiles, and clothing.
B) The United States is the world's largest international trader.
C) The United States imports more than it exports.
D) Services account for a larger portion of U.S. exports than U.S. imports.
E) Imports are a larger percentage of total expenditure than exports are a percentage of total production.

Question 6

The fundamental force that drives trade between nations is

A) the government.
B) NAFTA.
C) absolute advantage.
D) comparative advantage.
E) legal treaties.

Question 7

Goods and services that the United States buys from other nations are called

A) exports.
B) imports.
C) bartered goods.
D) exchanges.
E) world goods.

Question 8

The United States exports

A) goods only.
B) services only.
C) manufactured goods only.
D) goods and services.
E) only agricultural products and high-tech goods.

Question 9

The fundamental force that generates international trade is

A) the need for more goods and services.
B) absolute advantage.
C) the sea rule.
D) comparative advantage.
E) the existence of tariffs.

Question 10

If the United States starts to import a good that had previously been produced in the United States,the market price of the good in the United States

A) rises.
B) falls.
C) remains constant.
D) either remains constant or rises, depending on how whether the supply of the good stays the same or increases.
E) There is not enough information to answer the question because we need to know if the market price in the United States had been above or below the world market price before trade began.

Question 11

If a nation can produce a good or service at the lowest opportunity cost,then it

A) can sell the product at a lower price than other nations.
B) does not want to export the good because the low cost means it makes only a low profit.
C) is best for the nation to not trade the good internationally.
D) will definitely import the good because it can beat other countries' prices.
E) might export or import the good, depending on whether or not it has a comparative advantage in the production of the good.

Question 12

Imports are defined as the goods and services that we

A) produce and consume in the United States.
B) sell to other countries.
C) buy from other countries.
D) partially produce in both the United States and another country.
E) produce abroad using U.S. owned factories and then consume in the United States.

Question 13

The United States imports t-shirts from Asia.As a result,U.S.consumers pay ________ otherwise and Asian producers receive ________ otherwise.

A) a higher price than; a higher price than
B) a higher price than; a lower price than
C) a lower price than; a higher price than
D) a lower price than; a lower price than
E) the same price as; the same price as

Question 14

The United States imports t-shirts because

A) it is a dangerous job to produce them.
B) foreign nations have a lower opportunity cost of production.
C) the United States has a lower opportunity cost of production.
D) foreign economies have an absolute advantage in their production.
E) the United States must import goods and services from other countries so that they can develop economically.

Question 15

If the United States imports purses,then the quantity of purses produced in the United States will ________ and the quantity of purses purchased by consumers in the United States will ________.

A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
E) not change; increase

Question 16

How can a domestic producer determine whether or not it has a comparative advantage in the production of a good or service?

A) It cannot.
B) by comparing the price it receives to the prices of other domestic producers
C) by comparing the price it receives to the world price
D) by comparing the quantity it produces to the quantity produced in the world
E) by comparing the total domestic quantity to the total world quantity

Question 17

A country exports the goods

A) for which its domestic prices are very high compared to the world prices.
B) that the economy can produce the most of.
C) that the economy can produce at relatively lowest opportunity cost.
D) that it cannot sell domestically.
E) in which it has a comparative disadvantage.

Question 18

A nation has a comparative advantage in a good when it has a

A) lower absolute cost of producing the good.
B) higher opportunity cost of producing the good.
C) lower opportunity cost of producing the good.
D) higher absolute cost of producing the good.
E) tariff in place protecting the producers of the good.

Question 19

Most t-shirts bought by Americans are made in Asia.As a result of free trade,the production of t-shirts in America

A) has increased.
B) has stayed the same.
C) has decreased.
D) has been taken over by the government.
E) might change, but more information about what else the United States imports is needed to determine if U.S. production increased, decreased, or did not change.

Question 20

If you buy a DVD player produced in Japan,a

A) good was exported by Japan and imported by the United States.
B) good was imported by Japan and by the United States.
C) service was imported by Japan and exported by the United States.
D) service was exported by Japan and imported by the United States.
E) good was exported by Japan and by the United States.

Question 21

As a result of importing a good,domestic consumers ________ the quantity consumed and the price of the good ________.

A) increase; rises
B) increase; falls
C) decrease; rises
D) decrease; falls
E) increase; does not change

Question 22

A nation will export a good if its

A) no-trade, domestic price is equal to the world price.
B) no-trade, domestic price is less than the world price
C) no-trade, domestic price is greater than the world price.
D) no-trade, domestic quantity is less than the world quantity.
E) no-trade, domestic quantity is greater than the world quantity.

Question 23

A country will export a good if it

A) can sell the good to a foreigner at a higher price than the no-trade domestic price.
B) can sell the good to a foreigner at a lower price than the no-trade domestic price.
C) can dump the good on the world market.
D) has a high opportunity cost of production.
E) is impossible to import the good.

Question 24

Suevania opens its doors to trade with Barvania.Barvania has a comparative advantage in the production of machinery.Hence,once trade occurs Suevania's consumers will buy ________ machinery and pay ________ before.

A) more; a higher price than
B) more; a lower price than
C) less; a higher price than
D) less; a lower price than
E) the same amount of; the same price as

Question 25

$\begin{array}{c}\begin{array}{c}\text { Price } \\\text { (dollars per unit }\\\hline 2 \\4 \\6 \\8 \\10 \\12\end{array}\begin{array}{c}\text { Quantity demanded }\\\text { (units per day) } \\\hline 20 \\19 \\18 \\17 \\16 \\15\end{array}\begin{array}{c}\text { Quantity supplied }\\\text { (units per day) } \\\hline 14 \\16 \\18 \\20 \\22 \\24\end{array}\end{array}$


-According to the above table,the country will import the good if the world price is less than ________ and will export the good if the world price is more than ________.

A) $4; $4
B) $6; $6
C) $8; $4
D) $10; $10
E) $4; $8

Question 26

With no international trade,the U.S.price of wheat is lower than the world price of wheat.This indicates that the United States ________ a comparative advantage in the production of wheat and with international trade,the United States will ________ wheat.

A) has; export
B) has; not trade
C) has; import
D) does not have; export
E) might have; export

Question 27

Airlines in other countries buy airplanes from Boeing because

A) it is illegal to produce airplanes in many other countries.
B) Boeing's prices are less than what the airlines would pay for planes built in their own country.
C) trade treaties require such purchases.
D) these nations must buy something from the United States.
E) None of the above answers is correct.

Question 28

When a country exports a good because the world price is higher than the no-trade domestic price,domestic purchases of the good ________ and domestic production of the good ________.

A) increase; increases
B) increase; decreases
C) decrease; increases
D) decrease; decreases
E) do not change; increases

Question 29

If the world price of a good is below the no-trade domestic price,a country

A) will benefit from exporting the good.
B) will benefit from importing the good.
C) cannot benefit from trade.
D) has a comparative advantage in the production of that good.
E) will not engage in trade for that good.

Question 30

The above figure shows the U.S.market for flip-flops.With no international trade,the price in the United States for flip-flops is ________.With international trade,the price in the United States for flip-flops is ________.

A) $12; $14
B) $500; $300
C) $14; $12
D) $700; $300
E) $500; $700

Question 31

The above figure shows the U.S.market for flip-flops.With international trade,U.S.consumers buy ________ flip-flops and U.S.producers produce ________ flip-flops.

A) 500,000; 500,000
B) 300,000; 700,000
C) 500,000; 300,000
D) 700,000; 300,000
E) 700,000; 500,000

Question 32

$\begin{array}{c}\begin{array}{c}\text { Price } \\\text { (dollars per unit }\\\hline 2 \\4 \\6 \\8 \\10 \\12\end{array}\begin{array}{c}\text { Quantity demanded }\\\text { (units per day) } \\\hline 20 \\19 \\18 \\17 \\16 \\15\end{array}\begin{array}{c}\text { Quantity supplied }\\\text { (units per day) } \\\hline 14 \\16 \\18 \\20 \\22 \\24\end{array}\end{array}$


-The table above has the domestic demand and domestic supply schedules for a good.If the world price of the good is $10 and international trade occurs,then according to the table

A) domestic production is higher before trade than after trade.
B) the country imports 16 units a day.
C) the country imports 6 units a day.
D) the country exports 6 units a day.
E) the country exports 22 units a day.

Question 33

Once international trade occurs,a country with a comparative advantage in the production of a good will ________ production of the good and ________.

A) decrease; import the good
B) increase; export the good
C) not change; import the good
D) increase; import the good
E) decrease; export the good

Question 34

The above figure shows the U.S.market for flip-flops.When there is no international trade,the U.S.price is ________ per flip-flop and the U.S.quantity is ________ flip-flops.

A) $12; 300,000
B) $14; 500,000
C) $12; 700,000
D) $14; 300,000
E) $14; 700,000

Question 35

The above figure shows the U.S.market for flip-flops.With international trade,the United States imports ________ flip-flops.

A) 300,000
B) 500,000
C) 700,000
D) 0 because the United States exports flip-flops
E) 400,000

Question 36

$\begin{array}{c}\begin{array}{c}\text { Price } \\\text { (dollars per unit }\\\hline 2 \\4 \\6 \\8 \\10 \\12\end{array}\begin{array}{c}\text { Quantity demanded }\\\text { (units per day) } \\\hline 20 \\19 \\18 \\17 \\16 \\15\end{array}\begin{array}{c}\text { Quantity supplied }\\\text { (units per day) } \\\hline 14 \\16 \\18 \\20 \\22 \\24\end{array}\end{array}$


-The table above has the domestic demand and domestic supply schedules for a good.According to the table,the no-trade price of the good is

A) $4.
B) $6.
C) $8.
D) $10.
E) $2.

Question 37

If a nation imports a good that can be domestically produced,what happens to the quantity consumed of the good and why?

A) The quantity consumed increases because the market price decreases.
B) The quantity consumed decreases because the market price increases.
C) The quantity consumed remains constant because the price is unchanged.
D) The quantity consumed increases because the nation produces more of the good.
E) The quantity consumed decreases because the market price decreases.

Question 38

As a result of importing a good,domestic producers ________ the quantity produced and the price of the good ________.

A) increase; rises
B) increase; falls
C) decrease; rises
D) decrease; falls
E) decrease; does not change

Question 39

The above figure shows the U.S.market for flip-flops.With international trade,the equilibrium price in the United States is ________ and the United States ________ flip-flops.

A) $12; imports
B) $12; does not trade
C) $12; exports
D) $14; imports
E) $14; does not trade

Question 40

A country exports a good if

A) it has a high opportunity cost of production.
B) the world price of the good is below the country's no-trade equilibrium price.
C) the world price of the good is above the country's no-trade equilibrium price.
D) the quantity demanded of the good in the country is greater than the quantity supplied at the world price.
E) it cannot import the good.

Question 41

The United States exports a good if its no-trade U.S.price is ________ its world price.With international trade,U.S.production of the good ________ compared to the level of no-trade production.

A) higher than; does not change
B) higher than; increases
C) lower than; increases
D) the same as; increases
E) the same as; does not change

Question 42

The figure above shows the U.S.demand and U.S.supply curves for cherries.At a world price of $2 per pound once international trade occurs,the total exports of cherries from the United States to other nations equals

A) 200,000 pounds.
B) 400,000 pounds.
C) 600,000 pounds.
D) 800,000 pounds.
E) 0 pounds.

Question 43

Who gains from international trade?

A) only the exporting nation
B) only the importing nation
C) both the importing and the exporting nations
D) neither the importing nor the exporting nations
E) The gains depends on which nation gets to keep the total revenue from the sale

Question 44

The figure above shows the U.S.demand and U.S.supply curves for cherries.At a world price of $2 per pound once international trade occurs,the total imports of cherries to the United States from other nations equals

A) 200,000 pounds.
B) 400,000 pounds.
C) 600,000 pounds.
D) 800,000 pounds.
E) 0 pounds.

Question 45

International trade benefits

A) only the exporter.
B) only the importer.
C) both the exporter and the importer.
D) neither the exporter nor the importer.
E) the exporter at all times and sometimes also the importer.

Question 46

The figure above shows the U.S.demand and U.S.supply curves for cherries.In the absence of international trade,how many pounds of cherries would U.S.farmers produce?

A) 200,000 pounds
B) 400,000 pounds
C) 600,000 pounds
D) 800,000 pounds
E) 0 pounds

Question 47

The figure above shows the U.S.demand and U.S.supply curves for cherries.In the absence of international trade,cherry farmers would receive ________ per pound of cherries.

A) $0.50
B) $1.50
C) $2.50
D) $2.00
E) $1.00

Question 48

When a good is imported,the domestic production of it ________ and the domestic consumption of it ________.

A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change

Question 49

Most t-shirts bought by Americans are made in Asia.U.S.consumers of t-shirts buy these t-shirts because

A) they pay a higher price for t-shirts made in Asia than they would for similar shirts made in the United States.
B) they pay a lower price for t-shirts made in Asia than they would for similar shirts made in the United States.
C) they must buy some goods or services produced in Asia.
D) by so doing they are helping preserve U.S. jobs producing t-shirts.
E) they know that the United States has a comparative advantage in wearing t-shirts.

Question 50

A nation will import a good if its no-trade,domestic

A) price is equal to the world price.
B) price is less than the world price.
C) price is greater than the world price.
D) quantity is less than the world quantity.
E) quantity is greater than the world quantity.

Question 51

When Italy buys Boeing jets,the price Italy pays is ________ if it produced its own jets and the price Boeing receives is ________ than it could receive from an additional U.S.buyer.

A) lower than; lower
B) higher than; higher
C) lower than; higher
D) higher than; lower
E) the same as; higher

Question 52

Goods and services that we buy from firms in other countries are called our

A) imports.
B) exports.
C) inputs.
D) raw materials.
E) obligations.

Question 53

The above figure shows the U.S.market for wheat.When there no international trade,the U.S.price of wheat is ________ per ton and the U.S.equilibrium quantity is ________ tons.

A) $14; 300,000
B) $14; 500,000
C) $16; 500,000
D) $16; 300,000
E) $16; 700,000

Question 54

The above figure shows the U.S.market for wheat.With no international trade,the price of wheat in the United States is ________ per ton.With international trade,the price of wheat in the United States is ________ per ton.

A) $16; $14
B) $500; $300
C) $14; $16
D) $700; $300
E) $500; $700

Question 55

The figure above shows the U.S.demand and U.S.supply curves for cherries.Suppose the world price of cherries is $2 per pound.At this price,U.S.consumption of cherries will equal

A) 200,000 pounds.
B) 400,000 pounds.
C) 600,000 pounds.
D) 800,000 pounds.
E) 0 pounds.

Question 56

If the United States exports planes to Brazil and imports ethanol from Brazil,the price received by U.S.producers of planes ________,and the price received by Brazilian producers of ethanol ________.

A) does not change; does not change
B) rises; rises
C) rises; falls
D) falls; rises
E) falls; falls

Question 57

The figure above shows the U.S.demand and U.S.supply curves for cherries.At a world price of $2 per pound once international trade occurs,the production of cherries in the United States will equal

A) 200,000 pounds.
B) 400,000 pounds.
C) 600,000 pounds.
D) 800,000 pounds.
E) 0 pounds.

Question 58

The above figure shows the U.S.market for wheat.With international trade,the United States exports ________ of wheat.

A) 300,000 tons
B) 500,000 tons
C) 700,000 tons
D) 400,000 tons
E) None of the above answers is correct because the United States imports wheat.

Question 59

The above figure shows the U.S.market for wheat.With international trade,the price of wheat in the United States is ________ per ton and the United States ________ wheat.

A) $16; exports
B) $14; exports
C) $14; imports
D) $16; imports
E) $14; does not trade

Question 60

The above figure shows the U.S.market for wheat.With international trade,U.S.consumers buy ________ tons of wheat and U.S.producers produce ________ tons of wheat.

A) 700,000; 300,000
B) 500,000; 500,000
C) 300,000; 500,000
D) 300,000; 700,000
E) 500,000; 700,000

Question 61

When a nation starts importing a good or service,domestic employment in that industry

A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what else the country imports is needed to determine if employment increases, decreases, or does not change.
E) might change, but more information about what the country exports is needed to determine if employment increases, decreases, or does not change.

Question 62

When a nation imports a good,its consumer surplus ________,and its producer surplus ________.

A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; increases
E) does not change; increases

Question 63

When a nation exports a good or service in which it has a comparative advantage,employment in that industry

A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what else the country exports is needed to determine if employment increases, decreases, or does not change.
E) might change, but more information about what the country imports is needed to determine if employment increases, decreases, or does not change.

Question 64

When a nation exports a good,its ________ surplus decreases and its ________ surplus increases.

A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer

Question 65

When a nation exports a good or service in which it has a comparative advantage,production of the good or service

A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what the country imports is needed to determine if production increases, decreases, or does not change.
E) might change, but more information about what else the country exports is needed to determine if production increases, decreases, or does not change.

Question 66

When a nation imports a good or service,the nation's consumer surplus ________,its producer surplus ________,and its total surplus ________.

A) increases; decreases; increases
B) increases; decreases; decreases
C) increases; increases; increases
D) decreases; decreases; decreases
E) decreases; decreases; increases

Question 67

The above figure shows the U.S.market for chocolate.With no international trade,producer surplus is equal to

A) area A + area B + area C + area D.
B) area B + area C + area D + area E.
C) area B + area C + area D.
D) area C + area D.
E) area E.

Question 68

When a nation exports a good,its consumer surplus ________,and its producer surplus ________.

A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; increases
E) does not change; increases

Question 69

After a nation starts importing a good from overseas,the domestic price of the good

A) falls.
B) stays the same.
C) rises.
D) might change, but more information about what the country exports is needed to determine if the price rises, falls, or does not change.
E) might change, but more information about what else the country imports is needed to determine if the price rises, falls, or does not change.

Question 70

The above figure shows the U.S.market for chocolate.With international trade,consumer surplus is equal to

A) area A + area B + area C + area D.
B) area A.
C) area B + area C + area D.
D) area C + area D.
E) area E.

Question 71

When a nation imports a good,its ________ surplus decreases and its ________ surplus increases.

A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; total
E) total; consumer

Question 72

The above figure shows the U.S.market for chocolate.With international trade,the gain in total surplus is equal to

A) area B.
B) area A + area B + area C + area D.
C) area B + area C + area D + area E.
D) area C + area D.
E) area B + area C + area D.

Question 73

When a nation imports a good,its ________ surplus increases and its ________ surplus increases.

A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; total
E) total; consumer

Question 74

If Country A opens up their corn market to trade with the rest of the world and the global price of corn is lower than the equilibrium price of corn in Country A,then Country A will ________ corn,which will ________ consumer surplus,________ producer surplus,and ________ total surplus.

A) import; increase; decrease; increase
B) import; decrease; increase; increase
C) export; increase; decrease; increase
D) export; decrease; increase; increase
E) export; decrease; increase; decrease

Question 75

When a nation starts importing a good or service,the domestic production of the good or service

A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what the country exports is needed to determine if production increases, decreases, or does not change.
E) might change, but more information about what else the country imports is needed to determine if production increases, decreases, or does not change.

Question 76

The above figure shows the U.S.market for chocolate.With no international trade,consumer surplus is equal to

A) area A + area B + area C + area D.
B) area A.
C) area B + area C + area D.
D) area C + area D.
E) area E.

Question 77

The above figure shows the U.S.market for chocolate.With international trade,________ is the transfer of surplus from producers to consumers.

A) area B +area C + area D
B) area B
C) area C + area D
D) area A
E) area E

Question 78

The above figure shows the U.S.market for chocolate.With no international trade,consumer surplus is equal to ________ and producer surplus is equal to ________.

A) area A + area B + area C + area D; area E
B) area B + area C + area D; area A + area E
C) area A; area E
D) area C + area D; area B + area E
E) area E; area A + area B + area C + area D

Question 79

When a nation exports a good or service,employment in that industry

A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what else the country exports is needed to determine if employment increases, decreases, or does not change.
E) might change, but more information about what the country imports is needed to determine if employment increases, decreases, or does not change.

Question 80

When a nation imports a good,its ________ surplus decreases and its ________ surplus increases.

A) consumer; producer
B) consumer; consumer
C) producer; producer
D) producer; consumer
E) total; consumer