Question 1

Statement I: We pay higher taxes on gasoline than most Western European countries.
Statement II: Our dependence on foreign oil is increasing.

Accepted Answer

Statement I is false because most Western European countries have significantly higher gasoline taxes than the United States. Statement II is true as the U.S. has seen fluctuations in its dependence on foreign oil, but overall trends have shown increases over certain periods, especially considering historical contexts.

Question 2

Assume that for Canada the opportunity cost of producing 1 television set is 2 bushels of wheat.Assume that for the U.S.the opportunity cost of producing 1 bushel of wheat is 2 television sets.All other things being equal:

Accepted Answer

According to the opportunity cost, Canada has a lower opportunity cost in producing wheat than in producing televisions (2 bushels of wheat vs 1 television). On the other hand, the United States has a lower opportunity cost in producing televisions than in producing wheat (2 televisions vs 1 bushel of wheat). Thus, it makes sense for Canada to specialize in producing and exporting wheat while importing televisions from the United States. Conversely, the United States should specialize in producing and exporting televisions while importing wheat from Canada. This leads to both countries producing what they have a comparative advantage in, and mutual gains from trade.

Question 3

$$\begin{array} { l c c } 
& \text { One Brazilian Worker } & \text { One Columbian Worker } \
\text { Hot dogs } & 20 \text { bushels } & 15 \text { bushels } \
\text { Coffee } & 10 \text { bushels } & 5 \text { bushels }
\end{array}$$
-The opportunity cost of producing one bushel of coffee in Brazil is

Accepted Answer

The opportunity cost of producing one bushel of coffee in Brazil is the amount of hot dogs that could have been produced with the resources used to produce that bushel of coffee. Since a Brazilian worker can produce 20 bushels of hot dogs or 10 bushels of coffee, the opportunity cost of 1 bushel of coffee is 20/10 = 2 bushels of hot dogs.

Question 4

A tax on an imported good that raises its price is called a

Accepted Answer

A tariff is a tax imposed on imported goods, which increases their price and reduces their competitiveness in the domestic market. This policy is often used to protect domestic industries from foreign competition or to generate revenue for the government. A quota, on the other hand, limits the quantity of a specific good that can be imported, but it does not necessarily raise its price unless there is excess demand. Comparative advantage and disadvantage are concepts related to international trade, but they do not refer to specific policies or measures.

Question 5

Statement I: Although our trade deficit is still a major concern,it has declined substantially since 1987.
Statement II: We are the only nation in the world that has a large trade deficit with China.

Accepted Answer

The answer of Statement I: Although our trade deficit is...

Question 6

Our merchandise trade deficit in 2009 was just about _______ billion dollars.

Accepted Answer

The answer of Our merchandise trade deficit in 2009 was...

Question 7

According to the theory of international trade,a nation should

Accepted Answer

According to the theory of international trade, a nation should always export goods in which it has a comparative advantage. This means that a country should focus on producing goods that it can produce more efficiently than other countries and import goods that it cannot produce efficiently. This allows for specialization, increased production, and overall economic efficiency.

Question 8

Brazil should

Accepted Answer

Brazil is renowned for its coffee production, leveraging its climate and geography to produce coffee more efficiently than hot dogs. Specializing in coffee and importing hot dogs from Colombia, where they might have a comparative advantage in other products, follows the principle of comparative advantage in international trade.

Question 9

We import about _______% of our oil.

Accepted Answer

The correct answer is C) 66%. This percentage reflects a significant portion of oil that is imported to meet the demand, indicating reliance on foreign oil sources.

Question 10

The United States is guilty of dumping on the international market because of the

Accepted Answer

The agricultural subsidies provided by the US allow American farmers to produce goods at a lower cost, which leads to surplus production. The excess goods are then sold on the international market at artificially low prices, creating unfair competition and harming local farmers in other countries. This practice is known as dumping. Therefore, option D is the best choice.

Question 11

Statement I: Our trade deficit with Japan could be cut by about nine tenths if the Japanese halted their protectionist trade policies.
Statement II: If we could wipe our trade deficit with Japan and China,we would be running a trade surplus.

Accepted Answer

The answer of Statement I: Our trade deficit with Japan...

Question 12

$$\begin{array} { l c c } 
& \text { One Brazilian Worker } & \text { One Columbian Worker } \
\text { Hot dogs } & 20 \text { bushels } & 15 \text { bushels } \
\text { Coffee } & 10 \text { bushels } & 5 \text { bushels }
\end{array}$$
-According to the information contained in the table,Brazil has an absolute advantage in

Accepted Answer

Brazil produces more of both hot dogs (20 bushels vs. 15 bushels) and coffee (10 bushels vs. 5 bushels) than Colombia, indicating an absolute advantage in both goods.

Question 13

Statement I: The Japanese used a strategy of underselling American manufactured goods to capture the U.S.market.
Statement II: The Japanese closed their markets to American produced goods.

Accepted Answer

Both statements are true. The Japanese employed a strategy of underselling to penetrate the U.S. market, effectively outcompeting American manufacturers on price. Additionally, Japan has been criticized for maintaining trade barriers and practices that have made it difficult for American goods to enter the Japanese market, effectively protecting their domestic industries.

Question 14

$$\begin{array} { l c c } 
& \text { One Brazilian Worker } & \text { One Columbian Worker } \
\text { Hot dogs } & 20 \text { bushels } & 15 \text { bushels } \
\text { Coffee } & 10 \text { bushels } & 5 \text { bushels }
\end{array}$$
-Colombia has an absolute advantage in

Accepted Answer

The answer of \[\begin{array} { l c c } 
&...

Question 15

Statement I: Foreign competition has made many American industries more efficient.
Statement II: Multinational corporations have combined the competitive advantage of low wages in foreign countries with that of high capital.

Accepted Answer

Both statements are true. Statement I is accurate because foreign competition often forces domestic industries to improve efficiency to remain competitive. Statement II is true as multinational corporations often leverage the combination of low labor costs in some countries with high capital and technology from their home countries to gain competitive advantages.

Question 16

Statement I: Our oil imports and our trade deficit with Japan and China together account for the majority of our overall trade deficit.
Statement II: Although the Chinese market is open to American producers,the Chinese people have very little income to purchase relatively expensive imported goods.

Accepted Answer

Both statements highlight significant aspects of the U.S. trade deficit and the dynamics of trade with China. Statement I points out the substantial impact of oil imports and trade with Japan and China on the U.S. trade deficit. Statement II addresses the issue of market access versus purchasing power in China, indicating that despite market openness, the purchasing power for expensive imports is limited.

Question 17

Our bill for our oil imports in 2009 was about $________ billion a year.

Accepted Answer

The answer of Our bill for our oil imports in...

Question 18

A nation's comparative advantage in the production of an item is determined by

Accepted Answer

A nation's comparative advantage in the production of an item is based on the opportunity cost of production compared to its trading partner's opportunity cost of producing the same item. Opportunity cost refers to the value of the next best alternative forgone when allocating resources to a particular activity. Nations will specialize in producing the goods and services in which they have a comparative advantage and trade with other nations to increase overall welfare.

Question 19

Statement I: Although we have been losing manufacturing jobs to competition since the early 1960s,there are more manufacturing jobs in America today than there were in 1960.
Statement II: The basis for foreign trade is comparative advantage.

Accepted Answer

Statement I is false because the number of manufacturing jobs in America has generally declined since the 1960s. Statement II is true because comparative advantage is a fundamental economic principle that explains the basis for foreign trade.

Question 20

In general,when a nation has an absolute advantage over other nations in a particular product,it can produce that product:

Accepted Answer

The answer of In general,when a nation has an absolute...

Quiz 31: International Trade

Statement I: We pay higher taxes on gasoline than most Western European countries. Statement II: Our dependence on foreign oil is increasing.

Assume that for Canada the opportunity cost of producing 1 television set is 2 bushels of wheat.Assume that for the U.S.the opportunity cost of producing 1 bushel of wheat is 2 television sets.All other things being equal:

A tax on an imported good that raises its price is called a

Statement I: Although our trade deficit is still a major concern,it has declined substantially since 1987. Statement II: We are the only nation in the world that has a large trade deficit with China.

Our merchandise trade deficit in 2009 was just about _______ billion dollars.

According to the theory of international trade,a nation should

Brazil should

We import about _______% of our oil.

The United States is guilty of dumping on the international market because of the

Statement I: Our trade deficit with Japan could be cut by about nine tenths if the Japanese halted their protectionist trade policies. Statement II: If we could wipe our trade deficit with Japan and China,we would be running a trade surplus.

Statement I: The Japanese used a strategy of underselling American manufactured goods to capture the U.S.market. Statement II: The Japanese closed their markets to American produced goods.

$\begin{array} { l c c } & \text { One Brazilian Worker } & \text { One Columbian Worker } \\\text { Hot dogs } & 20 \text { bushels } & 15 \text { bushels } \\\text { Coffee } & 10 \text { bushels } & 5 \text { bushels }\end{array}$ -Colombia has an absolute advantage in

Statement I: Foreign competition has made many American industries more efficient. Statement II: Multinational corporations have combined the competitive advantage of low wages in foreign countries with that of high capital.

Statement I: Our oil imports and our trade deficit with Japan and China together account for the majority of our overall trade deficit. Statement II: Although the Chinese market is open to American producers,the Chinese people have very little income to purchase relatively expensive imported goods.

Our bill for our oil imports in 2009 was about $________ billion a year.

A nation's comparative advantage in the production of an item is determined by

Statement I: Although we have been losing manufacturing jobs to competition since the early 1960s,there are more manufacturing jobs in America today than there were in 1960. Statement II: The basis for foreign trade is comparative advantage.

In general,when a nation has an absolute advantage over other nations in a particular product,it can produce that product: