Pre-Test Chap 37 e18 - Pre-Test Chap 37 e18 Student: _ 1....

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Pre-Test Chap 37 e18 Student: ___________________________________________________________________________ 1. If country A has a higher cost of producing good X than country B, then country: A. B should impose a tariff on the exports of product X B. B has a comparative advantage in the production of product X C. A should impose a tariff on the imports of product X D. A has a comparative advantage in the production of product X 2. The principle of comparative advantage indicates that mutually beneficial international trade can take place only when: A. Tariffs are eliminated B. Transportation costs are almost zero C. Relative costs of production differ between nations D. A country can produce more of some product than other nations can 3. Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product. The export supply curves for the two nations are represented by lines: A. 5 and 7 B. 5 and 6 C. 6 and 8 D. 7 and 8
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4. Refer to the above table. If the world price of the product were $6 and a tariff of $1 is placed on the product, then the quantity of output that would be supplied domestically would be: A. 2,200 units, and the quantity of output that would be imported would be 800 units B. 1,600 units, and the quantity of output that would be imported would be 800 units C. 1,600 units, and the quantity of output that would be imported would be 400 units D. 1,400 units, and the quantity of output that would be imported would be 400 units 5. In Germany, one worker can produce one cuckoo clock or one beer mug. In Taiwan, one worker can produce two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good? A. Taiwan in both goods B. Taiwan in clocks and Germany in mugs C. Germany in clocks and Taiwan in mugs D. Germany in both goods 6. If the United States government were to impose a quota on wristwatches imported from Switzerland, the: A. United States would reduce its export of watches B. Prices of watches in Switzerland would rise C. Price of watches in the United States would remain the same, but the quantity will fall D. Total quantity of watches (domestically produced and imported) purchased would decline 7. The best example of a labor-intensive commodity is: A. Meat B. Wheat C. Wool D. Digital cameras Answer the question(s) below on the basis of the data given for two hypothetical nations, Wat and Xat. The nations have the production possibilities for units of rice and corn given below 8. Refer to the above data. Which of the following statements about the two nations is correct based on the principle of comparative advantage? A. Xat should specialize in the production of corn
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Pre-Test Chap 37 e18 - Pre-Test Chap 37 e18 Student: _ 1....

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