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Incorrect 1. For which of the following nations does international trade account for the largest percentage of GDP?

Incorrect
1.
For which of the following nations does international trade account for the largest percentage of GDP?
A) Japan
B) The Netherlands
C) Germany
D) Great Britain
E) the United States
Points Earned: 0.0/1.0
Correct Answer(s): B


Incorrect
2.
Suppose that workers in Transylvania can produce only two goods -- yo-yos or sweatsocks. The Transylvanian currency is the daler. In what unit is the opportunity cost of yo-yos measured?
A) dalers
B) dalers per yo-yo
C) dalers per sweatsock
D) yo-yos
E) sweatsocks
Points Earned: 0.0/1.0
Correct Answer(s): E


Incorrect
3.
For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?
A) The opportunity cost of producing watches is lower in Denmark.
B) The opportunity cost of producing cheese is lower in Denmark.
C) The opportunity cost of producing watches is identical in both countries.
D) It is impossible to compare opportunity costs because the two countries use different currencies.
E) In Germany the opportunity cost of producing one pound of cheese is one watch.
Points Earned: 0.0/1.0
Correct Answer(s): A


Correct
4.
For each bow the Romans are producing, they give up the opportunity to make 10 arrows. The Dacians are giving up producing 2 bows for every 40 arrows they are producing. Which of the following is true regarding comparative advantage?
A) The Romans have comparative advantage in producing arrows
B) The Romans have comparative advantage in producing bows
C) The Romans have comparative advantage in producing arrows and bows
D) The Dacians have comparative advantage in producing arrows and bows
E) The Dacians have comparative advantage in producing bows
Points Earned: 1.0/1.0
Correct Answer(s): B


Incorrect
5.
Which of the following is not a basis for trade between two nations?
A) different skill levels of the labor forces
B) one nation's absolute advantage
C) a difference in tastes between countries
D) economies of scale
E) different capital stocks
Points Earned: 0.0/1.0
Correct Answer(s): B


Incorrect
6.
The opportunity cost of producing one car in Germany is 2,000 bushels of wheat, and the opportunity cost of producing one car in Canada is 1,200 bushels of wheat. The two countries can realize mutual gains from trade if they agree on terms of trade that are
A) greater than 2,000 bushels of wheat per car
B) less than 1,200 bushels of wheat per car
C) greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces wheat
D) greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces cars
E) greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and each country produces both goods
Points Earned: 0.0/1.0
Correct Answer(s): C


Correct
7.
The rate at which two countries trade one good for another
A) is known as the foreign exchange rate
B) is known as the terms of trade
C) is known as the export line
D) equals the slope of the import line
E) equals the common slope of the countries' production possibilities frontiers
Points Earned: 1.0/1.0
Correct Answer(s): B


Incorrect
8.
Which of the following is true?
A) International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.
B) International trade requires that a country's production possibilities exceed its consumption possibilities.
C) A country's production possibilities always equal its consumption possibilities.
D) A country's consumption possibilities can never equal its production possibilities because of leakages in the system.
E) As long as there is full employment of resources, a country's production possibilities will exceed its consumption possibilities even with trade.
Points Earned: 0.0/1.0
Correct Answer(s): A


Incorrect
9.
Which of the following is not a reason for international specialization?
A) some countries have educated, trained workers, while other countries have unskilled workers
B) tastes and preferences tend to be different in different countries
C) economies of scale can allow larger, specialized producers to operate at lower average cost
D) mineral resources are often concentrated in particular countries
E) the world price of a good is determined by the world supply and demand for it
Points Earned: 0.0/1.0
Correct Answer(s): E


Correct
10.
Ad valorem tariffs on imports are based on a percentage of an import's value; specific tariffs are based on a lump sum per physical unit imported.
A) True
B) False
Points Earned: 1.0/1.0
Correct Answer(s): A


Incorrect
11.
Exhibit 19-2

Domestic Supply and Demand
for Tulips in the Netherlands
Demand

Supply
Q

P

Q

P
12,000

$0

6,000

$0
10,000

1

7,000

1
8,000

2

8,000

2
6,000

3

9,000

3
4,000

4

10,000

4



In Exhibit 19-2, if the world price of tulips is $1 and there are no trade restrictions, The Netherlands will
A) produce 7,000, consume 10,000, and export 3,000 tulips
B) produce 10,000 and consume 10,000 tulips
C) produce no tulips
D) import all of the tulips that it consumes
E) consume all of the tulips that it produces
Points Earned: 0.0/1.0
Correct Answer(s): E


Incorrect
12.
A lump-sum tax per unit on imports is known as
A) a specific tariff
B) an effective tariff
C) a specific quota
D) an effective quota
E) an ad valorem quota
Points Earned: 0.0/1.0
Correct Answer(s): A


Incorrect
13.
As a result of a tariff on imports, consumers in the importing country
A) purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of fewer total goods than without the tariff
B) purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of more total goods than without the tariff
C) purchase more domestically produced goods and more foreign goods, resulting in the consumption of fewer total goods than without the tariff
D) purchase fewer domestically produced goods and fewer foreign goods, resulting in the consumption of more total goods than without the tariff
E) cease importing any goods at all
Points Earned: 0.0/1.0
Correct Answer(s): A


Incorrect
14.
Exhibit 19-4

nar002-1.jpg

In Exhibit 19-4, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will be purchased in the United States?
A) 4,000
B) 6,000
C) 8,000
D) 10,000
E) 12,000
Points Earned: 0.0/1.0
Correct Answer(s): D


Incorrect
15.
Exhibit 19-8

nar003-1.jpg

Exhibit 19-8 shows the demand and supply of shirts for the country of Eragos. With free trade, for a world price of $4 per shirt, the Eragoans are producing:
A) 4 shirts
B) 8 shirts
C) 13 shirts
D) 18 shirts
E) 20 shirts
Points Earned: 0.0/1.0
Correct Answer(s): B


Correct
16.
Which of the following is not correct concerning quotas?
A) The enactment of quotas rewards domestic producers with higher prices.
B) The enactment of quotas creates opportunities for lobbyists to seek the perpetuation of quotas.
C) Quotas on steel, textiles and apparel, and sugar have been in effect for several decades.
D) Lobbying efforts by domestic producers and foreign exporters are vigorously fought by domestic consumers.
E) The auctioning of quotas would reduce their attractiveness to foreign exporters.
Points Earned: 1.0/1.0
Correct Answer(s): D


Correct
17.
A major U.S. motive for negotiating a free-trade agreement with Mexico was to
A) increase immigration into the United States
B) encourage Mexico's recent drive to achieve a more market-oriented economy
C) keep Mexico from going Communist
D) achieve, ultimately, political union with Mexico
E) help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries
Points Earned: 1.0/1.0
Correct Answer(s): B


Correct
18.
A major U.S. motive for negotiating a free-trade agreement with Mexico was to
A) help foster the study of the Spanish language as a means to trading with all Spanish-speaking countries
B) increase immigration into the United States
C) gain increased access to Mexican consumers
D) keep Mexico from going Communist
E) achieve, ultimately, political union with Mexico
Points Earned: 1.0/1.0
Correct Answer(s): C


Incorrect
19.
Which of the following is not correct concerning predatory dumping?
A) It may be a way to discourage the development of domestic production of a good.
B) It may drive out established firms.
C) There are a great number of documented cases of predatory dumping.
D) In actuality, the blocking of entry on a worldwide scale would be extremely difficult to accomplish.
E) In pursuing their monopoly position after dumping, dumpers may actually encourage the entry of other firms.
Points Earned: 0.0/1.0
Correct Answer(s): C


Correct
20.
Low wages may be traceable to all of the following except one. Which is the exception?
A) low productivity
B) too much saving
C) unstable business climate
D) poor education and training
E) lack of adequate physical capital supplied to labor
Points Earned: 1.0/1.0
Correct Answer(s): B

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