Deck 17: International Trade

Question 1

Voluntary exchanges:

A)generate surplus,leaving both participants better off than they were before.
B)generate deadweight loss,leaving both participants worse off than they were before.
C)generate deadweight loss,leaving at least one participant worse off than they were before.
D)create a transfer of surplus from one participant to another.

Answer 1

generate surplus,leaving both participants better off than they were before.

Question 2

When a country has the ability to produce more of a good than others with a given amount of resources,they:

A)have an absolute advantage.
B)have a comparative advantage.
C)are free-traders.
D)should remain self-sufficient.

Answer 2

have an absolute advantage.

Question 3

Gains from trade are:

A)the increase in welfare in both countries that results from specialization and trade.
B)the transfer of surplus by the receiving country that results from trade.
C)the deadweight loss by the losing country that results from trade.
D)the increased skills and human capital that results from specialization and trade.

Answer 3

the increase in welfare in both countries that results from specialization and trade.

Question 4

When trade is possible,each country can produce the goods that it has:

A)a comparative advantage at producing,rather than the exact combination of goods its consumers want.
B)an absolute advantage at producing,rather than the exact combination of goods its consumers want.
C)an absolute advantage at producing,rather than the goods it has a comparative advantage in.
D)None of these is true.

Question 5

Comparative advantage is the ability to produce:

A)more of a good than others with a given amount of resources.
B)relatively more than any other good with a given amount of resources.
C)a good or service at a lower opportunity cost than others can.
D)None of these is true.

Question 6

The increase in welfare in both countries that results from specialization and trade is called:

A)gains from trade.
B)surplus enhancement.
C)exportation surplus.
D)deadweight gain.

Question 7

For the most part,in the real world,trade between countries:

A)is free.
B)is regulated or restricted in some way.
C)is free,with the notable exception of China.
D)None of these is true.

Question 8

The Multifibre Arrangement and African Growth and Opportunity Act:

A)explains why a country not suitable for trade could become a major exporter.
B)altered trade patterns from those that would have occurred in the absence of these agreements.
C)was a group of restrictive trade treaties between individual countries,and agreements exempting others from the restrictions.
D)All of these are true.

Question 9

If England buys hockey sticks from Canada,it tells us:

A)England has an absolute advantage over Canada in making hockey sticks.
B)Canada has an absolute advantage over England in making hockey sticks.
C)England has the comparative advantage over Canada in making hockey sticks.
D)Canada has the comparative advantage over England in making hockey sticks.

Question 10

When two countries specialize and trade:

A)both can enjoy more output than either could produce on its own.
B)they can have consumption possibilities beyond their production possibilities.
C)surplus can be gained by both countries.
D)All of these are true.

Question 11

The Multifibre Arrangement (MFA):

A)was a group of separate treaties between individual countries.
B)set limits on how much of what type of clothing could be traded between which countries.
C)was written on a level of detail that seems ridiculous in retrospect.
D)All of these are true.

Question 12

If Spain sells soccer balls to the United States,it tells us:

A)Spain has an absolute advantage over the United States in making soccer balls.
B)Spain can produce more soccer balls than the United States given the same resources.
C)Spain has the ability to produce soccer balls at a lower opportunity cost than the United States can.
D)All of these are true.

Question 13

International trade affects:

A)prices in different countries.
B)workers in different countries.
C)consumers in different countries.
D)All of these are true.

Question 14

When a country has the ability to produce a good or service at a lower opportunity cost than others can,they:

A)have an absolute advantage.
B)have a comparative advantage.
C)are free-traders.
D)should remain self-sufficient.

Question 15

Absolute advantage is the ability to produce:

A)more of a good than others with a given amount of resources.
B)relatively more than any other good with a given amount of resources.
C)a good or service at a lower opportunity cost than others can.
D)None of these is true.

Question 16

If Colombia has a comparative advantage over Mexico in the production of coffee,it means:

A)Colombia probably sells coffee to Mexico.
B)Mexico is more productive at making coffee than Colombia.
C)Colombia has the ability to produce more coffee than Mexico with the same resources.
D)None of these is true.

Question 17

When each country specializes in producing the good for which it has a comparative advantage:

A)both countries can benefit.
B)both countries always enjoy equal gains from trade.
C)the country that is bigger will gain more surplus.
D)All of these are true.

Question 18

Voluntary exchanges between ____________ generates surplus.

A)firms
B)countries
C)individuals
D)All of these are true.

Question 19

Both countries can benefit from trade when:

A)at least one country produces the good for which it has an absolute advantage.
B)each specializes in producing the good for which it has a comparative advantage.
C)each specializes in producing the good for which it has an absolute advantage.
D)It is not possible for both countries to benefit.

Question 20

If Japan has an absolute advantage over the United States in making TVs,it means:

A)Japan probably sells TVs to the United States.
B)Japan is more productive at making TVs than the United States,when both countries use the same quantity of resources in TV production.
C)Japan has the ability to produce TVs at a lower opportunity cost than the United States.
D)None of these is true.

Question 21

A country with a lot of land relative to its population may have a comparative advantage in:

A)land-intensive activities.
B)capital-intensive activities.
C)labor-intensive activities.
D)technology-intensive activities.

Question 22

As workforces become more educated in countries with comparative advantage in labor-intensive products,the comparative advantage for the production of those goods:

A)shifts toward other countries with more cheap labor relative to the other factors of production.
B)shifts toward other countries with less cheap labor relative to the other factors of production.
C)shifts away from countries with more cheap labor relative to other factors of production.
D)None of these is true.

Question 23

A country is likely to have a comparative advantage in a land-intensive activity if it has:

A)a lot of land relative to its population.
B)a large population relative to its landmass.
C)a higher opportunity cost of producing technology.
D)None of these is true.

Question 24

In reality,trade requires:

A)governments to get together and agree on who is going to specialize in what.
B)governments employ an economic super-planner to crunch the numbers to find comparative advantage for different products.
C)that the day-to-day business decision making is carried out almost entirely by firms and individuals,not by governments.
D)None of these is true.

Question 25

As workforces become more educated in countries with comparative advantages in labor-intensive products,cheap labor becomes:

A)less abundant relative to skilled labor.
B)more abundant relative to skilled labor.
C)more abundant relative to capital.
D)None of these is true.

Question 26

Over time,technology tends to:

A)spread from country to country,equalizing opportunity costs.
B)set countries apart in terms of productivity.
C)allow developing nations to experience the "catch-up" effect.
D)None of these is true.

Question 27

In reality,international free trade:

A)allows everyone involved to gain surplus.
B)can have individual winners and losers of surplus within a country.
C)creates surplus only for the producers in a country.
D)creates surplus only for the consumers in a country.

Question 28

When we say that a country enjoys gains from trade,we mean:

A)everyone in that country benefits from the trade.
B)the net gain of surplus is positive for that country.
C)the total producer surplus increased in the country.
D)the total consumer surplus increased in the country.

Question 29

We might predict that Hawaii has a comparative advantage compared to Russia in the production of pineapples because:

A)Hawaii's climate is more suitable.
B)Hawaii has more land available to grow them on.
C)Hawaii has more advanced farming technology.
D)All of these are true.

Question 30

A country is likely to have a comparative advantage in a capital-intensive activity if it has:

A)a lot of land relative to its population.
B)a large amount of capital relative to its landmass.
C)a higher opportunity cost of producing technology.
D)None of these is true.

Question 31

Only a firm with ______________ will be able to make their output profitably.

A)a comparative advantage at producing their output
B)the highest opportunity cost of production
C)an absolute advantage at producing their output
D)None of these is true.

Question 32

A country may gain a temporary comparative advantage if:

A)it is the first to discover and implement a new technology or production process.
B)it remains self-sufficient until it stockpiles enough inventory to supply the world.
C)it remains a political ally to all.
D)All of these are true.

Question 33

If there are big gains to be had from specialization and trade,why doesn't every country produce just one good?

A)Specialization is limited by trade agreements.
B)No national economy is a perfectly free market.
C)There is no perfectly free trade between national economies.
D)All of these are true.

Question 34

We might predict that Japan has a comparative advantage compared to Russia in the production of hi-tech electronics because:

A)Japan's climate is more suitable.
B)Japan has more land available to build manufacturing plants on.
C)Japan has more advanced electronics technology.
D)All of these are true.

Question 35

An important determinant of comparative advantage is:

A)diversity in climate and natural resources.
B)endowment of factors of production.
C)technology.
D)All of these are important determinants of comparative advantage.

Question 36

A country with plenty of capital and little land may have a comparative advantage in:

A)land-intensive activities.
B)capital-intensive activities.
C)labor-intensive activities.
D)technology-intensive activities.

Question 37

Technology or production processes developed in a particular country:

A)may give that country a temporary comparative advantage.
B)may set that country back until they earn back the research and development costs.
C)will give that country a permanent comparative advantage.
D)None of these is true.

Question 38

Once a new technology spreads and is adopted by many countries,

A)the first country to use it may lose its comparative advantage.
B)the first country to use it will lose its absolute advantage.
C)other countries will perfect it,putting them at an absolute advantage.
D)the country will have to have strict intellectual property rights protections in place.

Question 39

A national characteristic that affects the cost of producing goods in a particular country is:

A)natural resources and climate.
B)endowment of factors of production.
C)technology.
D)All of these affect the cost of producing goods.

Question 40

The right decision about what to produce and who to trade with happens:

A)automatically.
B)when governments publish comparative advantage numbers.
C)only after firms research the cost of inputs such as labor and raw materials,and the sale prices of different goods you could produce,and calculate the most profitable option.
D)None of these is true.

Question 41

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were open to free trade,domestic consumers would consume how many units?

A)60
B)115
C)150
D)90

Question 42

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to given graph shown,what is the world price?

A)$23
B)$16
C)$11
D)$45

Question 43

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were open to free trade,how many units would be imported?

A)60
B)115
C)150
D)90

Question 44

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,domestic prices would:

A)remain $14 for domestically produced goods,and be $10 for those units imported.
B)drop to $10 for all units.
C)remain $14,with more units sold overall.
D)None of these is true.

Question 45

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,domestic producers would:

A)transfer surplus in area DE to consumers.
B)transfer surplus in area DE to foreign producers.
C)lose surplus in area FG to deadweight loss.
D)lose surplus in area FG to foreign producers.

Question 46

Imports are goods and services that are:

A)produced in other countries and consumed domestically.
B)produced domestically and consumed in other countries.
C)produced and consumed in other countries.
D)produced and consumed domestically.

Question 47

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this were depicting an autarky,the amount being sold domestically is:

A)60.
B)115.
C)160.
D)90.

Question 48

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this were depicting an autarky,the amount being bought domestically is:

A)60 at $10 each.
B)60 at $17 each.
C)115 at $14 each.
D)150 at $10 each.

Question 49

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were an autarky,consumers would get area:

A)A in consumer surplus.
B)ABC in consumer surplus.
C)ABCDE in consumer surplus.
D)ABCDEFG in consumer surplus.

Question 50

We call an economy that is self-contained and does not engage in any trade with outsiders:

A)an autarky.
B)an oligopoly.
C)an oligarchy.
D)a monarchy.

Question 51

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,the amount consumed domestically would:

A)increase by 35.
B)increase by 90.
C)decrease by 35.
D)decrease by 90.

Question 52

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were open to free trade,domestic producers would produce how many units?

A)60
B)115
C)150
D)90

Question 53

Exports are goods and services that are:

A)produced in other countries and consumed domestically.
B)produced domestically and consumed in other countries.
C)produced and consumed in other countries.
D)produced and consumers domestically.

Question 54

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,consumers would:

A)enjoy a net gain to surplus of DEFG.
B)suffer a net loss to surplus of DEFG.
C)suffer a transfer of surplus to the producer of DEFG.
D)experience deadweight loss of FG.

Question 55

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this were depicting an autarky,the equilibrium price would be:

A)$10.
B)$14.
C)$17.
D)$4.

Question 56

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to become a free trade nation,this good would:

A)be imported.
B)be exported.
C)no longer be produced domestically.
D)not imported or exported,but only produced domestically.

Question 57

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,domestic producers would have to cut:

A)production by 55 units.
B)production by 90 units.
C)prices by $3.
D)prices by $7.

Question 58

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According the graph shown,if this economy were open to free trade,it would:

A)import this good,because the domestic price is greater than the world price.
B)export this good,because the domestic price is greater than the world price.
C)import this good,because the world price is greater than the domestic price.
D)export this good,because the world price is greater than the domestic price.

Question 59

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,surplus would:

A)increase overall.
B)decrease for the producer.
C)transfer from producer to consumer.
D)All of these are true.

Question 60

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,which amount of surplus would be transferred?

A)Area FG would be transferred to the consumer.
B)Area DE would be transferred to the consumer.
C)Area DEFG would be transferred to the consumer.
D)Area FG would be transferred to the producer.

Question 61

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were open to free trade,how many units would be exported?

A)35
B)85
C)120
D)75

Question 62

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were open to free trade,domestic consumers would consume how many units?

A)45
B)85
C)120
D)75

Question 63

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this were depicting an autarky,the amount being bought domestically is:

A)45 at $11 each.
B)45 at $23 each.
C)85 at $16 each.
D)120 at $23 each.

Question 64

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,surplus would:

A)increase overall.
B)decrease for the producer.
C)transfer from producer to consumer.
D)All of these are true.

Question 65

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,which amount of surplus would be transferred?

A)Area BC would be transferred to the consumer.
B)Area BCD would be transferred to the producer.
C)Area BCD would be transferred to the consumer.
D)Area BC would be transferred to the producer.

Question 66

For a single country to influence the price of some good in the global market:

A)it must be considered a price taker.
B)the quantity it produces and consumes must be small relative to the total amount of that good bought and sold worldwide.
C)the quantity it produces and consumes must be large relative to the total amount of that good bought and sold worldwide.
D)None of these is true.

Question 67

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,domestic producers would:

A)transfer surplus in area BC to consumers.
B)transfer surplus in area BCD to foreign producers.
C)lose surplus in area BCD to foreign consumers.
D)None of these is true.

Question 68

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,domestic prices would:

A)remain $16 for domestically produced goods,and be $23 for those units imported.
B)increase to $23 for all units.
C)remain $16,with more units sold overall.
D)None of these is true.

Question 69

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were an autarky,producers would enjoy area:

A)BCEFG
B)BCDEFG
C)G
D)EFG

Question 70

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were an autarky,consumers would get area:

A)A in consumer surplus.
B)ABC in consumer surplus.
C)ABCD in consumer surplus.
D)ABCDEFG in consumer surplus.

Question 71

When a price-taking country joins the global market for some good,it:

A)shifts the world demand and supply to the right.
B)has a negligible effect on the world equilibrium.
C)shifts the world demand and supply to the left.
D)shifts the world demand to the right,and the world supply to the left.

Question 72

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,the amount consumed domestically would:

A)increase by 35.
B)increase by 40.
C)decrease by 40.
D)increase by 75.

Question 73

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According the graph shown,if this economy were open to free trade,it would:

A)import this good because the domestic price is greater than the world price.
B)export this good because the domestic price is greater than the world price.
C)import this good because the world price is greater than the domestic price.
D)export this good because the world price is greater than the domestic price.

Question 74

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this were depicting an autarky,the amount being sold domestically is:

A)45.
B)85.
C)120.
D)75.

Question 75

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to become a free trade nation,this good would:

A)be imported.
B)be exported.
C)no longer be produced domestically.
D)not imported or exported,but only produced domestically.

Question 76

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,domestic producers would increase:

A)production by 75 units.
B)production by 35 units.
C)prices by $5.
D)prices by $11.

Question 77

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were to open to trade,consumers would:

A)enjoy a net gain to surplus of BC.
B)suffer a net loss to surplus of BCD.
C)suffer a transfer of surplus to the producer of BC.
D)experience deadweight loss of FG.

Question 78

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this were depicting an autarky,the equilibrium price would be:

A)$23
B)$16
C)$11
D)$45

Question 79

This graph demonstrates the domestic demand and supply for a good,as well as the world price for that good.
According to the graph shown,if this economy were open to free trade,domestic producers would produce how many units?

A)45
B)85
C)120
D)75

Question 80

For a country to be a price taker in the global market for some good:

A)the quantity it produces and consumes must be very small relative to the total amount of that good bought and sold worldwide.
B)the quantity it produces and consumes must be very large relative to the total amount of that good bought and sold worldwide.
C)there must be many sellers all supplying a very significant amount to the market.
D)there must be many buyers all buying a large amount from the market.