Question 1

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?

Accepted Answer

A)   Alpha should export to Beta, but Beta should not export to Alpha.
B)   Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible.
C)   If Alpha specializes in growing oranges and Beta specializes in growing apples, they could both gain by specialization and trade.
D)   If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

Question 2

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?

Accepted Answer

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.

Question 3

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?

Accepted Answer

A)   India has a comparative advantage in the production of rice.
B)   China has a comparative advantage in the production of rice.
C)   China has both an absolute and comparative advantage in the production of rice.
D)   India has an absolute advantage in the production of rice.

Question 4

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.

Accepted Answer

A)   comparative advantage
B)   learning and innovation
C)   creating the value chain
D)   relative advantage B

Question 5

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

Accepted Answer

A)   absolute advantage.
B)   efficiency.
C)   the allocation of resources.
D)   comparative advantage.

Question 6

The reasons that nations trade includes the fact that:

Accepted Answer

A)   no one country produces all of what citizens within the country want.
B)   the wants of their citizens exceeds their productive capacity.
C)   different countries have different levels of greed.
D)   labor costs are too high in some countries to efficiently produce goods.

Question 7

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:

Accepted Answer

A)   0.25 apples; 0.5 apples.
B)   9 apples; 4 apples.
C)   0.5 apples; 0.25 apples.
D)   2 apples; 4 apples

Question 8

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:

Accepted Answer

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.

Question 9

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:

Accepted Answer

A)   1 yard of textiles.
B)   3 yards of textiles.
C)   4 yards of textiles.
D)   12 yards of textiles.

Question 10

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

Accepted Answer

A)   may be able to produce everything relatively more efficiently than another party.
B)   may be able to produce something at a lower dollar cost than another party.
C)   with an absolute advantage in producing two different may export goods both of those goods to the other party.
D)   may be able to produce something at a lower opportunity cost than another party.

Question 11

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 _______.

Accepted Answer

A)   opportunity cost
B)   absolute cost
C)   relative cost
D)   comparative cost

Question 12

Define the term in economics "absolute advantage" and illustrate with an example.

Accepted Answer

When one nation can produce a product at...

Question 13

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:

Accepted Answer

A)   has an absolute advantage over India in the production of textiles.
B)   has an absolute advantage over India in the production of wheat.
C)   has a comparative advantage in the production of textiles.
D)   should export textiles to India. B

Question 14

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?

Accepted Answer

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

Question 15

The gains from expanding trade are probably most important for the low-income economies in the world as opposed to the gains though trade benefitting the USA. Why might this be so? Offer at least three different reasons comparing and contrasting the USA economy with that of smaller nations.

Accepted Answer

In some ways, the giant U.S. economy has...

Question 16

A skeptic about the gains from global trade might offer up some challenging counterpoint questions regarding trade. Ask at least two questions that counter the numeric benefits of globalization.

Accepted Answer

What if one nation becomes dependent on ...

Question 17

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

Accepted Answer

A)   $200 trillion
B)   $20 trillion
C)   $2 trillion
D)   $200 billion

Question 18

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

Accepted Answer

A)   may be able to produce everything relatively more efficiently than another party.
B)   may be able to produce something at a lower opportunity cost than another party.
C)   may be able to produce something at a lower dollar cost than another party.
D)   with an absolute advantage in producing two different may export goods both of those goods to the other party.

Question 19

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

Accepted Answer

A)   10%; 10%
B)   30%; 30%
C)   60%; 60%
D)   90%; 90% C

Question 20

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

Accepted Answer

A)   opportunity cost
B)   specialization
C)   absolute advantage
D)   maximum production

Exam 19: International Trade

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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

The reasons that nations trade includes the fact that:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 _______.

Correct AnswerverifiedShow Answer

Define the term in economics "absolute advantage" and illustrate with an example.

Correct AnswerverifiedWhen one nation can produce a product at...View AnswerShow Answer

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:

Correct AnswerverifiedB

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?

Correct AnswerverifiedShow Answer

The gains from expanding trade are probably most important for the low-income economies in the world as opposed to the gains though trade benefitting the USA. Why might this be so? Offer at least three different reasons comparing and contrasting the USA economy with that of smaller nations.

Correct AnswerverifiedIn some ways, the giant U.S. economy has...View AnswerShow Answer

A skeptic about the gains from global trade might offer up some challenging counterpoint questions regarding trade. Ask at least two questions that counter the numeric benefits of globalization.

Correct AnswerverifiedWhat if one nation becomes dependent on ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

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B

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When one nation can produce a product at...
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B

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In some ways, the giant U.S. economy has...
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What if one nation becomes dependent on ...
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As measured in 2008, about _ of U.S. trade and _ of European trade is intra-industry trade.

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C

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