ECON 101 - Chapter 5 Homework

C) A tax of 5% of the value of each Yamaha motorcycle imported from Japan.

1. Which of the following is an example of a tariff? A) A tax of $250 on each Yamaha motorcycle produced in the United States. B) A limit on the total number of Yamaha motorcycles imported from Japan. C) A tax of 5% of the value of each Yamaha motorcycle imported from Japan. D) A regulation specifying that each imported Yamaha motorcycle must meet certain emission exhaust guidelines.

D) national security

11. In 2002, the steel industry argued that higher tariffs on steel were necessary to help fight the war on terrorism. This is an example of the _____ argument. A) job creation B) predatory pricing C) infant industry D) national security

C) import quota.

12. A regulation that specifies the maximum amount of a good or service that may be imported during a specified period is a(n): A) nontariff barrier. B) tariff. C) import quota. D) export quota.

C) new industries should be protected from foreign competition until they become established.

13. The infant industry argument for trade protection states that: A) small, traditional industries such as handicrafts should be protected from foreign competition or they would not be able to survive. B) industries that provide day care for their employees' children ought to be protected from foreign competition. C) new industries should be protected from foreign competition until they become established. D) industries that produce products essential for the well-being of infants (e.g., the baby food industry) ought to be protected, since such products are essential for the good health of future generations.

B) the Heckscher-Ohlin model ?

14. China, which is labor-abundant, has a comparative advantage in clothing production, which is labor-intensive. Which of the following models explains this pattern of comparative advantage? A) the Ricardian model B) the Heckscher-Ohlin model C) a model of increasing returns D) a model of autarky

B) agriculture

15. In which of the following areas does the United States significantly limit imports? A) oil B) agriculture C) aircraft D) computers

B) factor endowments

16. If the _____ differ(s) between two countries, this suggests the possibility for mutually advantageous trade. A) currency B) factor endowments C) exchange rate D) level of government spending for defense

B) offshore outsourcing

17. When a business hires people in other countries to perform various tasks, _____ has occurred. A) comparative advantage B) offshore outsourcing C) pauper labor D) globalization

A) is that keeping out foreign imports allows the goods and services to be produced by domestic workers.

18. The job creation argument for protection against free trade: A) is that keeping out foreign imports allows the goods and services to be produced by domestic workers. B) is mostly that we need full employment to defend the security of the nation. C) is that we need full employment to prevent currency depreciation. D) is frequently put forward by economists.

D) straight lines; is constant

19. In a Ricardian model of international trade, the production possibility frontiers are _____, indicating that the opportunity cost of increasing the production of one item relative to another _____. A) straight lines; decreases B) convex; is constant C) concave; increases D) straight lines; is constant

A) imports; exports

2. Goods and services purchased from abroad are _____, while goods and services sold abroad are _____. A) imports; exports B) exports; imports C) exports; quotas D) quotas; factors

A) technology.

20. Japan's comparative advantage in automobiles can be attributed to: A) technology. B) factor endowments. C) exchange rates. D) climate.

D) trade protection.

3. Policies that limit imports, usually to insulate domestic producers from foreign competition, are known as: A) import-competing clauses. B) import reduction acts. C) competition protection. D) trade protection.

B) does not trade with other countries.

5. The term autarky refers to a country that: A) trades goods and services based upon the principle of absolute advantage. B) does not trade with other countries. C) trades goods and services based upon the principle of Ricardian advantage. D) trades goods and services based upon the principle of comparative advantage.

C) large reserves of crude oil

6. Saudi Arabia has a tremendous comparative advantage in petroleum. Which of the following is a source of this comparative advantage? A) no opportunity cost associated with oil production B) mild temperatures C) large reserves of crude oil D) high tariffs on oil from other nations

A) The WTO is a direct enforcer of trade agreements.

7. Which statement is NOT true about the World Trade Organization (WTO)? A) The WTO is a direct enforcer of trade agreements. B) The WTO is an international organization. C) The WTO resolves disputes between member countries. D) The WTO provides the framework for complex negotiations involved in major international trade agreements.

D) eliminated many trade barriers among themselves.

8. Canada, Mexico, and the United States have: A) developed a currency similar to the euro. B) reduced trade among themselves to protect jobs at home. C) joined together and are operating in what is called a closed-trade area with respect to the European Union. D) eliminated many trade barriers among themselves.

B) trade is bad for workers in poor exporting countries because those workers are paid very low wages.

According to the sweatshop labor fallacy: A) only countries with low wages benefit from trade. B) trade is bad for workers in poor exporting countries because those workers are paid very low wages. C) if a high-wage country imports goods from a low-wage country, the standard of living of the importing country will fall. D) the gains from trade are the result of exploiting absolute advantage.

A) QSQD cars will be imported.

At the world price of PW,: A) QSQD cars will be imported. B) QSQST cars will be imported. C) QSTQDT cars will be imported. D) QDTQD cars will be imported.

C) exports.

Goods and services sold to other countries are known as: A) exchange goods. B) factors. C) exports. D) imports.

10

If Alabama imports 10 bushels of peaches and exports 40 bushels of tomatoes, after trade, Alabama will consume _____ bushels of peaches and 35 bushels of tomatoes.

B) 1 ton of lemons and 5 iPhones

If Brazil exports 3 iPhones and imports 1 ton of lemons, how much of both products will Brazil consume? A) 1 ton of lemons and 3 iPhones B) 1 ton of lemons and 5 iPhones C) 2 tons of lemons and 8 iPhones D) 3 tons of lemons and 11 iPhones

20

If Georgia exports 10 bushels of peaches and imports 40 bushels of tomatoes, after trade, Georgia will consume _____ bushels of peaches and 40 bushels of tomatoes.

D) does not attempt to increase or decrease the levels of imports and exports that occur naturally as a result of demand and supply.

If a country engages in free trade, the government: A) places price controls on some goods. B) balances its budget. C) exploits its absolute advantage. D) does not attempt to increase or decrease the levels of imports and exports that occur naturally as a result of demand and supply.

B) 300; exported

If the world price is $40, _____ calculators will be _____. A) 100; exported B) 300; exported C) 300; imported D) 400; imported

3375

If the world price is $5 and an import quota of 600 is imposed, the loss to the United States is, in numerals, $_____.

B) decrease.

If the world price is less than the autarky price and the domestic country imports the good, the domestic price of the good will: A) remain constant. B) decrease. C) increase. D) fall to zero.

D) import that good.

If the world price of a good is below its domestic price, the country will: A) put a price floor on that good. B) export that good. C) have a surplus of that good. D) import that good.

A) U + V + W + Y + Z.

In autarky, total surplus is the area A) U + V + W + Y + Z. B) Y + Z. C) W + Z. D) U + V + W.

2

The gain in world production of iPhones if both countries specialize rather than engage in autarky is _____ iPhones.

A) limit imports.

Trade protection policies A) limit imports. B) benefit domestic producers and domestic consumers equally. C) limit exports. D) benefit domestic consumers at the expense of domestic producers.

True

True or False: Georgia should specialize in peaches and produce 30 bushels, then trade with Alabama for tomatoes. This is _____.

True

True or False: The European Union (EU) sets tariffs at the same rate on goods from outside the EU that enter the union. This is _____.

True

True or False: The Heckscher-Ohlin model predicts that China and Bangladesh, relative to the rest of the world, will have a comparative advantage in producing clothing because this work is labor intensive and those countries have abundant labor. This is _____.

False

True or False: When the steel workers union appeals for tariffs on imported steel they are using the infant industry argument of trade protection. This is _____.

A) increase.

When a tariff is levied on a good, the domestic price of that good will: A) increase. B) decrease. C) remain constant. D) fall by the amount of the tariff.