Homework 10

increase; decrease

Assume that the United States imposes a quota on Columbian coffee. Relative to the equilibrium world price that would exist in the absence of quotas, it is likely that the equilibrium price of coffee in the United States will ________ and the equilibrium price of coffee in Columbia will ________. Question options: decrease; remain the same remain the same; increase increase; increase increase; decrease

consumer surplus rises, producer surplus falls, and the economy as a whole gains.

An economy moves from autarky to free international trade. In the import sector: Question options: consumer and producer surplus both rise, and the economy as a whole gains. consumer surplus rises, producer surplus falls, and the economy as a whole gains. consumer surplus falls, producer surplus rises, and the economy as a whole gains. the decrease in either consumer surplus or producer surplus is sufficiently large to cause net losses for the economy

1

At the point at which it is currently producing, Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 3 hats is ________ sweaters. Question options: 1 3 22 28

12

At the point at which it is currently producing, Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 4 sweaters is ________ hats. Question options: 4 12 71 79

higher; lower

Compared with autarky, international trade leads to ________ production in exporting industries and ________ production in import-competing industries. Question options: higher; lower higher; higher lower; higher lower; lower

a comparative advantage; export

Countries that engage in trade will tend to specialize in goods in which they have ________ and will ________ those goods. Question options: a comparative advantage; import an absolute advantage; export a comparative advantage; export an economic profit; import

the opportunity cost of wine production is lower in France than in England.

France and England both produce wine and clothing under conditions of constant opportunity costs. France will have a comparative advantage in wine production if: Question options: it can produce more wine than England. its labor productivity in wine production is greater than England's. the absolute cost of producing wine is lower in France than in England. the opportunity cost of wine production is lower in France than in England.

rise; fall; rise

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to ________, domestic consumption to ________, and domestic production to ________. Question options: fall; fall; fall fall; rise; fall rise; fall; rise rise; rise; fall

export wooden furniture.

If a country's price for wood furniture in the absence of trade is lower than the price with trade, the country will likely: Question options: import wooden furniture. export wooden furniture. have absolute advantage in wooden furniture production. have a surplus of wooden furniture.

fall; rise

If a nation imports a good when the economy is opened to trade, the domestic price of the good will ________ and domestic consumption will ________. Question options: rise; rise rise; fall fall; rise fall; fall

higher; lower

If the United States imposes a quota on French wines, the result in the short run is likely to be ________ profits for American wine producers and ________ profits for French wine producers. Question options: lower; lower lower; higher higher; lower higher; higher

One ton of beef costs 12 boxes of tulips.

In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips. At which of these prices will trade occur between the two countries? Question options: One ton of beef costs 20 boxes of tulips. One ton of beef costs 5 boxes of tulips. One ton of beef costs 12 boxes of tulips. One ton of beef costs 8 boxes of tulips.

the Netherlands has a comparative advantage in raising beef.

In a single year, the Netherlands can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Belgium can raise 50 tons of beef or produce 750 boxes of tulips. From this information, we know that: Question options: the Netherlands has a comparative advantage in raising beef. the Netherlands has a comparative advantage in raising tulips. Belgium has a comparative advantage in raising beef. Belgium has an absolute advantage in raising beef.

does not trade with other countries.

The term autarky refers to a situation in which a country: Question options: trades goods and services based upon the principle of comparative advantage. trades goods and services based upon the principle of absolute advantage. trades goods and services based upon the principle of Ricardian advantage. does not trade with other countries.