Ch 7

5, 6, 7, 8, 10, 13, 16, 19, 20, 21, 23, 24, 25, 26

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What is a​ quota? A. A numerical limit a government imposes on the quantity of a good that can be imported into a country. B. An agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country. C. A quota is the same thing as a voluntary export restraint. D. All of the above.

A. A numerical limit a government imposes on the quantity of a good that can be imported into a country.

The world is often described as having a global economy. How important is international trade to the United​ States? A. In the​ U.S., exports are smaller fractions of GDP than in most other countries. B. In the​ U.S., imports make up more than half of GDP. C. In the​ U.S., exports are increasing but not as a portion of GDP. D. The U.S. exports fewer goods than any of the other 8 highest income countries. E. The U.S. exports more than it​ imports, resulting in a trade deficit.

A. In the​ U.S., exports are smaller fractions of GDP than in most other countries.

Although international trade leads to substantial net​ benefits, not everyone gains from international trade. Which of the following groups is most likely to lose from​ trade? A. the workers and companies in the industries that compete with the imports B. businesses outside the import sectors C. businesses that use inputs and products that are being imported D. consumers

A. the workers and companies in the industries that compete with the imports

In the 2016 Summer Olympic​ Games, Ashton Eaton​ (from the United​ States) won a gold medal in the​ decathlon, which requires athletes to compete in 10 different track and field events. In one of these​ events, Eaton ran a​ 100-meter race in 10.46 seconds. In a separate​ event, Usain Bolt​ (from Jamaica) won a gold medal by running 100 meters in 9.81 seconds. The concept of comparative advantage better explains A. ​Bolt's performance because he specialized in an event and had the fastest time. B. ​Eaton's performance because his time was only slightly higher and he competed in more events. C. ​Eaton's performance because he competed in a decathlon. D. ​Bolt's performance because he is the​ better-known athlete.

A. ​Bolt's performance because he specialized in an event and had the fastest time.

_________________ advantage is the ability of an​ individual, a​ firm, or a country to produce more of a good or service than competitors when using the same amount of resources.

Absolute

The United States practices​ "sugar protectionism" by A. banning sugar imports. B. imposing a quota on sugar imports. C. charging sugar exporters a flat license fee to be able to export sugar in the United States. D. encouraging sugar exporting countries to use voluntary export restraints.

B. imposing a quota on sugar imports.

Comparative advantage A. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a higher absolute cost than competitors. B. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower opportunity cost than competitors. C. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower absolute cost than competitors. D. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a higher opportunity cost than competitors.

B. is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Economic theory suggests countries benefit from international trade by producing more of those good and services for which they have a comparative advantage​ (and less of that for which a country does not have a comparative​ advantage). ​ However, countries rarely specialize completely. ​ Why? Even with international​ trade, countries rarely specialize completely because A. consumers in different countries have homogeneous tastes. B. production of most goods involves increasing opportunity costs. C. all goods and services can be traded internationally. D. some countries would lose as a result of free trade. E. some countries do not have an absolute advantage producing anything.

B. production of most goods involves increasing opportunity costs.

What is a voluntary export​ restraint? A. The same thing as a tariff. B. A quota imposed by the WTO. C. An agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country. D. A numerical limit on the quantity of a good that can be imported.

C. An agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country.

Who is harmed when individual nations move from autarky to free​ trade? A. The domestic customers of the firms that went out of business. B. The foreign customers of the firms that now specialize. C. The owners of the firms that went out of business. D. The nation taken as a whole.

C. The owners of the firms that went out of business.

In the 2016 Summer Olympic​ Games, Ashton Eaton​ (from the United​ States) won a gold medal in the​ decathlon, which requires athletes to compete in 10 different track and field events. In one of these​ events, Eaton ran a​ 100-meter race in 10.46 seconds. In a separate​ event, Usain Bolt​ (from Jamaica) won a gold medal by running 100 meters in 9.81 seconds. Based on their performance at the 2016 Olympic​ Games, who was the better​ athlete? A. They are equivalent athletes because they both competed in the Olympics. B. Bolt was the better athlete because his time was better in the​ 100-meter race. C. This cannot be determined because this is a normative question. D. Eaton was the better athlete because he competed in a decathlon.

C. This cannot be determined because this is a normative question.

​"Sugar protectionism" is viewed as a​ "job killer" because A. it adversely affects the stock market by raising the price of​ "sugar futures". B. it leads to job losses in the sugar industry. C. it leads to job losses in the candy industry and various food manufacturing industries that use sugar. D. any regulation such as a sugar quota leads to a recession and​ economy-wide job loss.

C. it leads to job losses in the candy industry and various food manufacturing industries that use sugar.

A country will always be an exporter of a good where it has _________________ advantage in production

Comparative

_______________ advantage is the ability of an​ individual, a​ firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Comparative

If sugar protectionism has the bad effects as stated in the​ editorial, which of the following is a likely reason why Congress and the president do not eliminate​ it? A. Sugar growers have a very strong lobby in Washington. B. There is little political support for the elimination of the quota. C. Consumers are unaware of the existence of the quota. D. All of the above.

D. All of the above.

In the real​ world, specialization is not complete. Why do countries not completely​ specialize? A.Because production of most goods involves increasing opportunity costs. B. Because not all goods are traded internationally. C. Because tastes for products differ. D. All of the above.

D. All of the above.

You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your​ neighbor, which of the following statements is​ true? A. Your neighbor is better off specializing in picking cherries. B. You can trade some of your apples for some of your​ neighbor's cherries, and both of you will end up with more of both fruit. C. You have a comparative advantage in picking apples. D. All of the above.

D. All of the above.

In what way is sugar protectionism a burden on​ consumers? As far as the effect of​ "sugar protectionism" on U.S. consumers is​ concerned, A. it requires a consumer to pay a license fee to buy large quantities of sugar. B. it has no appreciable effect on sugar prices. C. it limits the quantity of sugar that a consumer is eligible to buy. D. it raises the prices of sugar and candy that consumers have to pay and leads to a loss of consumer surplus.

D. it raises the prices of sugar and candy that consumers have to pay and leads to a loss of consumer surplus.

________________ are goods and services produced domestically but sold to other countries.

Exports

When an industry receives tariff or quota​ protection, there is no effect on other domestic industries. A. True B. False

False

______________ are goods and services bought domestically but produced in other countries.

Imports

_______________ are taxes imposed by a government on imports of a good into a country.

Tarriffs