Question 1

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?

Accepted Answer

A)   115
B)   60
C)   150
D)   90E) A) and C)
F) B) and C)

Question 2

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

Accepted Answer

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)   a comparative advantage at producing, rather than the exact combination of goods its producers want.E) B) and D)
F) A) and C)

Question 3

If Spain sells soccer balls to the United States,then Spain:

Accepted Answer

A)   has an absolute advantage over the United States in making soccer balls.
B)   can produce more soccer balls than the United States given the same resources.
C)   has the ability to produce soccer balls at a lower opportunity cost than the United States can.
D)   does not have any trade barriers with the US.E) C) and D)
F) B) and C)

Question 4

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:

Accepted Answer

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.E) None of the above
F) A) and B)

Question 5

The World Trade Organization (WTO) is an international organization designed to:

Accepted Answer

A)   monitor and enforce trade agreements, while also promoting free trade.
B)   monitor and enforce world banking policies, and lending between nations.
C)   provide a forum for all nations to have discussion on various international issues of concern.
D)   international governing body that is the final arbiter of all world trade.E) B) and D)
F) None of the above

Question 6

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

Accepted Answer

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.E) A) and B)
F) A) and C)

Question 7

Imports are goods and services that are produced:

Accepted Answer

A)   in other countries and consumed domestically.
B)   domestically and consumed in other countries.
C)   and consumed in other countries.
D)   and consumed domestically.E) All of the above
F) A) and B)

Question 8

This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good.  According to the graph shown,the amount bought by domestic consumers when there is open trade for this good is:

Accepted Answer

A)   1500.
B)   1150
C)   500.
D)   250.E) None of the above
F) B) and C) A

Question 9

Import standards on specific countries are:

Accepted Answer

A)   more common than blanket standards.
B)   used in equal amount to blanket standards.
C)   less common than blanket standards.
D)   easier to enforce than blanket standards.E) A) and B)
F) C) and D) C

Question 10

Suppose a country,whose production and consumption of coffee is large relative to the world market,has just entered the global market.If the country is a net exporter of coffee,we would expect:

Accepted Answer

A)   an increase in both world price and quantity of coffee.
B)   an increase in world price and decrease in world quantity of coffee.
C)   a decrease in both world price and quantity of coffee.
D)   a decrease in world price, and increase in world quantity of coffee.E) A) and D)
F) None of the above

Question 11

An important determinant of comparative advantage is:

Accepted Answer

A)   diversity in climate and natural resources.
B)   endowment of financial capital.
C)   low governmental barriers to trade.
D)   well established governmental regulations on trade.E) None of the above
F) A) and D)

Question 12

When two countries specialize and trade:

Accepted Answer

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.E) B) and C)
F) None of the above D

Question 13

Every government's set of policies used to govern their economy:

Accepted Answer

A)   vary widely from one another, making international trade a simple process.
B)   vary widely from one another, making international trade sometimes difficult.
C)   are largely the same, making international trade a simple process.
D)   are similar in most respects, but different in a few areas, making international trade sometimes difficult.E) B) and C)
F) B) and D)

Question 14

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?

Accepted Answer

A)   45
B)   85
C)   120
D)   75E) B) and C)
F) C) and D)

Question 15

Blanket standards on imports usually address issues affecting:

Accepted Answer

A)   domestic consumers.
B)   domestic producers.
C)   foreign production practices.
D)   They can be used to address any of these.E) A) and B)
F) C) and D)

Question 16

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good.  According to the graph shown,if the economy is in autarky and decides to open trade with a tariff,the impact on domestic supply is they will:

Accepted Answer

A)   increase output from 250 to 500.
B)   decrease output from 815 to 500.
C)   increase output from 500 to 815.
D)   decrease output from 1500 to 1150.E) A) and B)
F) None of the above

Question 17

If there are big gains to be had from specialization and trade,countries generally don't produce one good because:

Accepted Answer

A)   specialization is not limited by trade agreements.
B)   no national economy is a perfectly free market.
C)   there is perfectly free trade between national economies.
D)   consumers prefer a mix of goods and services.E) A) and B)
F) B) and C)

Question 18

When a nation imposes a blanket standard on imports,it refers to policies that:

Accepted Answer

A)   impose standards imposed on all imports.
B)   impose standards on specific countries.
C)   restrict the importation of specific goods.
D)   All of these are true.E) All of the above
F) B) and C)

Question 19

The great Franco-American cheese war of 2009 began with:

Accepted Answer

A)   beef.
B)   cheddar cheese import restrictions.
C)   Swiss cheese quotas.
D)   camembert cheese tariffs.E) None of the above
F) All of the above

Question 20

As a general rule,free trade:

Accepted Answer

A)   increases the supply of factors of production that are domestically abundant.
B)   increases demand for factors of production that are domestically abundant.
C)   decreases the supply of factors of production that are domestically scarce.
D)   decreases the demand for factors of production that are domestically abundant.E) All of the above
F) B) and D)

Exam 17: International Trade

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If Spain sells soccer balls to the United States,then Spain:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

The World Trade Organization (WTO) is an international organization designed to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Imports are goods and services that are produced:

Correct AnswerverifiedShow Answer

This graph demonstrates the domestic demand and supply for a good,as well as a quota and the world price for that good. According to the graph shown,the amount bought by domestic consumers when there is open trade for this good is:

Correct AnswerverifiedA

Import standards on specific countries are:

Correct AnswerverifiedC

Suppose a country,whose production and consumption of coffee is large relative to the world market,has just entered the global market.If the country is a net exporter of coffee,we would expect:

Correct AnswerverifiedShow Answer

An important determinant of comparative advantage is:

Correct AnswerverifiedShow Answer

When two countries specialize and trade:

Correct AnswerverifiedD

Every government's set of policies used to govern their economy:

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Blanket standards on imports usually address issues affecting:

Correct AnswerverifiedShow Answer

This graph demonstrates the domestic demand and supply for a good,as well as a tariff and the world price for that good. According to the graph shown,if the economy is in autarky and decides to open trade with a tariff,the impact on domestic supply is they will:

Correct AnswerverifiedShow Answer

If there are big gains to be had from specialization and trade,countries generally don't produce one good because:

Correct AnswerverifiedShow Answer

When a nation imposes a blanket standard on imports,it refers to policies that:

Correct AnswerverifiedShow Answer

The great Franco-American cheese war of 2009 began with:

Correct AnswerverifiedShow Answer

As a general rule,free trade:

Correct AnswerverifiedShow Answer

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D

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