Chapter 9 Application: International Trade
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. _ __ 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. _ __
1. Nations would gain from trade if a(n) ________ exists. ( c )
a.absolute advantage
b.specialization
parative advantage
d.infant industry
2. If Canada has a comparative advantage over Denmark in the production of wood, this implies that ( b )
a.it requires fewer resources in Canada than in Denmark to produce wood.
b.the opportunity cost of producing wood in Canada is lower than in Denmark.
c.Denmark does not benefit by trading with Canada.
d.Canada should buy wood from Denmark.
3. Domestic producers gain from the opportunity to export goods to foreign countries because ( a )
a.the free-trade price of the good is higher than the domestic price in the
absence of trade.
b.producers are able to reach a wider market.
c.although the free-trade price is lower than in the absence of trade, producers
are able to sell a greater quantity.
d.production rises, although there is no change in the price of the good
compared to the no-trade situation.
4. If at the world equilibrium price the U.S. quantity demanded is greater than the U.S. quantity supplied, then ( a )
a.the United States will import the good.
b.the United States will export the good.
c.the world price will fall.
d.the world price will ris
e.
5. If the United States imports shoes in a free-trade situation, we can infer that ( c )
a.the domestic production of shoes in a no-trade situation is lower than if there
is free trade.
b.domestic consumption of shoes is higher in a no-trade situation than if there is
free trade.
c.the domestic price of shoes in a no-trade situation is higher than the free-trade
world price.
d.the domestic price of shoes in a no-trade situation is lower than the free-trade
world price.
6. With international trade ( d )
a.producers and consumers in both countries must gain; otherwise, there would
be no trade.
b.producers in both countries must gain.
c.consumers in both countries must gain.
d.consumer surplus in the country that imports the good rises.
7. A tariff and an import quota will both ( c )
a.increase the quantity of imports and raise domestic price.
b.increase the quantity of imports and lower domestic price.
c.reduce the quantity of imports and raise domestic price.
d.reduce the quantity of imports and lower domestic pric
e.
8. One big difference between tariffs and quotas is that tariffs ( b )
a.raise the priced of a good while quotas lower it.
b.generate tax revenues while quotas do not.
c.stimulate international trade while quotas inhibit it.
d.hurt domestic producers while quotas help them.
9. Suppose the United States decides to impose a $1,000 tax on every Japanese minivan sold in the United States. This is an example of ( a )
a. a tariff.
b. a subsidy.
parative disadvantage.
d. a quota.
