WEEK 14 QUIZ

________ is one of the prevalent advantages for countries to engaging intra-industry trade.

Economies of scale

Yekutia has the resources to manufacture 320 motorcycles or 570 lawn-mowers per year. The country of Bezanitia, has the capability of producing 230 motorcycles or 410 lawn-mowers per year. Which country has the largest opportunity cost to produce one more motorcycle and what is the opportunity cost to that country?

Bezanitia has the largest opportunity cost to produce an additional motorcycle at 1.78 lawnmower per year. (Wrong)

What preceded the World Trade Organization (WTO) which lead to its organization?

General Agreement on Tariffs and Trade (GATT)

Which of the following organizations was created from the General Agreement on Tariffs and Trade (GATT)?

The World Trade Organization (WTO)

What is commonly viewed about trade policies as a very negative aspect of international trade?

The act of dumping.

The General Agreement on Tariffs and Trade (GATT) helps promote trade by ________.

reducing tariffs

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.

absolute advantage

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

The fictional country of Anastialia is a small country with rich resources in minerals. In an 8 hr work day it can produce 100 pounds of silver or 50 pounds of copper. If Anastialia decides to produce copper instead of silver it is ignoring the fact that its silver production has a(n)________ to copper.

comparative advantage

Free trade results in ________.

gains from trade

Over time, the average worker gains from reduced trade barriers through ________.

greater productivity and higher wages

Which of these answers is excluded from being an example of trade barriers?

lower prices

The role of the General Agreement on Tariffs and Trade (GATT) is to

negotiate agreements between nations to reduce trade barriers.

The reasons that nations trade includes the fact that

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

Together, intra-industry trade and economies of scale provide ________.

specialization through machinery (Wrong)

The last half-century has been the powerful surge of international trade due to ________.

technological developments

International trade policies benefiting from specialization and comparative advantage can make the average worker better off, but a tradeoff is ________.

workers could lose their jobs

Here are 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

The fictional global firm of Knickerbockers Socks established itself in the international trade industry ten years ago and has been an active participant with intra-industry trade in developed countries. Because of the way Knickerbockers operates, it can take advantage of economies of scale. What do economies of scale make possible for its sock customers?

A large variety of sock styles and sizes at competitive prices.

Which area in the graph below illustrates the gain to domestic shoe producers as a result of a government placing a tariff on foreign shoes?

C

Use the graph below to identify the government revenue from the tariff on foreign shoes.

D+E

What does the benefit of division of labor that comes from intra-industry foster and lead to?

Development of unique skills, innovation and learning

Which of the following is an economic benefit when countries participate in intra-industry trading?

Division of labor

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.

What makes a regional trading agreement so significant to the countries involved within the agreement parameters?

It can eliminate barriers to the mobility of goods, labor, and capital across the countries involved in the agreement.

The large global firm, Hyundai, sells its cars along with other car manufacturers around the globe through intra-industry trading. Hyundai takes advantage of economies of scale by having car plants in various parts of the world. How would Hyundai become more globally competitive through more intra-industry trade and better economies of scale?

It would offer a streamlined choice of colors for its cars where customer could select between four colors.

If an economist is a proponent of free trade amongst nations, what would be concerning about the proliferation of regional trade agreements?

Regional trade agreements may restrict trade from outside of the regions in the agreement.

An example of a regional trade agreements is ________.

Southern African Development Community

Which of the following is an example of a tariff?

The tax on an imported good.

What is the purpose of the World Trade Organization (WTO) ?

To bring all sizes of nations together to negotiate trade deals and resolve trade disputes between each other.

If Canada has a surplus of paper products produced but its consumers demand more cleaning solutions, and the US has an abundance of cleaning solutions but consumers are demanding more paper products, how would trade benefit both countries?

Trade would assist both countries to both reduce excess supply and satisfy market demand.

A broad reason that intra-industry trade between similar nations produces economic gains involves ________ because it allows producers to supply the market and variety to consumers.

economies of scale

Trade allows each country to take advantage of ________ than the other country.

economies of scale (Wrong)

The World Trade Organization (WTO) was established to ________.

enforce General Agreement on Tariffs and Trade (GATT)

Governments may use protectionist policies to ________.

protect domestic jobs

The Metal Works company receives subsidies from its government to produce its goods. When the Metal Works company generates surplus and begins to export around the world, what may it encounter when trying to sell to countries other than its own country?

protectionist policies in other countries

Generally, international trade laws in the last 60 years have served to

radically lower tariffs.