International Trade

The "Buy American" campaign is equivalent to a(n): A. Tariff B. Quota C. Export subsidy D. Voluntary export restriction

B. Quota

A maximum limit set on the amounts of commodities that may be imported into a country in any period of time is a: A. Tariff B. Quota C. Nontariff barrier D. Voluntary export restriction

B. Quota

A basic assumption for comparing the production possibilities curves of two nations is that those possibilities curves reflect differences in: A. Consumer tastes and preferences B. Resource availability and technological capabilities C. The nations' incomes and income distribution D. Unemployment and inflation rates

B. Resource availability and technological capabilities

An excise tax that is applied to imported products which are not produced domestically is a(n): A. Protective tariff B. Revenue tariff C. Import quota D. Nontariff barrier

B. Revenue tariff

The benefits to trading nations based on comparative advantage accrue from: A. Specialization only B. Specialization and trading C. Trading only D. Protection of domestic industries

B. Specialization and trading

An excise tax on imported commodities is known as a(n): A. Quota B. Tariff C. Export restriction D. Price ceiling

B. Tariff

Refer to the above diagrams and information. Assume that prior to specialization and trade, Italy and Greece preferred points I and G on their respective production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in total output will be: A. 5 steel and 15 chemicals B. 10 chemicals C. 15 steel and 5 chemicals D. 25 steel

A. 5 steel and 15 chemicals

Refer to the above graphs and information. The assumption made about the domestic production opportunity costs in both countries is that they are: A. Constant B. Variable C. Increasing D. Decreasing

A. Constant

Consider two countries which trade with each other. The degree of specialization according to their respective comparative advantages will be greater if the countries face: A. Constant costs B. High tariffs C. Low unemployment rates D. Increasing costs

A. Constant costs

Tariffs and import quotas would benefit the following groups, except: A. Consumers of the product B. Domestic producers of the product C. Workers in domestic firms producing the product D. The government of the importing country

A. Consumers of the product

If a nation imposes a tariff on an imported product, then the nation will experience a(n): A. Decrease in total supply and an increase in the price of the product B. Decrease in demand and a decrease in the price of the product C. Decrease in supply of, and an increase in demand for, the product D. Increase in supply of, and a decrease in demand for, the product

A. Decrease in total supply and an increase in the price of the product

A key difference between import quotas and voluntary export restraints (VERs) is that the: A. Domestic government administers the former, whereas the foreign government administers the latter B. Foreign government administers the former, whereas the domestic government administers the latter C. One is a tax, whereas the other is a quantity limit D. One raises the price of the imported product involved, whereas the other one does not

A. Domestic government administers the former, whereas the foreign government administers the latter

The major beneficiaries of a tariff on a product are the: A. Domestic producers of the product B. Domestic consumers of the product C. Workers engaged in trade, like transportation workers D. Foreign producers of the product

A. Domestic producers of the product

Refer to Graph 7 showing the domestic demand and supply curves for a specific product in a hypothetical nation called Zancuzi. If the world price for this product is $2.00, then Zancuzi will: A. Export 200 units B. Export 400 units C. Import 200 units D. Import 400 units

A. Export 200 units

Refer to the above graphs and information. It can be deduced that: A. Greece has a comparative advantage in chemicals B. Greece has the absolute advantage in both products C. Italy has a comparative advantage in chemicals D. It is more costly in terms of resources to produce steel in Italy

A. Greece has a comparative advantage in chemicals

Benefits from trade among nations are based on the following differences, except: A. In resource endowments B. In technological capabilities C. In product quality and other attributes D. In attitudes towards trade

A. In resource endowments

The imposition of a tariff on a product is least likely to result in a(n): A. Increase in the efficiency in the domestic industry producing the product B. Increase in the price of the product C. Decrease in the quantity of imports D. Decrease in the real incomes of workers in other industries

A. Increase in the efficiency in the domestic industry producing the product

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization: Wheat (buschels) Rice(buschels) India 10 10 Canada 40 20 A. India should export rice to Canada and import Canadian wheat B. India should export wheat to Canada and import Canadian rice C. Canada should produce both wheat and rice and not trade with India D. India cannot offer any benefits to Canada from trading with her

A. India should export rice to Canada and import Canadian wheat

Refer to graph 5. If Country X is open to international trade and the world-market price of the product is $3, then Country X will: A. Neither export nor import the product B. Export some units of the product C. Import some units of the product D. Not produce the product

A. Neither export nor import the product

If two nations have identical production possibilities curves with constant costs, then one nation would have: A. No comparative advantage over the other nation B. A comparative advantage in one good and a comparative disadvantage in the other good C. No absolute advantage over the other nation D. An absolute advantage in one good and an absolute disadvantage in the other good

A. No comparative advantage over the other nation

What other economic process tends to accompany international trade, for nations to benefit from such trade? A. Specialization in production B. Nationalization of industries C. Regulation of production and trade D. Spreading out of resources in more industries

A. Specialization in production

A tariff is a: A. Tax B. Price ceiling C. Quantity limit D. Subsidy

A. Tax

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by: A. The government B. Domestic consumers C. Domestic producers D. Foreign exporters

A. The government

If a nation exports a product, then the price of that product in the nation: A. Will rise above the domestic (no-trade) equilibrium price B. Will fall below the domestic (no-trade) no-trade equilibrium price C. Will remain the same as the domestic (no-trade) no-trade equilibrium price D. May either rise or fall, depending on the product

A. Will rise above the domestic (no-trade) equilibrium price

Refer to graph 7 showing the domestic demand and supply curves for a specific product in a hypothetical nation called Zancuzi. At what price will there be neither imports nor exports? A. $1.00 B. $1.50 C. $2.00 D. $2.50

B. $1.50

Use the following table below to answer the question below. The table shows a schedule of the import demand in Country A and the export supply in Country B at various dollar prices. Column 1 is the price of the product. Column 2 is the quantity demanded for imports (QdiA) in Country A. Column 3 is the quantity of exports supplied (QseB) in Country B Price QdiA QseB $4.00 0 200 3.00 100 0 2.00 200 0 1.00 300 0 Refer to the above table. The equilibrium world price in this two-nation model will be: A. $4.00 B. $3.00 C. $2.00 D. $1.00

B. $3.00

Refer to Graph 9 for a certain product market in Econland. If Econland were entirely closed to international trade, the equilibrium price and quantity would be: A. $9 and 2,000 units B. $8 and 1,800 units C. $7 and 2,000 units D. $6 and 1,400 units

B. $8 and 1,800 units

Refer to graph 6. At what price will Country Y export 100 units of the product? A. $9.00 B. $8.00 C. $7.00 D. $6.00

B. $8.00

In the United States, exports of goods and services account for about what percentage of GDP (total output) in 2008? A. 6 percent B. 13 percent C. 24 percent D. 42 percent

B. 13 percent

Refer to the above data. Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations are now fully specialized based on comparative advantage, the total gains from specialization and trade are: A. 25 units of rice and 25 units of corn B. 50 units of rice and 50 units of corn C. 100 units of rice and 100 units of corn D. 100 units of rice and 150 units of corn

B. 50 units of rice and 50 units of corn

Refer to the above tables. Assume that prior to specialization and trade Germany and the United States both choose production possibility C. Now if each specializes according to its comparative advantage, the resulting gains from specialization and trade will be: A. 8 million units of autos B. 6 million units of autos C. 6 million units of autos and 8 million units of chemicals D. 8 million units of autos and 6 million units of chemicals

B. 6 million units of autos

Refer to Graph 9 for a certain product market in Econland. If the world price for this product were $6, then Econland would import: A. 400 units and domestic producers would supply 1,400 B. 800 units and domestic producers would supply 1,400 C. 800 units and domestic producers would supply 2,200 D. 400 units and domestic producers would supply 2,200

B. 800 units and domestic producers would supply 1,400

Which would best describe a protective tariff? A. An excise tax that is usually applied to products which are not produced domestically in order to raise revenues for government B. An excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets C. A specification of the maximum amount of a product that may be imported in any period of time which is often used to protect domestic producers of a product D. Such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for quality or safety in order to restrict imports and protect domestic markets

B. An excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets

When a tariff or quota on a product is removed, the action: A. Benefits producers in the protected industries B. Benefits consumers of the product C. Benefits the government D. Hurts nations exporting the product

B. Benefits consumers of the product

The table below shows labor-productivity figures in two countries facing constant costs. Based on the data provided, it can be deduced that: Meat Per Worker Per Day Houses Per Worker Per Day A 40 80 B 10 40 A. Country A can produce more meat than country B B. Country A has a comparative advantage in producing meat C. Country B can produce fewer houses than country A D. Country A has a comparative advantage in producing houses and meat

B. Country A has a comparative advantage in producing meat

An example of a nontariff barrier would be: A. A minimum limit on the quantity of imports B. Excessive licensing requirements C. A tax on an imported product D. Voluntary export restraints

B. Excessive licensing requirements

Refer to graph 8 which shows the import demand and export supply curves for two nations that produce a product. Lines 6 and 8 apply to the same nation and represent, respectively: A. Import demand and export supply B. Export supply and import demand C. Domestic supply and domestic demand D. Domestic demand and domestic supply

B. Export supply and import demand

Refer to the above data. Which of the following statements is true? A. For Xat, the cost of 500 units of corn is 100 units of rice B. For Xat, the cost of 500 units of rice is 100 units of corn C. For Wat, the cost of 150 units of rice is 100 units of corn D. For Wat, the cost of 50 units of corn is 100 units of rice

B. For Xat, the cost of 500 units of rice is 100 units of corn

Assume that a VER (voluntary export restraint) is imposed on an imported product. The difference between the domestic price and the world price is captured by: A. The government B. Foreign exporters C. Domestic consumers D. Domestic workers

B. Foreign exporters

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case: A. France has a comparative advantage in the production of chemicals B. Germany has a comparative advantage in the production of chemicals C. France has an absolute advantage in the production of chemicals D. Germany has an absolute advantage in the production of chemicals

B. Germany has a comparative advantage in the production of chemicals

If a nation opens up to international trade, it will see falling prices for: A. Goods that it exports B. Goods that it imports C. Goods that it has a comparative advantage in D. All goods traded

B. Goods that it imports

Refer to graph 6. If the world price of the product is $6, then Country Y will: A. Export 100 units of the product B. Import 100 units of the product C. Exports 300 units of the product D. Imports 400 units of the product

B. Import 100 units of the product

Import quotas on products will reduce the quantity of the imported products and: A. Decrease the price to the consumers B. Increase the price to the consumers C. Will not affect the price to the consumers D. Increase the total quantity of the product consumed

B. Increase the price to the consumers

Nation A pays lower wages to workers than Nation B. Nation A also uses fewer capital goods per worker than Nation B. This suggests that gains from trade are likely to result if: A. Nation A produces products that are more capital-intensive and exports them to Nation B in return for products from Nation B that are more labor-intensive B. Nation A produces products that are more labor-intensive and exports them to Nation B in return for products from Nation B that are more capital-intensive C. Nation B produces products that are more labor-intensive and exports them to Nation A in return for products from Nation A that are more capital-intensive D. Nations A and B each produce capital-intensive and labor-intensive goods and trade them with each other

B. Nation A produces products that are more labor-intensive and exports them to Nation B in return for products from Nation B that are more capital-intensive

A licensing requirement, or unreasonable standard pertaining to the product quality and safety for a product that is imported into a country, are examples of: A. Protective tariffs B. Nontariff barriers C. Voluntary export restrictions D. Quotas on imported products

B. Nontariff barriers

The graph above shows the production possibilities curves for two hypothetical nations, Orin and Pohl, which each make two hypothetical products, jaxs and keps. Which of the following statements is correct? A. Orin has a comparative advantage in both jaxs and keps B. Pohl has a comparative advantage in jaxs C. The opportunity cost of making jaxs is lower in Orin than in Pohl D. Orin is more efficient than Pohl

B. Pohl has a comparative advantage in jaxs

Machines Wine France 3 1 Germany 1 1 A. France has a comparative advantage in producing wine B. Germany has a comparative disadvantage in producing wine C. France has a comparative advantage in producing machines D. Germany can produce machines at a lower opportunity cost than France

B. Poland will specialize in producing machines, and import wine

Refer to graph 5. At what price will Country X import 100 units of the product? A. $4.00 B. $3.00 C. $2.00 D. $1.00

C. $2.00

Refer to graph 6. Assuming that Country Y is open to trade, at what price will it be neither exporting nor importing the product? A. $9.00 B. $8.00 C. $7.00 D. $6.00

C. $7.00

Nations Quirk and Turk can produce aluminum or oil in the following maximum quantities when all their resources are fully devoted to either product. Outputs Nations Aluminum Oil Quirk 20 40 Turk 30 90 Which one of the following terms of trade is most likely to produce mutually-beneficial exchange between the two nations? A. 0.5 unit of oil for 1 unit of aluminum B. 0.5 unit of oil for 2 units of aluminum C. 1 unit of oil for 0.4 unit of aluminum D. 1 unit of oil for 4 units of aluminum

C. 1 unit of oil for 0.4 unit of aluminum

Country Rubber Bands Paper Clips A 40 80 B 10 40 In country A the opportunity cost of 1 paper clip is: A. 2 rubber bands B. 1 rubber band C. 1/2 rubber band D. 1/4 rubber band

C. 1/2 rubber band

Refer to the above tables. If Germany and the United States engage in trade, the mutually- beneficial terms of trade will be between: A. 3 and 4 units of autos for 1 unit of chemicals B. 2 and 4 units of autos for 1 unit of chemicals C. 2 and 4 units of chemicals for 1 unit of autos D. 0.33 and 0.5 units of autos for 1 unit of chemicals

C. 2 and 4 units of chemicals for 1 unit of autos

Refer to the above tables. Suppose that each nation specialized in producing the product for which it has a comparative advantage, and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and: A. 12 million units of chemicals B. 24 million units of chemicals C. 36 million units of chemicals D. 48 million units of chemicals

C. 36 million units of chemicals

About what percentage of the world's total exports comes from the United States? A. 48 percent B. 26 percent C. 9 percent D. 4 percent

C. 9 percent

Refer to graph 5. If the price is $5.00, there will be: A. A domestic surplus of 100 units that will be exported B. A domestic shortage of 100 units that will be imported C. A domestic surplus of 200 units that will be exported D. Neither a domestic surplus nor a shortage

C. A domestic surplus of 200 units that will be exported

In a two-nation world, comparative advantage means that one nation can produce: A. A product with fewer inputs than the other nation B. A product at lower average cost than the other nation C. A product at a lower domestic opportunity cost than the other nation D. More of a product than the other nation

C. A product at a lower domestic opportunity cost than the other nation

In a world with two products, wheat (W) and coffee (C), nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation: A. Alpha will prevail if world demand for coffee is great relative to its supply B. Alpha will prevail if world demand for wheat is weak relative to its supply C. Beta will prevail if world demand for coffee is great relative to its supply D. Beta will prevail if world demand for wheat is great relative to its supply

C. Beta will prevail if world demand for coffee is great relative to its supply

The data in the above tables suggest that production in: A. Germany is subject to increasing opportunity costs and the United States to constant opportunity costs B. The United States is subject to increasing opportunity costs and Germany to constant opportunity costs C. Both Germany and the United States are subject to constant opportunity costs D. Both Germany and the United States are subject to increasing opportunity costs

C. Both Germany and the United States are subject to constant opportunity costs

Refer to graph 8 which shows the import demand and export supply curves for two nations that produce a product. In this two-nation model, the equilibrium world price and quantity will be: A. A and Q2 B. B and Q4 C. C and Q2 D. D and Q4

C. C and Q2

Which of the following product-groups is a leading export of the United States? A. Steel B. Clothes C. Chemicals D. Petroleum

C. Chemicals

Which nation had the largest share of world exports in 2009? A. Japan B. Germany C. China D. United States

C. China

The principal concept behind comparative advantage is that a nation should: A. Maximize its volume of trade with other nations B. Use tariffs and quotas to protect the production of vital products for the nation C. Concentrate production on those products for which it has the lowest domestic opportunity cost D. Strive to be self-sufficient in the production of essential goods and services

C. Concentrate production on those products for which it has the lowest domestic opportunity cost

If the world price of a product rises relative to the domestic price in a trading nation, then for that product: A. Exports and imports will increase B. Exports and imports will decrease C. Exports will increase and imports will decrease D. Imports will increase and exports will decrease

C. Exports will increase and imports will decrease

An export subsidy for a product will benefit: A. Domestic consumers of the product B. Foreign producers of the product C. Foreign consumers of the product D. The domestic taxpayers

C. Foreign consumers of the product

Given the following production alternatives for Brazil and Poland, it can be seen that if the two nations open up trade with each other, then: Wine Machines Brazil 30 10 Poland 10 10 A. Brazil will specialize in producing machines, and import wine B. Poland will specialize in producing machines, and import wine C. Poland will export wine D. Brazil will not gain from specializing and trading, but Poland will gain

C. France has a comparative advantage in producing machines

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good? A. Taiwan in both goods B. Taiwan in clocks and Germany in mugs C. Germany in clocks and Taiwan in mugs D. Germany in both goods

C. Germany in clocks and Taiwan in mugs

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically-produced product which is now: A. Lower in price because import competition has risen B. Higher in price because import competition has risen C. Higher in price because import competition has declined D. Lower in price because import competition has declined

C. Higher in price because import competition has declined

Refer to graph 7 showing the domestic demand and supply curves for a specific product in a hypothetical nation called Zancuzi. When the world price for this product is $0.50, Zancuzi will: A. Import 500 units B. Import 100 units C. Import 400 units D. Export 100 units

C. Import 400 units

Most of the trade of the United States is with: A. India and China B. Japan and China C. Industrially advanced nations D. The nations of Eastern Europe

C. Industrially advanced nations

A natural-resource abundant nation would be expected to export a land-intensive commodity such as: A. Tractors B. DVD players C. Meat D. Chemicals

C. Meat

In a two-nation world, if country A has a comparative advantage in the production of good X over country B, then country A: A. Should not trade with country B B. Could have a comparative advantage in producing the other good Y as well C. Must have a comparative disadvantage in producing the other good Y D. Can produce good X with less resources than country B

C. Must have a comparative disadvantage in producing the other good Y

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case: A. Korea has a comparative advantage in the production of wheat B. The United States has a comparative advantage in the production of televisions C. Mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States D. Mutual gains from trade can be obtained if the United States imports wheat from Korea and Korea imports televisions from the United States

C. Mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States

Nation Statum can produce either 800 units of chemicals or 1,600 units of clothing. Nation Timin can produce either 200 units of chemicals or 800 units of clothing A. Nation Statum has a comparative advantage in producing clothing B. Nation Timin has a comparative advantage in producing chemicals C. Nation Statum has a comparative advantage in producing chemicals D. Nation Timin is the high-cost producer of clothing

C. Nation Statum has a comparative advantage in producing chemicals

Which of the following products is a leading import of the United States? A. Grains B. Aircraft C. Petroleum D. Generating equipment

C. Petroleum

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when: A. Tariffs are eliminated B. Transportation costs are almost zero C. Relative costs of production differ between nations D. A country can produce more of some product than other nations can

C. Relative costs of production differ between nations

Specialization and trade based on comparative advantage allow nations to attain the following results, except: A. Rising combined output B. Higher consumption and standard of living C. Rising employment D. Consuming combinations of products that are outside their PPCs

C. Rising employment

The ratio at which nations will exchange one product for another is known as the: A. Exchange rate B. Discount rate C. Terms of trade D. Balance of trade

C. Terms of trade

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true? A. Country Y should specialize in the growing of soybeans according to the principle of comparative advantage B. Country X is the least cost producer of wheat C. The domestic opportunity cost of wheat production is lower in country Y D. The high cost producer of soybeans is country X

C. The domestic opportunity cost of wheat production is lower in country Y

If there is no comparative advantage between two countries: A. One country must be more productive in producing all goods than the other B. The benefits resulting from trade are increased C. There are no gains from specialization and trade D. Each country should specialize in the production of a particular commodity

C. There are no gains from specialization and trade

Refer to the above data. Which of the following statements about the two nations is correct based on the principle of comparative advantage? A. Xat should specialize in the production of corn B. Wat should specialize in the production of rice C. Xat has a comparative advantage in the production of rice D. Xat has a comparative advantage in the production of corn

C. Xat has a comparative advantage in the production of rice

In 2009, U.S. exports of services ______ U.S. imports of services by about _____. A. exceeded; $17B B. fell short of; $17B C. exceeded; $138 B D. fell short of; $138B

C. exceeded; $138 B

Refer to graph 5 If Country X is open to international trade, at what price will it begin importing some units of the product? A. $5.00 B. $4.00 C. $3.00 D. $2.00

D. $2.00

Refer to graph 5. If Country X is open to international trade, at what price will it begin exporting some units of the product? A. $1.00 B. $2.00 C. $3.00 D. $4.00

D. $4.00

Refer to graph 8 which shows the import demand and export supply curves for two nations that produce a product. The import demand curves for the two nations are represented by lines: A. 5 and 6 B. 5 and 7 C. 6 and 8 D. 7 and 8

D. 7 and 8

Refer to the above graphs and information. If Italy and Greece should open up trade with each other, which of the following terms of trade is mutually beneficial? A. 1 ton of chemicals = 1 ton of steel B. 2 tons of chemicals = 1 ton of steel C. 5 tons of chemicals = 2 tons of steel D. 9 tons of chemicals = 5 tons of steel

D. 9 tons of chemicals = 5 tons of steel

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of: A. An import quota B. A revenue tariff C. A protective tariff D. A voluntary export restriction

D. A voluntary export restriction

In which of the following nations do exports account for the biggest percentage of GDP in 2008? A. Japan B. The United States C. Canada D. Belgium

D. Belgium

Refer to the above data. The mutually-beneficial terms of trade will be: A. Less than 2 units of rice for 1 unit of corn B. Greater than 4 units of rice for 1 unit of corn C. Between 3 and 5 units of corn for 1 unit of rice D. Between 3 and 5 units of rice for 1 unit of corn

D. Between 3 and 5 units of rice for 1 unit of corn

Which country is the United States' largest trading partner in terms of volume of trade? A. Mexico B. Japan C. China D. Canada

D. Canada

Which nation has greatly increased its role in international trade in recent years? A. Japan B. Iran C. Peru D. China

D. China

The best example of a labor-intensive commodity is: A. Meat B. Wheat C. Wool D. Clothing

D. Clothing

Tariffs and quotas are costly to consumers because: A. The price of the imported good falls B. The supply of the imported good increases C. Import competition increases for domestic goods D. Consumers shift purchases to higher-priced domestic goods

D. Consumers shift purchases to higher-priced domestic goods

A trade deficit refers to a situation where: A. Government spending exceeds tax revenues B. A nation is buying less than it is selling to other nations C. Assets are less than liabilities D. Exports are less than imports

D. Exports are less than imports

Specialization and trade between individuals or between nations lead to: A. Greater self-sufficiency B. Higher product prices C. Lower living standards D. Higher total output

D. Higher total output

Nation X has a comparative advantage in the production of a product compared to Nation Y when: A. It imposes a tariff on the importation of the product B. Its production possibilities curve expands, allowing it to produce more of the product C. It is achieving full employment and is producing the maximum amount of the product D. It has the lower domestic opportunity cost of producing the product

D. It has the lower domestic opportunity cost of producing the product

When tariffs on imported products are removed by a nation, it will result in: A. Higher prices and lower quantities consumed B. Higher prices and higher quantities consumed C. Lower prices and lower quantities consumed D. Lower prices and higher quantities consumed

D. Lower prices and higher quantities consumed

The slopes of the production possibilities curves for two nations reflect the: A. Relative prices of the resources in the two nations B. Amounts of imports and exports of the two nations C. Average income levels in the two nations D. Opportunity costs of production in the two nations

D. Opportunity costs of production in the two nations

Which of the following statements is true? A. Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it B. Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner C. Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product D. Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product

D. Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product

Nation Alpha has a comparative advantage in product X and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if: A. The exchange ratio of X for Y is fixed B. The terms of trade increase in both nations C. There is excess capacity in both economies D. The prices charged for X and Y reflect their domestic opportunity costs

D. The prices charged for X and Y reflect their domestic opportunity costs

If the United States government were to impose a quota on wristwatches imported from Switzerland, the: A. Price of wristwatches in the United States would decrease B. Prices of wristwatches in Switzerland would rise C. Price of wristwatches in the United States would remain the same, but the quantity will fall D. Total quantity of wristwatches (domestically produced and imported) purchased would decline

D. Total quantity of wristwatches (domestically produced and imported) purchased would decline