CHAPTER 09 - Chapter9 Application:InternationalTrade 1.

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Chapter 9 Application: International Trade 1. Nations would gain from trade if a(n) __________ exists. a. absolute advantage b. specialization c. comparative advantage d. infant industry ANSWER: c comparative advantage SECTION: 1 OBJECTIVE: 1 2. If Canada has a comparative advantage over Denmark in the production of wood, this implies that a. it requires fewer resources in Canada than in Denmark to produce wood. b. the opportunity cost of producing wood in Canada is lower than in Denmark. c. Denmark does not benefit by trading with Canada. d. Canada should buy wood from Denmark. ANSWER: b the opportunity cost of producing wood in Canada is lower than in Denmark. SECTION: 1 OBJECTIVE: 1 3. If two countries specialize a. the other countries trading with them cannot specialize. b. everyone in both countries benefits. c. the total of goods produced increases. d. all goods will be produced in both countries. ANSWER: c the total of goods produced increases. SECTION: 1 OBJECTIVE: 1 4. As a result of free trade in a commodity, the a. price of the commodity must be the same in all countries. b. total quantity imported will exceed the total quantity exported. c. price of the commodity will be higher in the producing country. d. price of the commodity will be lower in the producing country. ANSWER: a price of the commodity must be the same in all countries. SECTION: 1 OBJECTIVE: 1 5. If at the world equilibrium price the U.S. quantity demanded is greater than the U.S. quantity supplied, then  the a. United States will import the good. b. United States will export the good. c. world price will fall. d. world price will rise. ANSWER: a United States will import the good. SECTION: 1 OBJECTIVE: 1 51
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52 Chapter 9/Application: International Trade 6. Consider this diagram of the market for pocket calculators in Venezuela. In the absence of trade, the price and  quantity of calculators sold are a. $3.00 and 10 calculators. b. $3.00 and 60 calculators. c. $8.00 and 60 calculators. d. $8.00 and 80 calculators. ANSWER: c $8.00 and 60 calculators. SECTION: 1 OBJECTIVE: 1 7. Consider this diagram of the market for pocket calculators in Venezuela. With free trade, Venezuela produces  __________, consumes __________, and imports __________. a.
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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CHAPTER 09 - Chapter9 Application:InternationalTrade 1.

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