Question 1

Suppose the domestic price of wheat is $3.50 per bushel in Canada, while the world price is $4.00 per bushel. Assuming no transportation costs, Canada will:

Accepted Answer

A)   have a domestic shortage of wheat.
B)   export wheat.
C)   import wheat.
D)   neither export nor import wheat.E) B) and C)
F) B) and D)

Question 2

The following table is domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.
 
-Refer to the above data. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Accepted Answer

A)   1 unit and 15 units.
B)   4 units and 7 units.
C)   7 units and 0 units.
D)   4 units and 6 units.E) B) and D)
F) B) and C)

Question 3

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Accepted Answer

A)   labour costs and product prices are not related.
B)   there is no discernible relationship between wage rates and labour productivity.
C)   wage rates and labour productivity are directly related.
D)   wage rates and labour productivity are inversely related.E) A) and D)
F) B) and C)

Question 4

d and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be: A)  v and vz. B)  w and wy. C)  w and wz. D)  vx and xz." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Accepted Answer

A)   v and vz.
B)   w and wy.
C)   w and wz.
D)   vx and xz.E) A) and B)
F) None of the above

Question 5

If Canadian government were to impose a quota on wristwatches imported from Switzerland, the:

Accepted Answer

A)   Canada would reduce its export of watches.
B)   prices of watches in Switzerland would rise.
C)   price of watches in Canada would remain the same, but the quantity will fall.
D)   total quantity of watches (domestically produced and imported)  purchased would decline.E) A) and B)
F) A) and C) D

Question 6

In terms of absolute volume, world trade is dominated by:

Accepted Answer

A)   Japan, Germany, and China.
B)   the United States, England, and China.
C)   Germany, England, and France.
D)   Germany, the United States, and China.E) A) and D)
F) B) and C)

Question 7

d and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per unit tariff, per unit revenue received by domestic and foreign producers respectively will be: A)  Pc and Pa. B)  Pa and Pc. C)  Pa and Pt. D)  Pt and Pc." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above 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 PcPt per unit tariff, per unit revenue received by domestic and foreign producers respectively will be:

Accepted Answer

A)   Pc and Pa.
B)   Pa and Pc.
C)   Pa and Pt.
D)   Pt and Pc.E) A) and B)
F) A) and C)

Question 8

The World Trade Organization advocates new protections for intellectual property such as copyrights.

Accepted Answer

A) True 
 B)False  True

Question 9

The following is the Production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
 
-Refer to the above data. The domestic opportunity cost of:

Accepted Answer

A)   producing a ton of chips in Alpha is 1/5 of a ton of fish.
B)   producing a ton of chips in Beta is 6 tons of fish.
C)   catching a ton of fish in Alpha is 5 tons of chips.
D)   catching a ton of fish in Beta is 6 tons of chips.E) A) and D)
F) A) and C)

Question 10

Which is a valid counterargument to the call for higher tariffs to save Canadian jobs?

Accepted Answer

A)   the need to protect Canadian workers from the dumping of foreign products
B)   strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions
C)   Canadian firms and workers must be protected from the ruinous competition of nations where wages for workers are low
D)   imports may eliminate some Canadians jobs, but they create others, so they may have little or no effect on employmentE) B) and C)
F) A) and B)

Question 11

Barriers to free trade impair efficiency in the international allocation of resources.

Accepted Answer

A) True 
 B)False

Question 12

As it relates to international trade, "dumping":

Accepted Answer

A)   is a form of price discrimination illegal under Canadian anti-combines laws.
B)   is the practice of selling goods in a foreign market at less than cost.
C)   constitutes a general case for permanent tariffs.
D)   is defined as selling more goods than allowed by an import quota.E) C) and D)
F) B) and C)

Question 13

Refer to the tables below. Which of the following would be feasible terms for trade between Latalia and Trombonia? Production possibilities tables for two countries, Latalia and Trombonia:
Latalia's production possibilities:  Trombonia's production possibilities:

Accepted Answer

A)   1 ton of beans for 1 ton of pork
B)   2 tons of beans for 1 ton of pork
C)   6 tons of beans for 1 ton of pork
D)   4 tons of beans for 1 ton of porkE) C) and D)
F) None of the above

Question 14

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are, 60X and 40Y.
-Refer to the above information. Alpha would prefer terms of trade at, or close to, 1X = 2/3 Y.

Accepted Answer

A) True 
 B)False  True

Question 15

d and Dd are the domestic supply and demand for a product and Pc is the world price of that product. Sd + Q is the product supply curve after an import quota is imposed. A tariff of PcPt or an import quota of wy will: A)  have the same effect on the volume of imports. B)  have the same effect on domestic price. C)  have the same effect on the revenues of domestic producers. D)  do all of the above." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. Sd + Q is the product supply curve after an import quota is imposed. A tariff of PcPt or an import quota of wy will:

Accepted Answer

A)   have the same effect on the volume of imports.
B)   have the same effect on domestic price.
C)   have the same effect on the revenues of domestic producers.
D)   do all of the above.E) B) and C)
F) A) and C)

Question 16

Given the following production possibilities schedules, it can be seen that:

Accepted Answer

A)   Brazil has a comparative advantage in producing wine.
B)   Poland can produce more machines than Brazil.
C)   Brazil has a comparative advantage in producing machines.
D)   Poland can produce more of both goods than Brazil.E) A) and B)
F) A) and C)

Question 17

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that:

Accepted Answer

A)   the terms of trade will be 3X equals 1Y.
B)   Alpha should specialize in Y and Beta in X.
C)   Alpha should specialize in X and Beta in Y.
D)   there is no basis for mutually beneficial specialization and trade.E) All of the above
F) A) and B)

Question 18

The law of increasing opportunity costs limits international specialization.

Accepted Answer

A) True 
 B)False

Question 19

-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The opportunity cost of producing a:

Accepted Answer

A)   pizza is 2 beers in both countries.
B)   beer is 1/2 a pizza in both countries.
C)   pizza in East Lothian is 1 beer.
D)   beer in West Lothian is 1/2 a pizza.E) B) and D)
F) B) and C)

Question 20

A licensing requirement, or unreasonable standard pertaining to the product quality and safety for a product that is imported into a country, is an example of:

Accepted Answer

A)   protective tariffs.
B)   nontariff barriers.
C)   voluntary export restrictions.
D)   quotas on imported products.E) B) and C)
F) All of the above

Exam 16: International Trade

Suppose the domestic price of wheat is $3.50 per bushel in Canada, while the world price is $4.00 per bushel. Assuming no transportation costs, Canada will:

Correct Answer
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The following table is domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. -Refer to the above data. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct Answer
verified

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Correct Answer
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-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct Answer
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If Canadian government were to impose a quota on wristwatches imported from Switzerland, the:

Correct Answer
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D

In terms of absolute volume, world trade is dominated by:

Correct Answer
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-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. With a P_cP_t per unit tariff, per unit revenue received by domestic and foreign producers respectively will be:

Correct Answer
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The World Trade Organization advocates new protections for intellectual property such as copyrights.

Correct Answer
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True

The following is the Production possibilities data for two countries, Alpha and Beta, which have populations of equal size. -Refer to the above data. The domestic opportunity cost of:

Correct Answer
verified

Which is a valid counterargument to the call for higher tariffs to save Canadian jobs?

Correct Answer
verified

Barriers to free trade impair efficiency in the international allocation of resources.

Correct Answer
verified

As it relates to international trade, "dumping":

Correct Answer
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Refer to the tables below. Which of the following would be feasible terms for trade between Latalia and Trombonia? Production possibilities tables for two countries, Latalia and Trombonia: Latalia's production possibilities: Trombonia's production possibilities:

Correct Answer
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Correct Answer
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True

-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. S_d + Q is the product supply curve after an import quota is imposed. A tariff of P_cP_t or an import quota of wy will:

Correct Answer
verified

Given the following production possibilities schedules, it can be seen that:

Correct Answer
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Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that:

Correct Answer
verified

The law of increasing opportunity costs limits international specialization.

Correct Answer
verified

-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The opportunity cost of producing a:

Correct Answer
verified

A licensing requirement, or unreasonable standard pertaining to the product quality and safety for a product that is imported into a country, is an example of:

Correct Answer
verified

Exam 16: International Trade

Suppose the domestic price of wheat is $3.50 per bushel in Canada, while the world price is $4.00 per bushel. Assuming no transportation costs, Canada will:

Correct AnswerverifiedShow Answer

The following table is domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. -Refer to the above data. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct AnswerverifiedShow Answer

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Correct AnswerverifiedShow Answer

-Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct AnswerverifiedShow Answer

If Canadian government were to impose a quota on wristwatches imported from Switzerland, the:

Correct AnswerverifiedD

In terms of absolute volume, world trade is dominated by:

Correct AnswerverifiedShow Answer

-Refer to the above 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 PcPt per unit tariff, per unit revenue received by domestic and foreign producers respectively will be:

Correct AnswerverifiedShow Answer

The World Trade Organization advocates new protections for intellectual property such as copyrights.

Correct AnswerverifiedTrue

The following is the Production possibilities data for two countries, Alpha and Beta, which have populations of equal size. -Refer to the above data. The domestic opportunity cost of:

Correct AnswerverifiedShow Answer

Which is a valid counterargument to the call for higher tariffs to save Canadian jobs?

Correct AnswerverifiedShow Answer

Barriers to free trade impair efficiency in the international allocation of resources.

Correct AnswerverifiedShow Answer

As it relates to international trade, "dumping":

Correct AnswerverifiedShow Answer

Refer to the tables below. Which of the following would be feasible terms for trade between Latalia and Trombonia? Production possibilities tables for two countries, Latalia and Trombonia: Latalia's production possibilities: Trombonia's production possibilities:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTrue

-Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. Sd + Q is the product supply curve after an import quota is imposed. A tariff of PcPt or an import quota of wy will:

Correct AnswerverifiedShow Answer

Given the following production possibilities schedules, it can be seen that:

Correct AnswerverifiedShow Answer

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that:

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs limits international specialization.

Correct AnswerverifiedShow Answer

-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The opportunity cost of producing a:

Correct AnswerverifiedShow Answer

A licensing requirement, or unreasonable standard pertaining to the product quality and safety for a product that is imported into a country, is an example of:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers respectively would be:

Correct Answer
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D

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-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. With a P_cP_t per unit tariff, per unit revenue received by domestic and foreign producers respectively will be:

Correct Answer
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True

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True

-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. S_d + Q is the product supply curve after an import quota is imposed. A tariff of P_cP_t or an import quota of wy will:

Correct Answer
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Correct Answer
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