MACRO QUIZ 4

Goods and services purchased from abroad are _____, while goods and services sold abroad are _______

imports; exports

France and England both produce wine and clothing with constant opportunity costs. France will have a comparative advantage in wine production if..

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

The United States must give up the production of 500 bicycles to produce 20 additional tractors. The opportunity cost of producing 100 bicycles is _____ tractor

4

(Figure: The Market for Laptop Sleeves) Look at the figure The Market for Laptop Sleeves. Assume that S and D are the domestic supply and demand curves and the world price is PW. Identify the area of consumer surplus when a tariff raises the domestic price from the world price to PT.

A + B

(Figure: The Market for Laptop Sleeves) Look at the figure The Market for Laptop Sleeves. Assume that S and D are the domestic supply and demand curves and the world price is PW. Identify the area of deadweight loss when a tariff raises the domestic price from the world price to PT.

D+F

Mexico produces lettuce but can also import it. If Mexico imports some lettuce..

the world price is lower than the domestic price

(Figure: The Production Possibilities for Two Countries) Look at the figure The Production Possibilities for Two Countries. The opportunity cost of producing 1 tire in Indonesia is _____ radio(s), while the opportunity cost of producing 1 tire in Malaysia is _____ radio(s)

0.5; 2

a quota rent for tuna is the difference between the demand price and the supply price if a quota limit is imposed in the tuna market.

true

(Figure: The Market for Laptop Sleeves) Look at the figure The Market for Laptop Sleeves. Assume that S and D are the domestic supply and demand curves and the world price is PW. Identify the area of government tax revenue when a tariff raises the domestic price from the world price to PT.

E

(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1, consumer surplus equals _____, and producer surplus equals _____

F + G + H; J + K

(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW and the change in total surplus is..

I.

Which is NOT a source of comparative advantage?

In general, France has absolute advantage over Italy in production of goods and services

Taken collectively, people in nations that engage in international trade are not likely to..

be made worse off

(Figure: The Domestic Supply and Demand for SUVs in the United States) Look at the figure The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs

export 6 million

If a country's price for wood furniture in the absence of trade is lower than the price with trade, the country will likely..

export wooden furniture

(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW. Sri Lanka will _____ tea and the volume of trade will equal _____

export; QT - CT

(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW and consumer surplus _____ to ______

falls; F

When an economy moves from autarky to free international trade, for industries in the export sector, consumer surplus _____, producer surplus _____, and the economy as a whole _____.

falls; rises; gains

According to the Heckscher-Ohlin model, Brazil will have a comparative advantage in oranges if the factors ________ in the production of oranges are _________

intensive; abundant

If a country has the comparative advantage in producing cloth, in the market for cloth the autarky price would be _____ the world price and the country would _____ cloth

less than; export

An example of an import quota is a..

limit on the total number of Honda automobiles imported from Japan.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _____, domestic consumption to _____, and domestic production to _____

rise; fall; rise

(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW, and producer surplus _____ to _____

rises; G + H + I + J + K

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..

that in comparison with the United States, Bangladesh is a labor-abundant country

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..

the Netherlands has a comparative advantage in raising beef