Deck 15: International Trade and Trade Policy

Question 1

If Atlantis has an open economy, then it:

A)trades with other countries.
B)does not trade with other countries.
C)has a democratically elected government.
D)allows imports but not exports.

Answer 1

trades with other countries.

Question 2

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one radio?

A)1/10 TV
B)1/5 TV
C)5 TVs
D)10 TVs

Answer 2

1/5 TV

Question 3

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one shirt?

A)¼ computer
B)½ computer
C)2 computers
D)4 computers

Answer 3

¼ computer

Question 4

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Ricardo to produce one shirt?

A)¼ computer
B)½ computer
C)2 computers
D)4 computers

Question 5

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. ________ has the comparative advantage in computers and ________ has the comparative advantage in shirts.

A)Paula; Paula
B)Paula; Ricardo
C)Ricardo; Paula
D)Ricardo; Ricardo

Question 6

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. To maximize total output, Paula should specialize in producing ________ while Ricardo should specialize in producing ________.

A)computers; shirts
B)shirts; computers
C)computers; computers
D)shirts; shirts

Question 7

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Ricardo to produce one computer?

A)¼ shirt
B)½ shirt
C)2 shirts
D)4 shirts

Question 8

An economy that trades with the rest of the world is a(n)________.

A)open economy
B)command economy
C)trade economy
D)closed economy

Question 9

An economy that does NOT trade with the rest of the world is a(n)

A)open economy.
B)command economy.
C)trade economy.
D)closed economy.

Question 10

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one TV?

A)1/5 radio
B)1/3 radio
C)3 radios
D)12 radios

Question 11

A society could achieve a higher level of production if ________.

A)each person in the society is a jack-of-all trades
B)each person specializes according to their comparative advantage
C)it does not trade with other nations
D)it does not have taxes on imported goods

Question 12

If Fredonia has a closed economy, it ________ with other countries.

A)trades
B)does not trade
C)prevents its citizens from traveling to other countries but trades
D)does not negotiate

Question 13

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Jen to produce one TV?

A)1/5 radio
B)1/3 radio
C)5 radios
D)10 radios

Question 14

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the opportunity cost for Paula to produce one computer?

A)¼ shirt
B)½ shirt
C)1 shirt
D)4 shirts

Question 15

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one radio?

A)1/12 TV
B)1/6 TV
C)1/3 TV
D)4 TVs

Question 16

An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. What is the most of each good that can be produced each day if each worker fully specializes according to his/her comparative advantage?

A)4 computers and 12 shirts.
B)5 computers and 14 shirts
C)6 computers and 16 shirts
D)8 computers and 22 shirts

Question 17

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. To maximize total output, Jen should specialize in producing ________ while Rich should specialize in producing ________.

A)TVs; radios
B)TVs; TVs
C)radios; TVs
D)radios; both goods

Question 18

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. ________ has the comparative advantage in TVs and ________ has the comparative advantage in radios.

A)Jen; Jen
B)Rich; Rich
C)Jen; Rich
D)Rich; Jen

Question 19

The production possibility curve (PPC)shows the ________ production of one good for ________ production level of the other good.

A)minimum; every possible
B)maximum; every possible
C)minimum; the maximum
D)maximum; the minimum

Question 20

In general, a nation can enjoy a higher standard of living by ________ than by being self sufficient.

A)increasing its versatility
B)avoiding trade with other nations
C)specialization and trading
D)taxing imported goods

Question 21

Citizens can consume more of everything in a(n)

A)autarky.
B)closed economy.
C)open economy.
D)economy with many citizens.

Question 22

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. Amy's opportunity cost of producing one car is ________ pounds of cheese.

A)1/250
B)1/20
C)20
D)250

Question 23

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one car is ________ pound(s)of cheese.

A)1/250
B)1/20
C)250
D)500

Question 24

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing

A)both cheese and cars.
B)cheese.
C)cars.
D)neither cheese nor cars.

Question 25

The following graph is the production possibility curve for a three-person economy, with workers Janna, Drew, and Karl. Who has the highest opportunity cost of producing rice?

A)Janna
B)Drew
C)Kari
D)Janna and Drew

Question 26

The country Happy Land claims that it is producing everything its citizens consume. This situation is called

A)a closed economy.
B)an open economy.
C)protectionism.
D)autarky.

Question 27

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. If both Amy and Mike produce the good in which they have comparative advantage, the total annual output of this economy will be ________.

A)10,000 pounds of cheese
B)30 cars
C)10,000 pounds of cheese and 30 cars
D)5,000 pounds of cheese and 20 cars

Question 28

The following graph is the production possibility curve for a three-person economy, with workers Janna, Drew, and Karl. The slope of the PPC between points Y and Z is determined by ________ opportunity cost.

A)Janna's
B)Drew's
C)Kari's
D)Janna and Drew's

Question 29

The following graph is the production possibility curve for a three-person economy, with workers Janna, Drew, and Kari.  
Who has the greatest comparative advantage in shoe production?

A)Janna
B)Drew
C)Kari
D)None of them

Question 30

An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the most of each type that can be produced per day if each worker fully specializes according to his/her comparative advantage?

A)2 TVs and 6 radios
B)3 TVs and 8 radios
C)4 TVs and 10 radios
D)5 TVs and 12 radios

Question 31

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Amy should specialize in producing

A)both cheese and cars.
B)cheese.
C)cars.
D)neither cheese nor cars.

Question 32

The following graph is the production possibility curve for a three-person economy, with workers Janna, Drew, and Karl. The slope of the PPC between points X and Y is determined by ________ opportunity cost.

A)Janna's
B)Drew's
C)Kari's
D)Janna and Drew's

Question 33

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. Amy's opportunity cost of producing one pound of cheese is ________ car(s).

A)1/250
B)1/20
C)20
D)250

Question 34

The following graph is the production possibility curve for a three-person economy, with workers Janna, Drew, and Kari. Who has the greatest comparative advantage in rice production?

A)Janna
B)Drew
C)Kari
D)None of them

Question 35

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one pound of cheese is ________ car(s).

A)1/500
B)1/250
C)1/10
D)500

Question 36

A country's economic welfare most directly depends on

A)what it can produce.
B)what its citizens can consume.
C)how many goods and services it imports.
D)how many goods and services it exports.

Question 37

If a society's consumption possibilities are identical to its production possibilities that society has

A)a closed economy.
B)an open economy.
C)a two-person economy.
D)a free trade policy.

Question 38

Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. Amy has a comparative advantage in producing ________, and Mike has a comparative advantage in producing ________.

A)cars; cars
B)cars; cheese
C)cheese; cars
D)cheese; cheese

Question 39

Autarky is a situation in which a country is economically

A)dependent on trade.
B)self-sufficient.
C)underdeveloped.
D)destroyed.

Question 40

The combination of goods and services Mexico's citizens might feasibly consume are called Mexico's

A)total consumption.
B)total production.
C)production possibilities.
D)consumption possibilities.

Question 41

In an open economy, a society's consumption possibilities are typically ________ its production possibilities.

A)less than
B)equal to
C)unrelated to
D)greater than

Question 42

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. If both Art and Silvia worked full-time producing beef, how many pounds of beef can they produce per year?

A)2,000 pounds
B)4,000 pounds
C)6,000 pounds
D)8,000 pounds

Question 43

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. Silvia's opportunity cost of producing one pound of beef is ________ computer(s).

A)1/50
B)1/25
C)25
D)50

Question 44

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. If this country has an open economy, Silvia and Art can get ________ pounds of beef in exchange of a computer.

A)25
B)50
C)80
D)120

Question 45

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. Art's opportunity cost of producing one computer is ________ pounds of beef.

A)1/50
B)1/100
C)50
D)100

Question 46

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. Art's opportunity cost of producing one pound of beef is ________ computer(s).

A)1/100
B)1/50
C)50
D)100

Question 47

Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. How much of each good can be produced if each worker fully specializes according to comparative advantage?

A)1,600 fish and 8,000 pounds of berries
B)2,000 fish and 8,000 pounds of berries
C)3,600 fish and 12,800 pounds of berries
D)1,600 fish and 4,800 pounds of berries

Question 48

The accompanying figure shows the annual production possibilities curve for a small country that is open to trade with the rest of the world. Suppose the world price of cashews is $12 per pound, and the world price of mangos is $4 per pound. As indicated in the figure, at these prices, this country will produce 21,000 pounds of mangos and 5,000 pounds of cashews each year. Suppose that the residents of this country are allergic to cashews and only want to consume mangos. Given that this country is open to trade with the rest of the world, how many mangos in total can its residents consume each year?

A)44,000 pounds
B)36,000 pounds
C)30,000 pounds
D)39,000 pounds

Question 49

If the United States consumption possibilities are greater than its production possibilities, then the United States must have

A)a closed economy.
B)an open economy.
C)autarky.
D)protectionism.

Question 50

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. Silvia has a comparative advantage in producing ________, and Art has a comparative advantage in producing ________.

A)beef; beef
B)beef; computers
C)computers; beef
D)computers; computers

Question 51

Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. If they open up to trade and the citizens of the island consumed 1,200 fish per year, how many pounds of berries can they consume every year?

A)12,800 pounds
B)9,400 pounds
C)9,200 pounds
D)8,000 pounds

Question 52

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. With the opportunity to trade, Silvia can trade all the computers she can produce per year if she specializes in producing computers, for ________ pounds of beef.

A)2,000
B)3,000
C)4,000
D)6,000

Question 53

Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. In a closed economy, who has the comparative advantage in catching fish?

A)Sheila and Jim
B)Jim
C)Sheila
D)Neither of them

Question 54

Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. Who has the comparative advantage in producing berries?

A)Sheila and Jim
B)Jim
C)Sheila
D)Neither of them

Question 55

The accompanying figure shows the annual production possibilities curve for a small country that is open to trade with the rest of the world. Suppose the world price of cashews is $12 per pound, and the world price of mangos is $4 per pound. As indicated in the figure, at these prices, this country will produce 21,000 pounds of mangos and 5,000 pounds of cashews each year. At this country's current level of production, what is the opportunity cost of a pound of mangos in terms of cashews?

A)1/3 pounds of cashews
B)3 pounds of cashews
C)5/21 pounds of cashews
D)21/5 pounds of cashews

Question 56

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. With the open trade economy, Silvia and Art can consume any combination of beef and computers from the line

A)XY.
B)PQ.
C)XYZ.
D)PY.

Question 57

Sheila and Jim live in an island where they are the only two workers. Sheila can either catch 10 fish or gather 40 pounds of berries each day, and Jim can either catch 8 fish or gather 24 pounds of berries each day. Both of them work 200 days per year. At current world prices 1 fish trades for 3.5 pounds of berries. In a closed economy, if the citizens of this island consume 1,200 fish per year, how many pounds of berries can they consume?

A)12,800 pounds
B)9,200 pounds
C)8,000 pounds
D)4,800 pounds

Question 58

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. With the opportunity to trade Silvia and Art can ________ the maximum consumption of computers by ________ units.

A)decrease; 80
B)increase; 160
C)decrease; 160
D)increase; 40

Question 59

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. How much of each good is produced if each worker fully specializes according to comparative advantage?

A)8,000 pounds of beef and 120 computers
B)6,000 pounds of beef and 160 computers
C)4,000 pounds of beef and 80 computers
D)6,000 pounds of beef and 120 computers

Question 60

The following graph shows the production possibilities curve for the economy with only two members, Silvia and Art. Silvia can produce either 50 pounds of beef or 2 computers per week, and Art can produce 100 pounds of beef or 1 computer per week. Both of them work 40 weeks per year. Silvia's opportunity cost of producing one computer is ________ pounds of beef.

A)1/50
B)1/25
C)25
D)50

Question 61

If the opportunity cost of producing a good domestically is less than the opportunity cost of purchasing it on the world market, a country can gain by

A)increasing production and decreasing imports.
B)increasing production and decreasing exports.
C)decreasing production and increasing exports.
D)decreasing production and increasing imports.

Question 62

The world price of a good is determined by the

A)country that produces the good.
B)supply of that good in the world market.
C)demand for that good in the world market.
D)worldwide demand and supply of that good.

Question 63

Refer to the following graph. The maximum amount of good A can be consumed in this economy without trade is

A)F units.
B)P units.
C)G units.
D)Q units.

Question 64

In a many-worker economy the consumption possibilities line touches the production possibility curve

A)at one point.
B)at two points.
C)at three points.
D)at more than three points.

Question 65

If this is a closed economy how many cars will be exchanged?

A)20,000
B)40,000
C)60,000
D)80,000

Question 66

The United States imports shoes from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be ________ the world price of shoes.

A)less than
B)greater than
C)equal to
D)close to

Question 67

If the opportunity cost of producing a good domestically exceeds the opportunity cost of purchasing it on the world market, a country can gain by

A)increasing production and decreasing imports.
B)increasing production and decreasing exports.
C)decreasing production and increasing exports.
D)decreasing production and increasing imports.

Question 68

If the price of a good in a closed economy is greater than the world price, then if the country opens its markets to world trade the country will be a ________ of that good.

A)net importer
B)net exporter
C)importer and exporter
D)producer

Question 69

If a country is a net importer of a good, domestic suppliers will supply ________ of that good after it opens itself to international trade.

A)more
B)the same amount
C)none
D)less

Question 70

The price at which a good or service is traded on international markets is called the ________ price.

A)international
B)world
C)universal
D)market

Question 71

Refer to the following graph. If this country is producing between point P and G, it will gain by ________ its production of good A and importing more ________.

A)increasing; good B
B)increasing; good A
C)decreasing; good B
D)decreasing; good A

Question 72

What is the price of cars if this were a closed economy?

A)$6,000/car
B)$8,000/car
C)$10,000/car
D)$14,000/car

Question 73

Refer to the following graph. FH is the ________, which tells us how much of good B must be exchanged on ________ market to obtain an additional good A

A)production possibility curve; world
B)production possibility curve; domestic
C)consumption possibilities curve; world
D)consumption possibilities curve; domestic

Question 74

Refer to the following graph. If this country is producing between point G and Q, it will gain by ________ its production of good A and importing more ________.

A)increasing; good B
B)increasing; good A
C)decreasing; good B
D)decreasing; good A

Question 75

Refer to the following graph. The maximum amount of good B can be consumed in this economy with international trade is

A)F units.
B)P units.
C)G units.
D)Q units.

Question 76

Refer to the following graph. With free trade, this country's citizens can consume the greatest amount of both good A and good B if the country produces at point

A)F.
B)G.
C)H.
D)P.

Question 77

The slope of a many-worker consumption possibilities is determined by the relative price of

A)both goods in the domestic market.
B)both goods in the world market.
C)the good that is most in demand.
D)the good that is least in demand.

Question 78

Consider a many-worker economy with two goods. With access to international trade, a country can consume the greatest amount of both goods by producing at the point where the

A)slope of production possibilities curve is equal to slope of consumption possibilities curve.
B)consumption possibilities curve intersects the production possibility curve.
C)slope of consumption possibilities curve is greater than the slope of the production possibility curve.
D)production possibilities curve intersects the horizontal axis.

Question 79

The United States imports garments from third world countries. This means that if the U.S. economy were closed, the domestic price of goods would be ________ the world price of garments.

A)less than
B)greater than
C)equal to
D)close to

Question 80

If a country is a net importer of a good, the price of that good will ________ when the economy goes from closed to open for trade.

A)increase
B)stay the same
C)first increase then decrease
D)decrease