Question 1

Which of the following is not an important question for economic policy raised by the experience of the textile industry?

Accepted Answer

While all of the other questions are relevant to economic policy in the context of the textile industry, the question of which argument for restricting free trade is politically feasible is not specific to this industry and is more generally applicable to economic policy.

Question 2

The price of sugar that prevails in international markets is called the

Accepted Answer

The price of sugar that prevails in international markets is commonly known as the world price of sugar. This price is determined by the forces of supply and demand in the global market and is influenced by various factors such as production levels, trade policies, and weather conditions.

Question 3

A logical starting point from which the study of international trade begins is

Accepted Answer

The principle of comparative advantage is widely recognized as the logical starting point from which the study of international trade begins. It explains how countries can benefit from trading with each other, even if one country is more efficient at producing all goods than another country. It also highlights the potential gains from specialization and trade, as countries can produce the goods in which they have a comparative advantage and import goods that they can produce less efficiently.

Question 4

A tax on an imported good is called a

Accepted Answer

A tax on an imported good is called a tariff. A quota is a limit on the quantity of a particular product that can be imported, while a supply tax and trade tax are not commonly used terminology in international trade.

Question 5

Which of the following tools and concepts is useful in the analysis of international trade?

Accepted Answer

All three tools and concepts are important in analyzing international trade. Total surplus measures the overall welfare of consumers and producers in a market, and can be used to compare the net benefits of trade. Domestic supply is important to understand the potential impact of imports on domestic producers and the domestic market. Equilibrium price helps to determine the market price at which the quantity of a good supplied equals the quantity demanded.

Question 6

Assume,for Singapore,that the domestic price of soybeans without international trade is higher than the world price of soybeans.This suggests that,in the production of soybeans,

Accepted Answer

If the domestic price of soybeans in Singapore is higher than the world price, it means that Singapore is not efficient in producing soybeans compared to other countries. Therefore, other countries have a comparative advantage in producing soybeans, and Singapore will import soybeans to meet its domestic demand.

Question 7

A tariff is a

Accepted Answer

A tariff is a tax imposed by a government on goods that are imported into a country. This tax is levied on the price of the imported item, making it more expensive for the buyer. The purpose is to make the imported goods more expensive than similar products produced locally, thereby protecting domestic industries from foreign competition.

Question 8

What is the fundamental basis for trade among nations?

Accepted Answer

The fundamental basis for trade among nations is comparative advantage, which means that each country should specialize in producing goods and services that they are relatively better at producing compared to other countries and trade with other countries for goods and services that they are less efficient in producing. This allows for greater efficiency and benefits for all countries involved, as they can produce and consume more with the same amount of resources. Shortages or surpluses in nations that do not trade and misguided economic policies can hinder trade, but they are not the fundamental basis for it.

Question 9

An important factor in the decline of the U.S.textile industry over the past 100 or so years is

Accepted Answer

Foreign competitors have been able to produce textile goods at lower costs, which has made it difficult for the U.S. textile industry to compete. This has led to job losses and a decline in the industry over time. While factors like changes in consumer preferences and income levels can also impact demand for clothing, the ability of foreign competitors to produce textiles at lower costs is a major factor in the decline of the U.S. textile industry.

Question 10

With which of the Ten Principles of Economics is the study of international trade most closely connected?

Accepted Answer

The study of international trade is closely connected with the principle that trade can make everyone better off. This principle states that by specializing in producing and trading goods and services, countries can benefit from the gains of trade, leading to increased efficiency and higher standards of living. International trade also leads to increased competition, lower prices, and more choices for consumers, further increasing the benefits of trade.

Question 11

If a country allows trade and,for a certain good,the domestic price without trade is higher than the world price,

Accepted Answer

If the domestic price without trade is higher than the world price, domestic consumers would demand less of the good and domestic producers would supply more of the good. As a result, the country will be an importer of the good to meet the excess demand.

Question 12

The principle of comparative advantage asserts that

Accepted Answer

The principle of comparative advantage states that countries can become better off by specializing in what they do best. This means that countries should focus on producing goods and services where they have a lower opportunity cost, and trade with other countries to obtain what they are not efficient at producing. This allows for greater efficiency, higher productivity, and ultimately leads to higher growth rates and rising standards of living. A and C are incorrect because they are not consistent with the principle of comparative advantage. B is partially correct, but it does not fully capture the essence of the principle.

Question 13

The nation of Falconia forbids international trade.In Falconia,you can obtain a computer by trading 3 bicycles.In other countries,you can obtain a computer by trading 5 bicycles.These facts indicate that

Accepted Answer

The answer of The nation of Falconia forbids international trade.In...

Question 14

The market for corn in Wheatland consists solely of domestic buyers of corn and domestic sellers of corn if

Accepted Answer

The answer of The market for corn in Wheatland consists...

Question 15

The price of a good that prevails in a world market is called the

Accepted Answer

The price of a good that prevails in a world market is known as the world price. This price is determined by supply and demand factors on a global scale and can affect the domestic markets of individual countries. Choice A, absolute price, is not a commonly used term in economics. Choice B, relative price, refers to the price of one good in relation to the price of another good and is not specific to a world market. Choice C, comparative price, is similar to relative price and refers to the opportunity cost of producing one good in terms of another good, also not specific to a world market.

Question 16

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam

Accepted Answer

The answer of If the world price of textiles is...

Question 17

Patterns of trade among nations are primarily determined by

Accepted Answer

Comparative advantage is the main factor that determines patterns of trade among nations. This theory suggests that nations should specialize in the production and export of goods in which they have a lower opportunity cost (meaning the cost of producing a good in terms of forgone production of another good) compared to other nations. This allows them to trade with other nations for goods in which they have a higher opportunity cost and thereby both nations can benefit from the trade. Cultural and political considerations may play a role as well, but they are not the primary determinants of trade patterns. Differences in the income elasticity of demand among nations may affect trade volumes, but they do not determine the direction or types of goods traded.

Question 18

The nation of Pineland forbids international trade.In Pineland,you can buy 1 pound of fish for 2 pounds of pineapples.In other countries,you can buy 1 pound of fish for 1.5 pounds of pineapples.These facts indicate that

Accepted Answer

The answer of The nation of Pineland forbids international trade.In...

Question 19

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price,

Accepted Answer

The answer of If a country allows trade and,for a...

Question 20

For any country,if the world price of zinc is higher than the domestic price of zinc without trade,that country should

Accepted Answer

The answer of For any country,if the world price of...

Quiz 9: Application: International Trade