Question 1

A tariff is

Accepted Answer

A)  a subsidy on domestically produced goods.
B)  the difference between the world market price and the domestic price when a group of firms in an industry collude successfully.
C)  a tax on imported goods.
D)  a government imposed restriction on the quantity of a specific good that can be imported into the country and sold.E) A) and B)
F) A) and C)

Question 2

The contention that domestic unions tend to want to restrict foreign competition with tariffs is

Accepted Answer

A)  a national defense concern.
B)  the infant industry argument.
C)  dumping.
D)  to protect domestic jobs.E) A) and D)
F) B) and C)

Question 3

A government-imposed restriction on the quantity of a specific good that may be imported to and sold in the United States is called a

Accepted Answer

A)  tariff system.
B)  quota system.
C)  reverse-trade system.
D)  union trade system.E) A) and C)
F) B) and D)

Question 4

A voluntary import expansion involves a

Accepted Answer

A)  country agreeing to import more from another country.
B)  country agreeing to reduce its trade barriers.
C)  country agreeing to an import quota.
D)  firm agreeing to expand output.E) A) and D)
F) All of the above

Question 5

When a good is put onto the global market at a price below the cost to produce it,this is known as

Accepted Answer

A)  the infant-industry argument.
B)  dumping.
C)  a quota.
D)  protection of domestic jobs.E) All of the above
F) B) and C)

Question 6

The selling of a good or service abroad at a price below production costs is

Accepted Answer

A)  marginal cost selling.
B)  price discrimination.
C)  price differentiation.
D)  dumping.E) None of the above
F) B) and D) D

Question 7

Countries engaged in international trade specialize in production based on

Accepted Answer

A)  relative price levels.
B)  relative foreign exchange rates.
C)  comparative advantage.
D)  the differences in transportation costs.E) A) and B)
F) B) and D) C

Question 8

Mary can clean 20 windows per hour or type 30 pages of paper per hour.Tom can clean 18 windows per hour or he can type 25 pages of paper per hour.Based on this

Accepted Answer

A)  Mary has comparative advantages in activities.
B)  Tom has comparative advantages in both activities.
C)  Tom has a comparative advantage in cleaning windows.
D)  Mary has a comparative advantage in cleaning windows.E) All of the above
F) None of the above

Question 9

Which of the following statements is FALSE?

Accepted Answer

A)  When it comes to overall productive efficiency,compared to Japan,Germany and the rest of the European Union,the United States lags far behind.
B)  Sophisticated financial systems have given U.S.productive efficiency a boost.
C)  The United States' international competitive position has been helped by its long history of widespread entrepreneurship.
D)  Economic restructuring and investments in information technology have added to productive efficiency in the United States.E) A) and B)
F) None of the above

Question 10

When one country "dumps" some of its products in another country,it

Accepted Answer

A)  increases the aggregate level of employment in the importing country,thereby depressing that nation's market wages.
B)  also exports new technology to the importing nation and thereby indirectly boosts the importing nation's real GDP.
C)  sells its products abroad at a price lower than the price in the home market or lower than the cost of production.
D)  also exports pollution-causing technologies and thereby creates environmental hazards in the receiving country.E) A) and D)
F) All of the above

Question 11

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day.Ethel can produce a maximum of eight pies or two cakes in a day.Ethel has an comparative advantage in the production of

Accepted Answer

A)  cakes.
B)  pies.
C)  both cakes and pies.
D)  neither cakes nor pies.E) A) and B)
F) A) and C)

Question 12

In the long run,imports will most likely be paid for with

Accepted Answer

A)  exports.
B)  the sale of real and financial assets.
C)  the extension of credit.
D)  higher domestic unemployment.E) B) and C)
F) A) and C)

Question 13

A government-imposed restriction on the quantity of a specific good that another country is allowed to sell in the U.S.is

Accepted Answer

A)  a regional trade bloc.
B)  an import quota.
C)  a voluntary import expansion.
D)  a voluntary restraint agreement.E) A) and D)
F) B) and D)

Question 14

When the principle of comparative advantage determines trade,then a country will

Accepted Answer

A)  specialize only in that good with the highest opportunity cost.
B)  specialize only in goods with the lowest opportunity costs.
C)  specialize only in that good where output is less per worker hour than another country.
D)  specialize only in that good where production costs are more than average total costs.E) B) and D)
F) A) and B)

Question 15

Why is trade based on comparative advantage?

Accepted Answer

The relevant cost of producing a good is...

Question 16

The General Agreement on Tariffs and Trade is an international agreement

Accepted Answer

A)  to establish the North American continent as a free trade area.
B)  to encourage peaceful settlements of trade disputes,but has no particular point of view about the desirability of higher or lower tariffs.
C)  to encourage world trade by lowering tariffs and other trade barriers.
D)  to make all tariffs illegal.E) None of the above
F) B) and D)

Question 17

If protective import-restricting tariffs are imposed by a country,in the majority of cases that nation's consumers end up

Accepted Answer

A)  paying a higher price for the good than they otherwise would.
B)  paying a lower price for the good than they otherwise would.
C)  consuming more of the good than they otherwise would.
D)  having a higher standard of living than they otherwise would.E) A) and B)
F) None of the above

Question 18

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

Accepted Answer

A)  large investments in scientific research.
B)  economic restructuring.
C)  widespread entrepreneurship.
D)  reducing the federal deficit.E) A) and D)
F) A) and C)

Question 19

The highest tariff rates of the twentieth century in the United States arose as a result of which law?

Accepted Answer

A)  the Robinson-Patman Act
B)  the Tariff of Abominations Act
C)  the Wheeler-Lea Act
D)  the Smoot-Hawley ActE) C) and D)
F) B) and D)

Question 20

According to the infant-industry argument,protection should be withdrawn from an infant industry when the companies in the industry

Accepted Answer

A)  are listed on the domestic stock exchange.
B)  become profitable.
C)  double their sales revenues.
D)  reach a sufficient size to compete with foreign firms.E) A) and B)
F) A) and C) D

Exam 32: Comparative Advantage and the Open Economy

A tariff is

Correct AnswerverifiedShow Answer

The contention that domestic unions tend to want to restrict foreign competition with tariffs is

Correct AnswerverifiedShow Answer

A government-imposed restriction on the quantity of a specific good that may be imported to and sold in the United States is called a

Correct AnswerverifiedShow Answer

A voluntary import expansion involves a

Correct AnswerverifiedShow Answer

When a good is put onto the global market at a price below the cost to produce it,this is known as

Correct AnswerverifiedShow Answer

The selling of a good or service abroad at a price below production costs is

Correct AnswerverifiedD

Countries engaged in international trade specialize in production based on

Correct AnswerverifiedC

Mary can clean 20 windows per hour or type 30 pages of paper per hour.Tom can clean 18 windows per hour or he can type 25 pages of paper per hour.Based on this

Correct AnswerverifiedShow Answer

Which of the following statements is FALSE?

Correct AnswerverifiedShow Answer

When one country "dumps" some of its products in another country,it

Correct AnswerverifiedShow Answer

Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day.Ethel can produce a maximum of eight pies or two cakes in a day.Ethel has an comparative advantage in the production of

Correct AnswerverifiedShow Answer

In the long run,imports will most likely be paid for with

Correct AnswerverifiedShow Answer

A government-imposed restriction on the quantity of a specific good that another country is allowed to sell in the U.S.is

Correct AnswerverifiedShow Answer

When the principle of comparative advantage determines trade,then a country will

Correct AnswerverifiedShow Answer

Why is trade based on comparative advantage?

Correct AnswerverifiedThe relevant cost of producing a good is...View AnswerShow Answer

The General Agreement on Tariffs and Trade is an international agreement

Correct AnswerverifiedShow Answer

If protective import-restricting tariffs are imposed by a country,in the majority of cases that nation's consumers end up

Correct AnswerverifiedShow Answer

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

Correct AnswerverifiedShow Answer

The highest tariff rates of the twentieth century in the United States arose as a result of which law?

Correct AnswerverifiedShow Answer

According to the infant-industry argument,protection should be withdrawn from an infant industry when the companies in the industry

Correct AnswerverifiedD

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D

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C

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The relevant cost of producing a good is...
View Answer

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D