A nation’s export supply curve for a specific product: |
is upsloping. |
Picture Refer to the given diagram in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade): |
is the absolute value of the slope of line AC. |
Studies show that: |
costs of trade barriers exceed their benefits, creating an efficiency loss for society. |
The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the: Common Market Organization (CMO). |
World Trade Organization (WTO). |
Picture Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff in the amount PcPt, price and total quantity sold will be: Pc and z. |
Pt and y. |
Picture Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are: 1.5 beers for 1 pizza. |
1 beer for 1.5 pizzas. |
The primary gain from international trade is: increased employment in the domestic import sector. |
more goods than would be attainable through domestic production alone. |
Answer the question on the basis of the following production possibilities data for Gamma and Sigma. All data are in tons. Gamma’s production possibilities: Picture Sigma’s production possibilities: Picture On the basis of the given information: Sigma should export tea to Gamma and Gamma should export pots to Sigma. |
Gamma should export tea to Sigma and Sigma should export pots to Gamma. |
Picture Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff of PcPt, the total amount of tariff revenue collected on this product will be: PcPt times z. |
PcPt times wy. |
Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. Picture Refer to the given data. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because at $4: |
both nations want to export steel. |
Answer the question on the basis of the following production possibilities data for Gamma and Sigma. All data are in tons. Gamma’s production possibilities: Picture Sigma’s production possibilities: Picture Refer to the given data. What are the limits of the terms of trade between Gamma and Sigma? |
1 tea = 1 pot to 1 tea = 3 pots |
Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. Picture Refer to the given data. At a world price of $2: Alpha will want to export 20 units of steel. |
Alpha will want to import 20 units of steel. |
In 2012, the United States: had a small trade surplus in goods and services. |
imported more goods than it exported. |
In order for mutually beneficial trade to occur between two otherwise isolated nations: each nation must be able to produce at least one good absolutely cheaper than the other. |
each nation must be able to produce at least one good relatively cheaper than the other. |
In recent years, the United States has: |
exported more services abroad than it has imported. |
Picture Refer to the given diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If this economy was entirely closed to international trade, equilibrium price and quantity would be: Pa and z. Pc and z. |
Pa and x. |
Which of the following statements is false? The high tariffs of the Smoot-Hawley Act of 1930 and the retaliation they caused worsened the Great Depression. |
Studies show that developing nations that have relied on import restrictions to protect domestic industries have had higher growth rates than similar nations pursuing more open economic policies. |
Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect: employment to decrease in the German bicycle industry. |
employment to decrease in the U.S. bicycle industry. |
"Offshoring" refers to: exporting key resources. |
shifting work overseas that was previously done domestically. |
A nation will neither export nor import a specific product when its: export supply curve lies above its import demand curve. |
domestic price equals the world price. |
Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Picture Picture Refer to the tables. If these two nations specialize on the basis of comparative advantage: Trombonia will produce both beans and pork. |
Latalia will produce beans and Trombonia will produce pork. |
(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that: consumers should only buy goods from other states. |
people should only consume what they can produce themselves. |
Answer the question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size. Picture Refer to the given data. Beta: will not realize gains from specialization and trade. |
should specialize in catching fish and trade with Alpha for chips. |
(Consider This) The greatest benefit to an economy from international trade is: full employment of its labor force. |
consumption beyond domestic production possibilities. |
Answer the question on the basis of the following domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. Picture Refer to the given data. The total amount of revenue collected from a $1-per-unit tariff on this product will be: |
$7. |
In a two-nation model, the equilibrium world price will occur where: both nations’ export supply curves are horizontal. |
one nation’s export supply curve intersects the other nation’s import demand curve. |
(Last Word) Frederic Bastiat’s satirical argument against protectionism called for protecting domestic producers from: other European countries. |
the sun. |
Picture Refer to the graphs. These production possibilities curves: |
demonstrate that there can be gains from specialization and trade between the two nations. |
Answer the question on the basis of the following information about the cost ratios for two products—fish (F) and chicken (C)—in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Refer to the given information. In Singsong the domestic real cost of each chicken: is 2 fish. |
is ½ fish. |
Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Picture Picture Refer to the tables. Assume that before specialization and trade, Latalia produced combination C and Trombonia produced combination B. If these two nations now specialize completely based on comparative advantage, the total gains from specialization and trade will be: 4 tons of pork. |
4 tons of beans. |
Chapter 20 – International Trade
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