SCAN0810_000 - C hagter Eight. Name: Date: 1. France and...

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Unformatted text preview: C hagter Eight. Name: Date: 1. France and England both produce wine and cloth under conditions of constant Opportunity costs. France will have a comparative advantage in wine production if: A) it can produce more wine than England. 8) its labor productivity in wine production is greater than England's. C) the absolute cost of producing wine is lower in France than in England. D) the opportunity cost of wine production is lower in France than in England. 2. Bangladesh exports shirts, the making of which is labor—intensive, to the United States. The likely source of Bangladesh's comparative advantage in shirts is: A) a hotter climate, which makes it possible to produce shirts outdoors, eliminating the need for factory buildings and hence reducing costs. B) superior production technology. C) that, in comparison with the United States, Bangladesh is a labor-abundant country. D) the higher labor productivity in Bangladesh. 3. When an economy moves from autarky to free international trade, in the export sector: A) consumer and producer surplus both rise and the economy as a whole gains. B) consumer surplus rises, producer surplus falts, and the economy as a whole gains. C) consumer surplus falls, producer surplus rises, and the economy as a whole gains. D) the decrease in either consumer surplus or producer surplus is sufficiently large to cause net losses for the economy. 4. Taken collectively, people in nations that engage in international trade are not likely to: A) consume more than they were able to consume in the absence of trade. B) raise their standards of living. C) gain from lower opportunity costs of production. D) be made worse off. 5. If the differ(s) between two countries, this suggests the possibility for mutually advantageous trade. A) currency B) factor endowments C) exchange rate D) level of government spending for defense 6. Chile has a comparative advantage in copper. Which of the following is a source of this comparative advantage? A) mild temperatures B) large deposits of copper ore C) no opportunity cost associated with copper production D) high tariffs on copper from other nations Chapter Eight Page 1 10. 11. 12. . Goods and services purchased from abroad are . Mexico is relatively labor—abundant when compared with the United States. Therefore, Mexico has a comparative advantage in A) all goods B) goods that are labor—intensive in production C) goods that are capital-intensive in production D) goods that are land—intensive in production compared with the United States. . Japan's comparative advantage in automobiles can be attributed to: A) climate. B) factor endowments. C) technology. D) exchange rates. ; goods and services sold abroad are A) imports; exports B) tariffs; import quotas C) exports; imports D) import quotas; tariffs If the United States can produce 30 computers for every car it produces, and Japan can produce 15 computers for every car it produces, we can conclude that: A) the United States has the comparative advantage in car production. 13) Japan has the comparative advantage in car production. C) the United States has the absolute advantage in car production. D) Japan has the absolute advantage in car production. Japan, at the point at which it is currently producing, must give up the production of 75 computers to produce 25 additional cellular telephones. Which of the following is the opportunity cost of producing 3 computers? A) I cellular telephone B) 3 cellular teiephones C) 22 cellular telephones D) 28 cellular telephones When an economy moves from autarky to free international trade, in the import sector: A) consumer and producer surplus both rise, and the economy as a whole gains. B) consumer surplus rises, producer surplus falls, and the economy as a whole gains. C) consumer surplus falls, producer surplus rises, and the economy as a whole gains. D) the decrease in either consumer surplus or producer surplus is sufficiently large to cause net losses for the economy. Chapter Eight Page 2 13. 14. 15. 16. 17. 18. The infant industry argument for trade protection essentially states that: A) small, traditional industries such as handicrafis should be protected from foreign competition or they would not be able to survive. new industries should be protected temporarily from foreign competition until they become established. industries that provide day care for their employees' children ought to be protected from foreign competition. industries that produce products essential for the well—being of infants (e. g., the baby food industry) ought to be protected, since such products are essential for the good health of future generations. B) C) D) If a nation imports a good when the economy is opened to trade, the domestic price of the good will and domestic consumption will A) rise; rise 13) rise; fall C) fall; rise D) fall; fall When a domestic market begins to export goods to and import goods from a foreign market: A) producers in the exporting industry may be better off. B) consumers of the imported good may be worse off. C) consumers of the exported good may be better off. D) producers in the importing industry are better off. If a nation exports a good when the economy is opened to trade, the domestic price of the good will and domestic consumption will A) rise; rise B) rise; fall C) fall; rise D) fall; fall if labor is abundant in Southlandia but capital is scarce, when Southlandia opens to trade: A) the prices of labor and capital will rise. B) the prices of labor and capital will fall. C) the price of labor will rise and the price of capital will fall. D) the price of labor will fail and the price of capital will rise. Mexico can produce lettuce domestically, but lettuce can also be imported from other nations. if Mexico imports some lettuce from other nations, it must be the case that: A) Mexico has the comparative advantage in lettuce production compared to other nations that produce lettuce. the world price of lettuce is lower than the domestic price of lettuce. the price of lettuce in Mexico will rise to equal the world price of lettuce. the domestic quantity of lettuce supplied will increase as more lettuce is imported from other nations. B) c) D) Chapter Eight Page 3 19. In the market for wooden furniture, if a country‘s price in the absence of trade is lower than the price with trade, the country must: A) import wooden furniture. B) export wooden furniture. C) have absolute advantage in wooden furniture production. D) have a surplus of wooden furniture. 20. If a country has the comparative advantage in producing cloth, we would predict that in the market for cloth, the autarky price would be the world price and the country would cloth. A) less than; export B) greater than; export C) less than; import D) the same as; export 21. Compared with autarky, international trade leads to production in exporting industries and production in import—competing industries. A) higher; lower B) higher; higher C) lower; higher D) lower; lower 22. If the United States placed larger tariffs on all textiles, then: A) producer surplus would increase. B) consumer surplus would increase. C) total surplus would increase. D) producer surplus would decrease. 23. Which of the following is a common argument for trade protection? A) national security B) increased efficiency C) increased profitability D) increased productivity 24. An example of a tariff is a: A) limit on the total number of Honda automobiles imported from Japan. B) regulation specifyng that each imported Honda automobile must meet certain emission exhaust guidelines. C) tax of $500 on each Honda automobile produced in the United States. D) tax of 10% of the value of each Honda automobile imported from Japan. 25. If Japan levies tariffs on US. goods entering Japan, this will tend to: A) benefit both Japanese and US. producers. B) damage U.S. producers and benefit Japanese producers. C) benefit U.S producers and damage Japanese producers. D) damage both Japanese and US. producers. Chapter Eight Page 4 28. 29. 30. 31. . Policies that limit imports, usually with the goal of protecting domestic producers in import—competing industries from foreign competition, are known as: A) import—competing clauses. B) import reduction acts. C) trade protection. D) competition protection. . A tax imposed by a government on imported goods or services is a: A) quota. B) tariff. C) nontariff barrier. D) trade embargo. An example of a quota is a: A) limit on the total number of Honda automobiles imported from Japan. B) regulation specifying that each imported Honda automobile must meet certain emission exhaust guidelines. tax of 10% of the value of each Honda automobile imported from Japan. subsidy from the Japanese government of $500 for each Honda automobile imported into the United States. C) D) Tariffs and import quotas always: A) increase the quantity of imports as compared to free trade. B) generate government revenue. C) increase consumer surplus as compared to free trade. D) reduce total surplus as compared to free trade. France and England both produce wine and cloth under conditions of constant opportunity costs. If opportunity costs in the two countries are different and France has a comparative advantage in wine production, then England must have a comparative advantage in cloth production. A) True B) False Gains from trade will result if a country specializes in: A) all of its goods. B) the goods in which it has a comparative advantage. C) goods in which it has an absolute advantage. D) goods in which it has an absolute and comparative advantage. Chapter Eight Page 5 ...
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This note was uploaded on 02/03/2012 for the course ECONOMICS 202 taught by Professor Black during the Spring '08 term at Boise State.

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SCAN0810_000 - C hagter Eight. Name: Date: 1. France and...

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