ch 9

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

We do not see complete specialization in the real world because A. not all goods and services are traded​ internationally, production of most goods involves decreasing opportunity​ costs, and tastes for products differ. B. not all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products differ. C. not all goods and services are traded​ internationally, production of most goods involves constant opportunity​ costs, and tastes for products are remarkably uniform. D. all goods and services are traded​ internationally, production of most goods involves increasing opportunity​ costs, and tastes for products are remarkably uniform.

B

Which of the following statements is true about the importance of trade in the U.S.​ economy? A.Exports and imports have steadily declined as a fraction of U.S. GDP. B.While exports and imports have been steadily rising as a fraction of​ GDP, not all sectors of the U.S. economy have been affected equally by international trade. C.Only a few U.S. manufacturing industries depend on trade. D.None of the above.

B

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 nation taken as a whole. C.The owners of the firms that went out of business. D.The foreign customers of the firms that now specialize.

C

_____ is a situation in which a country does not trade with other countries. The​ _____ is the ratio at which a country can trade its exports for imports from other countries. A. Terms of​ trade, autarky B. Oikonomia, prices C. Autarky, terms of trade D. Plutarky, price ratio

C

Which of the following factors may explain why a country like the Netherlands is more likely to import and export larger fractions of its GDP than would a larger​ country, such as China or the United​ States? A.Given its small​ size, the Netherlands must specialize in producing and exporting only a few​ products; it cannot produce the wide range of products that China or the U.S. can produce. B.The Netherlands is a small country with a level of GDP that is only a small fraction of that of China or the U.S. C.The Netherlands must rely on imports for a large range of products. D.All of the above

D

If the United States were to stop trading goods and services with other​ countries, which of the following U.S. industries would be likely to see their sales decline the​ most? A.Some service industries. B.Most manufacturing industries. C.Most of the agriculture industry. D.Only A and B. E.All of the above. F.None of the above.

E

The United States is the leading exporting country in the world. A.True B.False

B

Among the main sources of comparative advantage are the​ following: A.climate and natural​ resources, relative abundance of labor and​ capital, technology, external diseconomies. B.climate and natural​ resources, relative abundance of labor and​ capital, inefficient​ technology, external economies. C.climate and natural​ resources, relative scarcity of labor and​ capital, technology, external economies. D.climate and natural​ resources, relative abundance of labor and​ capital, technology, external economies.

D

By​ trading, countries are able to consume more than they could without trade. This outcome is possible because A. world production of both goods increases after trade. B.inefficiencies in resource allocation are reduced. C. shifting production to the more efficient country—the one with the comparative advantage—increases total production. D.all of the above.

D

One effect of tariffs and quotas A.is to create jobs outside the industries immediately affected. B.is to reduce prices to domestic consumers as it protects jobs in the target industry. C.is generally a net gain for the nation enacting the protective legislation. D.is to cost jobs outside the industries immediately affected.

D

The World Trade Organization​ (WTO) A.is an international organization that oversees international trade agreements. B.generally aids in negotiating trade agreements that include not only goods but also services and intellectual property. C.replaced the General Agreement on Tariffs and Trade​ (GATT) in January 1995. D.all of the above.

D

Briefly explain whether you agree or disagree with the following​ statement: ​"International trade is more important to the U.S. economy than to most other​ economies." A. Disagree. Exports and imports are a relatively small fraction of the United States GDP. B. Disagree. Since the U.S. has an absolute advantage in the production of most​ goods, it​ doesn't gain from trade. C. Agree. The U.S. is the largest exporter of goods and services in the world. D. Agree. The U.S. economy relies on low priced imports to keep inflation under control.

A

Dumping A. is selling a product for a price below its cost of production. B. is selling a product for a price the same as its cost of production. C. is selling a product for a price above its cost of production. D. none of the above.

A