Q&A Hero

Q: Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. The tariff revenue collected by the government equals the area A) D + E + F. B) E. C) B + D + E + F. D) C + D + E + F.

Q: A quota A) makes domestic consumers better off. B) makes both domestic producers and consumers better off. C) makes everyone worse off. D) makes domestic producers better off.

Q: A tariff A) makes domestic consumers worse off. B) makes both domestic producers and consumers worse off. C) makes everyone better off. D) makes domestic producers worse off.

Q: Which of the following is the best example of a quota? A) a subsidy from the U.S. government to domestic manufacturers of tires to enable them to compete more effectively with foreign producers B) a limit on the quantity of tires that can be imported from a foreign country C) a 40% fee imposed on all imported tires D) a tax placed on all tires sold in the domestic market to help offset the impact of lost jobs in the domestic tire industry.

Q: Which of the following is the best example of a tariff? A) a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers B) a limit on the quantity of residential air conditioners that can be imported from a foreign country C) a $150 fee imposed on all imported residential air conditioners D) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Q: A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a A) tariff. B) quota. C) quantity floor. D) barricade.

Q: A tariff is A) a limit placed on the quantity of goods that can be imported into a country. B) a tax imposed by a government on goods imported into a country. C) a subsidy granted to importers of a vital input. D) a health and safety restriction imposed on an imported product.

Q: Under autarky, domestic producer surplus is represented by the area A) above the supply curve and below the equilibrium price. B) above the supply curve and below the demand curve. C) below the demand curve and above the equilibrium price. D) above the demand curve and below the supply curve.

Q: Under autarky, consumer surplus is represented by the area A) above the supply curve and below the equilibrium price. B) above the supply curve and below the demand curve. C) below the demand curve and above the equilibrium price. D) above the demand curve and below the supply curve.

Q: Which of the following is not an example of a trade restriction? A) tariffs B) quotas and voluntary export restraints C) legislation requiring that cars sold in a country have a 50 percent domestic content D) consumer preferences for goods produced domestically

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of consumer surplus? A) $0 B) $270 C) $305 D) $320.

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus? A) $0. B) $40. C) $320. D) $360.

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports? A) 5 units B) 10units C) 15 units D) 20 units

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the domestic quantity supplied? A) 5 units B) 10units C) 15 units D) 20 units

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded? A) 5 units B) 10units C) 15 units D) 20 units

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What will the market price be? A) $10 B) $18 C) $24 D) >$24

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the deadweight loss is A) $0. B) $15. C) $30. D) $40.

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the producer surplus is A) $40 B) $105 C) $195 D) $285

Q: Figure 9-1 Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the consumer surplus is A) $195. B) $260. C) $300. D) $555.

Q: Trade between countries that is without restrictions is called A) unobstructed commerce. B) unabated trade. C) free trade. D) unencumbered trade.

Q: Suppose in Finland a worker can produce either 32 cell phones or 4 kayaks while in Canada a worker can produce either 40 cell phones or 10 kayaks. a. Which country has an absolute advantage in cell phone production? In kayak production? b. What is the opportunity cost of 1 cell phone in Finland? In Canada? c. What is the opportunity cost of 1 kayak in Finland? In Canada? d. Which country has a comparative advantage in cell phone production? In kayak production? e. Suppose each country has 1,000 workers. Currently, each country devotes 40 percent of its labor force to cell phone production and 60 percent to kayak production. What is the output of cell phones and kayaks for each country and what is the total output of cell phones and kayaks between the two countries? f. Suppose each country specializes in the production of the good in which it has a comparative advantage. What is the total output of cell phones and kayaks in the two countries? g. Provide a numerical example to show how Finland and Canada can both gain from trade. Assume that the terms of trade are established at 6 cell phones for 1 kayak.

Q: What are the four main sources of comparative advantage? Briefly explain each source and provide examples.

Q: The simple trade model demonstrates that countries can expand consumption by specializing in the production of goods and services in which they have a comparative advantage. In reality we do not see complete specialization in production. State three reasons why this is case.

Q: What is autarky?

Q: Once a country has a comparative advantage in producing a product, it cannot lose that advantage.

Q: One of the main sources of comparative advantage is internal economies.

Q: Trade only occurs if there are only winners, and no losers, as a result of the trade.

Q: One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

Q: In the 1970s and 1980s, the United States lost its comparative advantage in consumer electronics goods to Japan. What factor was most responsible for the development of Japan's comparative advantage in consumer electronics goods? A) Japanese firms benefited from external economies. B) Japan has abundant supplies of labor. C) Japanese firms excelled in process technology. D) Japan has abundant supplies of natural resources needed to produce electronics goods.

Q: The United States is a leading exporter of wheat. What explains the comparative advantage of the United States in wheat production? A) positive externalities B) investment by multinational firms such as Archer-Daniels-Midland and the Tyson Foods Inc. C) climate and soil conditions in the United States which are well-suited for wheat production D) a large supply of unskilled labor

Q: Wall Street, in the borough of Manhattan in New York City, is the heart of the U.S. financial system, where banks, brokerage houses, other financial firms, and the New York Stock Exchange are all located. What is the reason for New York City's comparative advantage in the financial market? A) the development of superior information technology B) an abundant supply of skilled labor C) New York City has one of the largest sea ports in the world. D) external economies

Q: Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it. A) higher; less efficient B) higher; more efficient C) lower; less efficient D) lower; more efficient

Q: ________ refers to reductions in a firm's costs that result from an increase in the size of an industry. A) Internal economies B) External economies C) Autarkial dominance D) Streamlining

Q: The United States has developed a comparative advantage in film production due to the film industry being long-established in southern California, and lower costs result from the size of the industry in the area. This source of comparative advantage is referred to as A) the abundance of natural resources. B) superior process technology. C) external economies. D) best practices of unskilled labor.

Q: China has developed a comparative advantage in the production of clothing. The source of this comparative advantage is A) a large supply of natural resources. B) a large supply of unskilled workers and relatively little capital. C) investment in capital used to produce clothing. D) superior process technology.

Q: Japan has developed a comparative advantage in designing and producing automobiles. The source of its comparative advantage in these products is A) abundant supplies of natural resources. B) a favorable climate. C) a strong central government. D) technology.

Q: Which of the following is not a source of comparative advantage? A) relative abundance of labor and capital B) technology C) climate and natural resources D) a strong foreign currency exchange rate

Q: A Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is A) false since it ignores the workers who lose their jobs as result of international trade. B) false since not all countries participate in international trade. C) true because it refers to countries; individuals may be losers as a result of international trade. D) true because all consumers and workers benefit from international trade.

Q: Which of the following statements is true? A) All individuals in both countries are made better off as a result of international trade. B) Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall. C) Although some individuals are made better off as a result of international trade, both countries may be made worse off overall. D) Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.

Q: A consequence of increasing marginal costs of producing digital music players in Japan is A) Japan will not export digital music players. B) Japan will stop short of complete specialization in the production of digital music players. C) Japan will import digital music players from countries that don't experience increasing marginal costs. D) Japan will likely impose trade restrictions on imported digital music players.

Q: Tastes for products such as beer differ. As a result A) we see countries specializing completely in the production of beer. B) consumers of beer have difficulty deciding what type of imported beer to buy. C) the quality of imported beer is less than it could be. D) different countries may each have a comparative advantage in producing different types of beer.

Q: In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this is A) comparative advantage works better in theory than in practice. B) some countries have more resources than other countries. C) tastes for many traded goods are similar in many countries because of globalization. D) production of most goods involves increasing opportunity costs.

Q: The first example used to explain comparative advantage used two countries (England and Portugal) and two goods (wine and cloth) to show that A) each country would be better off from trade if it had an absolute advantage in producing one of the goods. B) each country would have a comparative advantage in the production of the good for which it had an absolute advantage. C) mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods. D) mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods.

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Belize gain compared to the "without trade" numbers?A) -100B) 100C) 120D) 250

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Denmark gain compared to the "without trade" numbers?A) 30B) 100C) 150D) 900

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Belize gain compared to the "without trade" numbers?A) -100B) 0C) 150D) 250

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Denmark gain compared to the "without trade" numbers?A) -150B) 0C) 150D) 1,050

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Belize consume?A) 150B) 270C) 930D) 1,200

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many clocks will Denmark consume?A) 270B) 900C) 930D) 1,200

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Belize consume?A) 100B) 130C) 250D) 400

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Denmark consume?A) 150B) 180C) 270D) 400

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. All of the following are terms of trade that could possibly benefit both countries exceptA) 1/5 of a hat : 1 clockB) 1/3 of a hat : 1 clockC) 1/2 of a hat : 1 clockD) 3/4 of a hat : 1 clock

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. All of the following are terms of trade that could possibly benefit both countries exceptA) 1 hat : 2 clocksB) 1 hat : 4 clocksC) 1 hat : 5 clocksD) 1 hat : 8 clocks

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. With trade, what is the total gain in clock production?A) 150B) 300C) 2,100D) 2,250

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. With trade, what is the total gain in hat production?A) 150B) 300C) 400D) 650

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Prior to trade, what was the opportunity cost to produce 1 clock in Belize?A) 1/6 of a hatB) 2/3 of a hatC) 1.5 hatsD) 6 hats

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Prior to trade, what was the opportunity cost to produce 1 clock in Denmark?A) 1/6 of a hatB) 2/3 of a hatC) 1.5 hatsD) 6 hats

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Prior to trade, what was the opportunity cost to produce 1 hat in Belize?A) 1/6 of a clockB) 2/3 of a clockC) 1.5 clocksD) 6 clocks

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Prior to trade, what was the opportunity cost to produce 1 hat in Denmark?A) 1/6 of a clockB) 2/3 of a clockC) 1.5 clocksD) 6 clocks

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Which country has a comparative advantage in producing hats?A) DenmarkB) BelizeC) both countriesD) neither country

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Which country has a comparative advantage in producing clocks?A) DenmarkB) BelizeC) both countriesD) neither country

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Which country has an absolute advantage in producing hats?A) DenmarkB) BelizeC) both countriesD) neither country

Q: Table 9-6Production andConsumption ProductionWithout Trade With TradeClocksHatsClocksHatsDenmark9001501,2000Belize1501000400Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production and consumption quantities without trade, and the production numbers with trade.Refer to Table 9-6. Which country has an absolute advantage in producing clocks?A) DenmarkB) BelizeC) both countriesD) neither country

Q: Examples of ________ show how trade between two countries can make each better off. A) absolute advantage B) comparative advantage C) autarky D) trade barriers

Q: Countries that engage in trade will tend to specialize in the production of goods and services in which they have ________ and will ________ these goods and services. A) a comparative advantage; import B) an absolute advantage; export C) a comparative advantage; export D) an absolute advantage; import

Q: The ratio at which a country can trade its exports for imports from other countries is called A) a trade barrier. B) the terms of trade. C) autarky. D) a free trade agreement.

Q: A situation in which a country does not trade with other countries is called A) autarky. B) self-actualization. C) autonomy. D) independence.

Q: Table 9-5BowsArrowsAhmet2080MyLinh2575Table 9-5 shows the output per week for bows and arrows by Ahmet and MyLinh.Refer to Table 9-5.a.Which person has an absolute advantage in the production of bows? arrows?b. Which person has a comparative advantage in the production of bows?c. Which person has a comparative advantage in the production of arrows?

Q: Table 9-5BowsArrowsAhmet2080MyLinh2575Table 9-5 shows the output per week for bows and arrows by Ahmet and MyLinh.Refer to Table 9-5. Fill in the following table with the opportunity costs of producing bows and arrows for Ahmet and MyLinh.BowsArrowsAhmetMyLinh

Q: Table 9-4Output Per Hour of WorkHandbagsJacketsCambodia153Thailand246Table 9-4 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand.Refer to Table 9-4.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?

Q: Table 9-4Output Per Hour of WorkHandbagsJacketsCambodia153Thailand246Table 9-4 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand.Refer to Table 9-4. Fill in the following table with the opportunity costs of producing handbags and jackets for Cambodia and Thailand.HandbagsJacketsCambodiaThailand

Q: Explain whether it is possible for a country to have an absolute advantage in the production of a product without having a comparative advantage in the production of that product.

Q: What does it mean for a country to have an absolute advantage in producing a product?

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

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

Q: If a country has an absolute advantage in producing a product, it must also have a comparative advantage in producing that product.

Q: The ability of a firm or country to produce a good or service at a lower opportunity cost than other producers is called absolute advantage.

Q: If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade? A) Mexico has a lower opportunity cost of producing bacon than Mexico and Mexico has a comparative advantage in producing fishing poles. B) The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico. C) Mexico must have an absolute advantage in producing fishing poles and Canada must have an absolute advantage in bacon. D) Mexico has a higher opportunity cost of producing fishing poles than Canada, and Canada has a higher opportunity cost of producing bacon.

Q: If Canada has a comparative advantage relative to Mexico in the production of timber, then A) the explicit cost of production for timber is lower in Canada than in Mexico. B) the opportunity cost of production for timber is lower in Canada than in Mexico. C) the implicit costs of production for timber are lower in Canada than in Mexico. D) the average cost of production for timber is lower in Canada than in Mexico.

Q: If the opportunity cost of production for two goods is different between two countries, then A) trade cannot benefit either country. B) only one country can be made better off by trade. C) mutually beneficial trade is possible. D) trade will only benefit both countries if one can lower its opportunity costs.