Practice Quiz 15

Answer the next question on the basis of the following production possibilities tables for two countries, North and South Cantina: Refer to the above tables. If North and South Cantina engage in trade, the terms of trade will be between:

1 and 3 mirrors for each smoke

In Qatar, a worker can produce either one unit of salt or two units of pepper. In Korea, one worker can produce either two units of salt or three units of pepper. Compared to Qatar, Korea has a comparative advantage in the production of:

salt

Answer the next question on the basis of the following domestic supply and demand schedules for aluminum. Refer to the data. Suppose the world price of aluminum is $10. The total amount of tax revenue collected with a $5 tariff will be:

$200

Use the following diagram to answer the next question. Refer to the above diagram, wherein Sd and Dd are the domestic supply and demand for a product. If the world price for this product is $10, this country will:

import 20 units

"Tariffs are needed to protect workers from ruinous competition from low-wage countries." This statement:

is faulty because comparative advantage makes trade mutually beneficial

A nation's trading possibilities line:

lies to the right of its production possibilities line

Answer the next question based on the following diagram. Refer to the diagram. Lines A and C, respectively, represent the export supply curve and import demand curve for the country of Aycee, and lines B and D represent the same for the country of Beedee. In world equilibrium:

Aycee imports 100 units from Beedee at a price of $16

Two nations, Delta and Gamma, each produce goods X and Y under conditions of constant costs. Assume that by devoting all of its resources to the production of good X, Delta can produce 100 units of X. By devoting all of its resources to Y, Delta can produce 150 Y. The comparable figures for Gamma are 30 X and 30 Y. We can conclude that:

Delta has a comparative advantage in Y and Gamma has a comparative advantage in X

A government agency requires that all agricultural goods entering the country undergo an unduly long inspection process to assure product quality. This is an example of:

a nontariff barrier

According to the concept of comparative advantage, specialization and trade between two countries will benefit:

both countries, provided domestic opportunity costs differ in the two countries