Please answer these questions

Question 7

Which of the following is an argument for free trade?

Lower consumption possibilities.

The need to protect goods and services essential to national security.

Greater efficiency through specialization.

Aiding infant industries.

Question 8

If a country is completely self-reliant in producing goods for its own consumption needs, then:

It consumes more than it can with trade.

Its consumption possibilities equal its production possibilities.

It promotes specialization.

It achieves a higher standard of living by exporting.

Question 9

Two countries will have zero incentive to trade if their production-possibilities curves are parallel straight lines because:

The opportunity costs for both countries are the same.

One country has an absolute advantage in the production of both goods thus providing that country no incentive for trade.

One country has a comparative advantage in the production of both goods thus providing that country with no incentive for trade.

An intersection of the two lines is not possible and therefore a trade equilibrium is not possible.

Question 10

Consumption possibilities, during a given time period, refer to the:

Maximum amount of imported goods and services that a country can consume.

Amount by which a country can expand its production possibilities by engaging in international trade.

Alternative combinations of goods and services that a country can consume.

Maximum amount that a country can produce if it imports and does not export.

Question 11

Comparative advantage in production is achieved by:

Subsidizing, specializing, and lowering the price of an exported good.

Being able to produce a good with fewer inputs than in other countries.

Having terms of trade that are better than the terms of trade faced in other countries.

Having a lower opportunity cost of producing a good relative to that of other countries.

Question 12

Suppose the production of 12 tons of copper in the United States requires the same amount of resources as the production of 1 ton of aluminum. In Mexico, 12 tons of copper requires the same amount of resources as 2 tons of aluminum. Implicitly:

The United States has the comparative advantage in producing copper.

Mexico has an absolute advantage in producing aluminum.

The United States has an absolute advantage in producing copper.

All of the above.

Question 13

Suppose 2 cars take the same resources as producing 2 trucks in the United States. But in Japan 2 cars take the same resources as 1 truck. In the production of cars we can conclude:

Japan has the absolute advantage.

The United States has the absolute advantage.

The United States has the comparative advantage.

Japan has the comparative advantage.

Question 14

Suppose France and the United States do not trade and the competitive price of an ordinary bottle of wine is 40 francs in France and $2 in the United States. The price of wheat per bushel is 40 francs in France and $6 in the United States. If prices reflect only the differences in costs of the resources to produce wine and wheat in the two countries, this information is sufficient to enable us to state that:

The United States has a comparative advantage in the production of wine.

France has a comparative advantage in the production of wine.

Neither country has a comparative advantage in the production of either good.

The United States has an absolute advantage in the production of both goods.

Question 15

Absolute advantage refers to:

Total market domination by one country of the production and sales of a certain good.

The ability of a country to produce a specific good at a lower opportunity cost than its trading partners.

The ability of a country to produce a specific good with fewer resources than other countries.

The ability of a country to guarantee itself very favorable terms of trade at the expense of its trading partners.

Question 16

Terms of trade refers to:

The opportunity costs incurred in trade.

The rate at which goods are exchanged.

The degree to which one country has an absolute advantage.

Which country pays the transportation costs when trade occurs.

Question 17

A country will not trade unless:

It has an absolute advantage.

The terms of trade are superior to domestic opportunities.

Its balance of trade is in a surplus position.

All of the above.

Question 18

Suppose that Brazil has a comparative advantage in coffee and Mexico has a comparative advantage in tomatoes. Which of the following groups would be worse off if these countries specialize and trade?

Mexican coffee producers.

Brazilian coffee producers.

Mexican tomato producers.

All groups are better off when specialization and trade take place.

Question 19

Which of the following groups has an interest in restricting free trade?

Workers producing goods for export.

Communities depending on export goods for jobs.

Producers in import-competing industries.

All of the above.

Question 20

International trade:

Lowers prices to consumers.

Alters the mix of domestic production.

Redistributes income from import-competing industries to export industries.

All of the above.

Question 21

Arguments against free trade include:

Concerns about national security.

Protection of infant industries.

Concerns about dumping.

All of the above.

Question 22

Dumping is said to occur when:

Foreign producers sell their goods in the United States at prices lower than their marginal cost of production.

Foreign producers sell their goods in the United States at prices lower than the U.S. average cost of production.

Foreign producers sell their goods in the United States at prices lower than those prevailing in their own countries.

The foreign countries have trade surpluses and the United States has a trade deficit.

Question 23

The infant-industry argument can be justified because:

A new industry may never develop in a protected, noncompetitive environment.

The government may not be able politically to end protectionism even when protectionism is no longer justified.

Government may choose to protect industries which place heavy import burdens on the economy.

A new industry may be difficult to start in the face of existing foreign competition.

Question 24

Which of the following is a barrier to trade?

Embargoes.

Quotas.

Tariffs.

All of the above.

Question 25

An embargo is:

A prohibition on exports or imports.

A tax imposed on imported goods.

A limit to the quantity of a good that may be imported in a given time period.

An orderly marketing agreement.

Question 26

A tariff is:

A prohibition on exports or imports.

A tax imposed on imported goods.

A limit to the quantity of a good that may be imported in a given time period.

An orderly marketing agreement.

Question 27

A quota is:

A prohibition on exports or imports.

A tax imposed on imported goods.

A limit to the quantity of a good that may be imported in a given time period.

An orderly marketing agreement.

Question 28

Tariffs tend to reduce the volume of imports by:

Setting maximum allowable import limits.

Placing severe quality restrictions on imported goods.

Making them more expensive to domestic consumers.

Reducing prices of domestically produced goods.

Question 29

A voluntary restraint agreement is:

A prohibition on exports or imports.

A tax imposed on imported goods.

A trade bloc which permits free trade among member countries.

An agreement to reduce the volume of trade in a specific good.

Question 30

A beggar-thy-neighbor policy is:

The imposition of import barriers for the purpose of curbing inflation.

The imposition of trade barriers to increase domestic employment.

The imposition of trade barriers for the purpose of expanding exports.

An attempt by a poor country to get more foreign aid and assistance.