Question 1

-Refer to Table 13-3. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)   Tina has a comparative advantage in making candles.
B)   Bryce has an absolute advantage in making soap.
C)   Bryce has a comparative advantage in making candles.
D)   Bryce has a comparative advantage in making candles and making soap.E) B) and D)
F) B) and C)

Question 2

If a country has a comparative advantage in producing a product, it may not have an absolute advantage in producing that product.

Accepted Answer

A) True 
 B)False

Question 3

-Refer to Table 13-2. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)   Sarita has a comparative advantage in baking pies.
B)   Gabriel has an absolute advantage in baking cakes.
C)   Gabriel has a comparative advantage in baking pies.
D)   Gabriel has a comparative advantage in baking pies and baking cakes.E) B) and D)
F) None of the above

Question 4

If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia can not benefit from trade with Norway.

Accepted Answer

A) True 
 B)False

Question 5

Goods and services bought domestically but produced in other countries are referred to as

Accepted Answer

A)   exports.
B)   imports.
C)   transfer payments.
D)   foreign consumption.E) B) and C)
F) A) and D)

Question 6

Whenever a buyer and a seller agree to trade,

Accepted Answer

A)   the agreement is made based on absolute advantage.
B)   they must have identical opportunity costs in producing their respective products.
C)   one party will always be worse off.
D)   both must believe they will be made better off.E) None of the above
F) B) and D)

Question 7

Which of the following describes the infant industry argument for protectionism?

Accepted Answer

A)   An industry must be protected in its early stages of development so that firms can compete with government-subsidised foreign competition.
B)   Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies.
C)   Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field.
D)   Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.E) A) and D)
F) None of the above

Question 8

Absolute advantage is

Accepted Answer

A)   the ability to produce more of a good or service than competitors when using the same amount of resources.
B)   the ability to produce higher quality goods compared to one's competitors.
C)   the ability to produce a good or service at a higher opportunity cost than one's competitors.
D)   the ability to produce more of a good or service than competitors that have more resources.E) All of the above
F) B) and C)

Question 9

The World Trade Organisation (WTO)  promotes foreign trade and investment, or globalisation. In recent years opposition to globalsation has led to violent protests at meetings of the WTO. One reason for these anti-globalisation protests is

Accepted Answer

A)   foreign trade and investment are examples of zero-sum games.
B)   protesters believe that globalisation will result in a return to communism in developing countries.
C)   protesters believe that free trade destroys the distinctive cultures of many countries.
D)   protesters object to the loss of intellectual property (such as software programs and movies)  that results from foreign trade and investment.E) B) and D)
F) C) and D)

Question 10

-Refer to Table 13-4.
a. Which country has an absolute advantage in the production of handbags and jackets?
b. Which country has a comparative advantage in the production of handbags?
c. Which country has a comparative advantage in the production of jackets?

Accepted Answer

a. Thailand has an absolute advantage in...

Question 11

Which of the following statements is used to justify protectionism?

Accepted Answer

A)   Free trade leads to higher prices for imported goods.
B)   Free trade increases employment by protecting domestic firms.
C)   A country should not rely on other countries for goods that are critical to its national defense.
D)   Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection.E) A) and B)
F) A) and C)

Question 12

What is dumping? Who benefits and who loses from dumping?

Accepted Answer

Dumping refers to selling a product for ...

Question 13

The largest proportion of world trade is in which of the following sectors?

Accepted Answer

A)   agriculture
B)   manufacturing
C)   mining
D)   servicesE) A) and D)
F) A) and C)

Question 14

What is an 'open economy'?

Accepted Answer

and/or has few or no...

Question 15

Which of the following is not an example of a trade restriction?

Accepted Answer

A)   tariffs
B)   quotas and voluntary export restraints
C)   legislation requiring that cars sold in a country have a 50 per cent domestic content
D)   consumer preferences for goods produced domesticallyE) C) and D)
F) None of the above

Question 16

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Accepted Answer

A)   a non-tariff trade barrier.
B)   an export quota.
C)   an import quota.
D)   a voluntary export restraint.E) C) and D)
F) None of the above

Question 17

If Japanese workers are more productive than French workers, then trade between Japan and France

Accepted Answer

A)   can take place only if France has an absolute advantage in producing a good or service Japanese buyers want.
B)   cannot take place because Japanese goods and services will be less expensive than French goods and services.
C)   cannot take place until French workers become more productive.
D)   will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want.E) C) and D)
F) B) and D)

Question 18

Trade between countries that is without restrictions is called

Accepted Answer

A)   unobstructed commerce.
B)   unabated trade.
C)   free trade.
D)   unencumbered trade.E) C) and D)
F) A) and C)

Question 19

The main purpose of most tariffs and quotas is to

Accepted Answer

A)   raise revenue for the government.
B)   reduce the prices consumers pay for goods and services.
C)   reduce the foreign competition that domestic firms face.
D)   improve the quality of goods and services imported into the country.E) None of the above
F) All of the above

Question 20

The Australian economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Accepted Answer

A) True 
 B)False

Exam 13: International Trade

If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia can not benefit from trade with Norway.

Correct AnswerverifiedShow Answer

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Correct AnswerverifiedShow Answer

Absolute advantage is

Correct AnswerverifiedShow Answer

If Japanese workers are more productive than French workers, then trade between Japan and France

Correct AnswerverifiedShow Answer

The main purpose of most tariffs and quotas is to

Correct AnswerverifiedShow Answer

What is dumping? Who benefits and who loses from dumping?

Correct AnswerverifiedDumping refers to selling a product for ...View AnswerShow Answer

If a country has a comparative advantage in producing a product, it may not have an absolute advantage in producing that product.

Correct AnswerverifiedShow Answer

Trade between countries that is without restrictions is called

Correct AnswerverifiedShow Answer

Which of the following is not an example of a trade restriction?

Correct AnswerverifiedShow Answer

What is an 'open economy'?

Correct Answerverifiedand/or has few or no...View AnswerShow Answer

Whenever a buyer and a seller agree to trade,

Correct AnswerverifiedShow Answer

Which of the following statements is used to justify protectionism?

Correct AnswerverifiedShow Answer

The World Trade Organisation (WTO) promotes foreign trade and investment, or globalisation. In recent years opposition to globalsation has led to violent protests at meetings of the WTO. One reason for these anti-globalisation protests is

Correct AnswerverifiedShow Answer

The Australian economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

Correct AnswerverifiedShow Answer

The largest proportion of world trade is in which of the following sectors?

Correct AnswerverifiedShow Answer

-Refer to Table 13-4. a. Which country has an absolute advantage in the production of handbags and jackets? b. Which country has a comparative advantage in the production of handbags? c. Which country has a comparative advantage in the production of jackets?

Correct Answerverifieda. Thailand has an absolute advantage in...View AnswerShow Answer

Which of the following describes the infant industry argument for protectionism?

Correct AnswerverifiedShow Answer

-Refer to Table 13-2. Select the statement that accurately interprets the data in the table.

Correct AnswerverifiedShow Answer

-Refer to Table 13-3. Select the statement that accurately interprets the data in the table.

Correct AnswerverifiedShow Answer

Goods and services bought domestically but produced in other countries are referred to as

Correct AnswerverifiedShow Answer

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Dumping refers to selling a product for ...
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and/or has few or no...
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a. Thailand has an absolute advantage in...
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