Micro Exam 6

I'MAStart-UP Corp. issued and sold 2,500,000 common voting shares during its first public stock sale. What is the minimum number of shares needed to be able to elect a new director to the Board?

1.25 million

Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. The opportunity cost of one bushel of wheat in India is:

4 yards of textiles.

Despite interlocking import quotas, tariffs, and nontariff barriers, the share of apparel sold in the United States that is imported rose from about _________ in 1999 to about ________ today.

50%;75%

In presidential elections over the last few decades, about ____________ of voting-age citizens actually turned out to cast their votes.

55-65%

As measured in 2008, about _________ of U.S. trade and ________ of European trade is intra-industry trade.

60%; 60%

International trade currently involves about ______________ worth of goods and services thundering around the globe.

$20 trillion

The membership of the WTO includes about __________ nations.

150

Treasury bonds are issued by the federal government through the _____________________ .

U.S. Department of the Treasury

When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) __________________ in producing that product.

absolute advantage

Colombia produces coffee with less labor and land than any other country; it therefore necessarily has:

an absolute advantage in coffee production

Which of the following is not an ironclad rule in the financial markets? -borrowing from a bank works better for large, well-known corporations -banks fund small business loans and large firms issue bonds to raise money -a bank can monitor a large established firm's better than a new small business -relatively large and well-known firms typically never borrow from banks

banks fund small business loans and large firms issue bonds to raise money

A reduction in government purchases and decline in the money supply

curve has a different slope

The idea behind comparative advantage reflects the possibility that one party:

may be able to produce something at a lower opportunity cost than another party.

A practical approach to microeconomic policy will need to take a realistic view of the specific strengths and weaknesses of markets and ___________________________________.

the specific strengths and weaknesses of government

The opportunity cost of producing a pair of pants in the USA is 5 bushels of wheat, while in China, it is 2 bushels of wheat. As a result:

there can be mutual gains from trade to the two countries if the USA exports wheat to China in exchange for pants.

Australian law may require people to vote, but mandatory voting laws are unlikely to mean that each vote cast in an election __________________________________.

will be an informed or a thoughtful vote

​If a nation does not have an absolute advantage in producing anything, it

will have a comparative advantage in the activity in which its disadvantage is the least.

International trade is fundamentally a ________________________.

win-win situation

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then: A. there are no incentives for Beta to engage in international specialization and trade with Alpha. B. it is in the interest of Beta to grow oranges and trade for apples. C. it is in the interest of both countries to specialize and trade with one another. D. there are no incentives for Alpha or Beta to specialize and trade with one another.

A

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 36 units of food per year or 18 units of clothing. Which of the following is true? A. Georgeland has an absolute but not a comparative advantage in producing clothing. B. Georgeland has both an absolute and a comparative advantage in producing clothing. C. Alland has an absolute but not a comparative advantage in producing food. D. Alland has both an absolute and a comparative advantage in producing food.

A

At the time the United States was formed, mandatory voting was required in each of the following states with one exception. Which one is it?

Alabama

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?

Alland has an absolute advantage in producing food but will not trade with Georgeland.

According to international trade theory, a country should: A. import goods in which it has an absolute advantage. B. import goods in which it has a comparative disadvantage. C. export goods in which it has an absolute advantage. D. import goods in which it has an absolute disadvantage.

B

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. The opportunity cost of producing 1 orange for Alpha and Beta, respectively, are: A. 0.25 apples; 0.5 apples. B. 9 apples; 4 apples. C. 0.5 apples; 0.25 apples. D. 2 apples; 4 apples

C

If a nation has a comparative disadvantage in the production of some commodity: A. it cannot gain from international trade unless it has an absolute advantage in every other commodity. B. it cannot gain from international trade in the commodity. C. it can still gain from international trade in that commodity, by getting it at a lower opportunity cost than if it produced it domestically. D. it can gain from international trade in that commodity only if it has an absolute advantage in that commodity.

C

Jethro has a(n) __________________ in all aspects of camping: he is faster at carrying a backpack, gathering firewood, paddling a canoe, setting up tents, making a meal, and washing up. A. relative advantage B. opportunity cost C. absolute advantage D. comparative advantage

C

Suppose that the USA can make 15,000,000 cars or 20,000,000 bottles of wine with one year's worth of labor. France can make 10,000,000 cars or 18,000,000 bottles of wine with one year's worth of labor. From these numbers, we can conclude: A. The USA has a comparative advantage in the production of wine. B. France has a comparative advantage in the production of cars. C. The USA has an absolute advantage in the production of cars. D. France has an absolute advantage in the production of wine.

C

Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:

Canada has a comparative advantage in the production of hockey sticks.

In ____________________, when there is no president race, the voter turnout is typically ___________________________.

Congressional elections; less than half of the eligible voters

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following terms of trade between apples and oranges would allow both Alpha and Beta to gain by specialization and exchange? A. 1 orange for 0.2 apples B. 2 apples for 3 oranges C. 3 apples for 3 oranges D. 1 apple for 3 oranges

D

Assume that one day's labor in Argentina can produce either 20 units of cloth or 2 units of wine, while in Chile one day's labor can produce either 24 units of cloth or 12 units of wine. If Argentina transfers 2 units of labor from wine to cloth and Chile transfers 1 unit of labor from cloth to wine, the increase in combined output by those two workers will be: A. 16 wine; 8 cloths B. 16 wine; 16 cloths C. 12 wine; 12 cloths D. 8 wine; 16 cloths

D

Which of the following is true? A. A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. B. A nation can have a comparative advantage in the production of every good, but not an absolute advantage. C. A nation cannot have an absolute advantage in the production of every good. D. A nation cannot have a comparative advantage in the production of every good.

D

_____________________ identifies the area where a producer's absolute advantage is relatively greatest, or where the producer's absolute disadvantage in productivity is relatively least. A. relative advantage B. opportunity cost C. productivity advantage D. comparative advantage

D

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 16 units of food per year or 8 units of clothing. Which of the following is true?

Georgeland has a comparative advantage, but not an absolute advantage, in producing clothing.

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true?

If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?

India has a comparative advantage in the production of rice.

________________ are a form of _______ bonds that offer relatively high interest rates to compensate for their relatively high chance of default.

Junk bonds; corporate

________________ occurs when a group of legislators all agree to vote for a package of otherwise unrelated laws that they individually favor.

Logrolling

__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.

Nontariff barriers

____________________ is a particular type of spending that mainly benefits a single political district.

Pork-barrel spending

The race to the bottom scenario of global environmental degradation is explained roughly like this:

Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.

_______________________ are numerically small, but well organized groups that are able to exert a disproportionate effect on political outcomes.

Special interest groups

If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, there can be mutual gains from trade if:

The USA specializes in potatoes because of its comparative advantage in producing potatoes.

________________________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry.

The infant industry argument

​Which of the following would be expected if the tariff on foreign-produced automobiles was increased?

The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss?

This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices.

​A U.S. tariff on French wine will likely benefit U.S. wine producers and the U.S. government (by increasing tax revenue), but harm U.S. wine drinkers and French wine producers.

True

Which of the following is the best example of a tariff?

a $1000-per-car fee imposed on all small cars imported

Politicians often argue for tariff increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long-run effect is most likely to be:

a decrease in both American imports and exports.

A tariff differs from a quota in that a tariff is:

a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

If the government legislates policies that block imports of solar panels and gives domestic manufacturers a $5 billion dollar tax subsidy, the benefits to the U.S. solar panel manufacturing and distribution industry will be very visible. The bearers of the cost of the tax subsidy:

are more anonymous.

When nations increase production in their area of _________________ and trade with each other, both sides can benefit.

comparative advantage

_____________________ identifies the area where a producer's absolute advantage is relatively greatest, or where the producer's absolute disadvantage in productivity is relatively least.

comparative advantage

What matters most in determining the efficient distribution of production over the world is:

comparative advantage.

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) __________ advantage and toward industries where it has a(n) ___________ advantage.

comparative; comparative

The absence of which of the following best explains why government agencies are slower to correct mistakes than private firms.

competition or a threat of new entry

Pork-barrel spending can be thought of as another case where democracy is challenged by _______________ and __________________.

concentrated benefits; widely dispersed costs

Research on voting behavior in the U.S. has shown that, on average, people who are more __________________ tend to _______________________.

connected to society; vote more frequently

​Which of the following is not a result of a U.S. tariff on foreign autos?

decrease the quantity of domestic autos purchased by U.S. consumers

​Compared to the no-trade situation, when a country exports a good:

domestic consumers lose, domestic producers gain, and the gains outweigh the losses

​The infant industry argument for protectionism suggest that an industry must be protected in the early stages of its development so that:

domestic producers can attain the economies of scale to allow them to compete in world markets

____________ means selling goods below their cost of production.

dumping

A problem may arise when politicians are elected by the votes of 60% or less of the population, because these politicians may not enact

economic policy in the best interests of 100% of the population.

The concept of _________________ means that as the measure of output goes up, average costs of production decline—at least up to a point.

economies of scale

During the U.S. stock market collapse of 2007, Paula's financial advisor recommended that she invest in a number of pharmaceutical companies while their stock values were down considerably. He expected these companies to maintain high dividend yields, making them attractive to investors. If Paula follows her financial advisor's recommendations, she is

following fundamental trading advice.

Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect?

government tax revenues increase

Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. From the data, the USA:

has an absolute advantage over India in the production of wheat.

The political systems in most Latin American nations differ from the political system in the United States because most Latin American nations

have laws that require voting.

Since the 1980s, national elections in Germany, Spain and France have all recorded ______________ than was recorded for presidential elections in the United States.

higher voter participation

_____________ are numerical limitations on the quantity of products that can be imported.

import quotas

Raising an existing tariff on grapes from Argentina will:

increase American consumption of domestically produced grapes.

​A U.S. import tariff imposed on steel is likely to:

increase employment in the U.S. steel industry

​Imposing a quota on metal softball bats shipped into the United States would likely:

increase the price of the bats but decrease the total quantity of bats purchased in the United States

After the USA introduces a tariff in the market for steel, the price of steel in the USA will:

increase.

Import tariffs generally ________ the output of domestic producers of the affected products and also _________ the output of domestic exporters.

increase; decrease

An import quota does which of the following?

increases the price of the domestic goods to consumers

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:

is essentially correct

In Canada, voters typically choose between three or more candidates in an election, which can lead to situations where

it becomes impossible for the majority to decide who it prefers.

If a nation has a comparative disadvantage in the production of some commodity:

it can still gain from international trade in that commodity, by getting it at a lower opportunity cost than if it produced it domestically.

Intra-industry trade between similar trading partners allows the gains from ______________________ that arise when firms and workers specialize in the production of a certain product.

learning and innovation

Economists would say tariffs:

limit voluntary exchanges.

trade allows each country to take advantage of _________________ in the other country.

lower opportunity costs

In some instances where voters have more than two choices in a democratic election, the principle that the __________________ will decide the outcome may no longer make logical sense.

majority of voters

Which of the following is an oversimplified term that is sometimes used to describe the meaning of democracy?

majority rule

Each year banks typically offer a wide range of ____________ comprised of ______________________from a variety of different companies.

mutual funds; a range of stocks or bonds

The reasons that nations trade includes the fact that:

no one country produces all of what citizens within the country want.

The slope of the production possibility frontier is determined by the ________________ of expanding production of one good, measured by how much of the other good would be lost.

opportunity cost

The theory of comparative advantage shows that the gains from international trade do not just result from the absolute advantage of producing at lower cost, but also from pursuing comparative advantage and producing at a lower ________________.

opportunity cost

The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of __________________.

opportunity cost

In the U.S., why is figuring out a way of strengthening people's feeling of connectedness to society still an issue of importance?

other proposals offered have failed to substantially increase voter turnout

Which of the following will provide an investor with a legally valid claim of partial ownership of a firm? -entitlement to bond interest -ownership of a treasury bond -entitlement to dividends -ownership of stock

ownership of stock

The theory of __________________ holds that people won't bother incurring the costs of becoming informed and voting, because they know that their vote ___________________________________________.

rational ignorance; won't be decisive in the election

The problem of special interests in politics can be related to an economic policy problem called ________________________.

regulatory capture

Some nations that seek to produce all of their own needs face the problem that:

some industries are too small to be efficient if restricted to their domestic markets alone.

Legislators who focus on local spending projects for their own district typically show a lack of sufficient concern for

spending in the interest of the nation as a whole.

Which of the following is not one of the proposals that have been offered to encourage greater voter turnout?

tax incentives for active voters

In the United States, which of the following would be most likely to participate in an election by informing themselves and casting their vote?

the employed

​The difference between the price the consumer is willing to pay for a good or service and what he would have to pay for that unit is called:

the gain in consumer surplus

Tariffs result in a decrease in consumer surplus because:

the price of the protected good increases and quantity consumed decreases.

If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy reducing or eliminating imports of rice into the country would include:

the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall.