Trade Quiz

Refer to Figure 9-2. With free trade, consumer surplus is Select one: a. $320. b. $640. c. $845. d. $1,690

a. $320.

The most obvious benefit of specialization and trade is that they allow us to Select one: a. work more hours per week than we otherwise would be able to work. b. consume more goods than we otherwise would be able to consume. c. spend more money on goods that are beneficial to society, and less money on goods that are harmful to society. d. consume more goods by forcing people in other countries to consume fewer goods.

b. consume more goods than we otherwise would be able to consume.

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by Select one: a. 15 blankets and 35 meals. b. 25 blankets and 40 meals. c. 35 blankets and 45 meals. d. 50 blankets and 80 meals.

a. 15 blankets and 35 meals.

Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good Y will increase by Select one: a. 3 units. b. 6 units. c. 9 units. d. 12 units.

a. 3 units

When the nation of Duxembourg allows trade and becomes an importer of software, Select one: a. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises. b. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls. c. residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises. d. residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls.

a. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.

Refer to Figure 9-2. With free trade, producer surplus is Select one: a. $845. b. $1,620. c. $1,690. d. $3,240.

b. $1,620.

Refer to Table 3-20. At which of the following prices would both Brad and Theresa gain from trade with each other? Select one: a. 12 bushels of wheat for 6 pounds of beef b. 12 bushels of wheat for 8 pounds of beef c. 12 bushels of wheat for 12 pounds of beef d. Brad and Theresa could not both gain from trade with each other at any price.

b. 12 bushels of wheat for 8 pounds of beef

Refer to Figure 3-4. If Lisa and Bryce each divides his or her time equally between producing jackets and producing sweaters, then total production is Select one: a. 2 sweaters and 8 jackets. b. 3 sweaters and 13 jackets. c. 5 sweaters and 8 jackets. d. 6 sweaters and 26 jackets.

b. 3 sweaters and 13 jackets.

Refer to Figure 3-20. If Canada and Mexico switch from each country dividing its time equally between the production of Good X and Good Y to each country spending all of its time producing the good in which it has a comparative advantage, then total production of Good X will increase by Select one: a. 3 units. b. 6 units. c. 9 units. d. 12 units

b. 6 units

Refer to Table 3-20. What is Brad's opportunity cost of producing one pound of beef? Select one: a. 5/6 bushel of wheat b. 6/5 bushels of wheat c. 3/5 bushels of wheat d. 5/3 bushels of wheat

b. 6/5 bushels of wheat

Refer to Table 3-20. What is Brad's opportunity cost of producing one pound of beef? Select one: a. 5/6 bushel of wheat b. 6/5 bushels of wheat Correct c. 3/5 bushels of wheat d. 5/3 bushels of wheat

b. 6/5 bushels of wheat

Trade can make everybody better off because it Select one: a. increases cooperation among nations. b. allows people to specialize according to comparative advantage. c. requires some workers in an economy to be retrained. d. reduces competition among domestic companies.

b. allows people to specialize according to comparative advantage.

Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves and baseball bats, but Tom is better at producing both goods. In this case, trade could Select one: a. benefit both Steve and Tom. b. benefit Steve, but not Tom. c. benefit Tom, but not Steve. d. benefit neither Steve nor Tom.

b. benefit both Steve and Tom.

Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative advantage in producing wheat if Select one: a. Canada requires fewer resources than the U.S. to produce a bushel of wheat. b. the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S. c. the opportunity cost of producing a bushel of wheat is lower for the U.S. than it is for Canada. d. the U.S. has an absolute advantage over Canada in producing computer software.

b. the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the U.S.

Refer to Figure 9-2. As a result of trade, total surplus increases by Select one: a. $50. b. $100. c. $250. d. $500.

c. $250.

Refer to Figure 3-10. If Alice produces only lemonade, she can produce: a. 200 pitchers per day. b. 300 pitchers per day. c. 400 pitchers per day. d. 450 pitchers per day.

c. 400 pitchers per day

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is Select one: a. 1/6 chair for Ken and 1/3 chair for Traci. Incorrect b. 1/6 chair for Ken and 3 chairs for Traci. c. 6 chairs for Ken and 1/3 chair for Traci. d. 6 chairs for Ken and 3 chairs for Traci.

d. 6 chairs for Ken and 3 chairs for Traci.

Economists generally support Select one: a. trade restrictions. b. government management of trade. c. export subsidies. d. free international trade.

d. free international trade.