ECON 214 quiz 12 solutions complete answers

ECON 214 quiz 12 solutions complete answers 

 

 For country A, an export is a good produced in:

            

For country A, an import is a good produced in:

            

Total world exports of goods and services are now about ____________ the size of world gross domestic product (GDP).

            

 An economy that does not trade with the rest of the world is a(n):

            

 An economy that trades with the rest of the world is a(n):

            

What is the price of cars if this is a nontrading (closed) economy?

            

If this is a nontrading (closed) economy, how many cars (in thousands) will be exchanged?

            

If this is a trading (open) economy, the price of a car will be:

            

 If this is a trading (open) economy, quantity demanded of cars (in thousands) will be:

            

 If this is a trading (open) economy, quantity supplied of cars (in thousands) by the domestic producers will be:

 

How many cars (in thousands) will this country import in a trading (open) economy situation?

            

If this is a nontrading (closed) economy, the price of a TV will be:

            

If this is a nontrading (closed) economy, the number of TVs exchanged (in thousands) will be:

            

In a trading (open) economy, the price of a TV will be:

            

 In a trading (open) economy, the quantity demanded of TVs (in thousands) in the domestic market will be:

            

In a trading (open) economy, the quantity supplied of TVs (in thousands) in the domestic market will be:

            

 In a trading (open) economy, how many TVs (in thousands) will this country import?

            

If St. John has a closed economy, it _____________ with other countries.

            

 If Hong Kong has an open economy, it ____________ with other countries.

            

Free trade is _____________, because it _____________ the size of the pie available to the economy.

            

 Since 2000, world goods trade has:

            

In the past decade, companies like Nike and Under Armour have set up manufacturing centers in Nicaragua in part due to the country’s establishment of _____________, allowing these companies to avoid standard corporate tax rates.

            

 Trade balance is:

            

Trade surplus is:

            

 Trade deficit is:

            

For nearly four decades, the United States has had a:

            

Which country has the world’s biggest economy?

            

 In recent years, the United States has:

            

 Which of the following trade agreements is a binding agreement to reduce trade barriers between 18 Asian nations?

            

 In 2011, 60% of goods imported by the United States came from just seven nations. Which of the following nations was NOT one of those seven?

            

In 2011, 60% of goods imported by the United States came from just seven nations. Which of the following nations was one of those seven?

            

 Which two countries buy the most U.S. exports?

            

Which of the following organizations has over 130 member nations and oversees the General Agreement on Trade and Tariffs (GATT)?

            

 What does NAFTA stand for?

            

 Which of the following trade agreements provides for the development of a single market among its members?

            

 If a society’s consumption possibilities are identical to its production possibilities, that society has a(n):

            

 Citizens can consume the largest quantities of goods and services in which of the following situations?

            

The ability of one person or nation to produce more of a good while using the same quantity of resources as another is called a(n):

            

The ability of one person or nation to produce a good at a lower opportunity cost than another is called a(n):

            

 The combination of goods and services Mexico’s citizens might feasibly consume is called Mexico’s:

           a.  total consumption.

            

Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.

            

Which country benefits from this free trade agreement?

            

Which country’s consumers will benefit from the free trade agreement?

            

Florida’s nice beaches and subtropical climate give the state ___________ in tourism.

            

An individual or country that has a comparative advantage in the production of one good:

            

 A has a comparative advantage over B in producing a good if:

            

A rich nation will trade with a poor nation (and vice versa) because the:

            

 According to the principle of comparative advantage, trade between two countries will benefit:

            

A society could achieve a higher level of productivity if:

            

In general, a nation can enjoy a higher standard of living by ___________ than by being self-sufficient.

            

Esther and Albert produce hamburgers and hot dogs. Esther can produce six hamburgers per hour or four hot dogs per hour. Albert can produce three hamburgers per hour or one hot dog per hour.

 

Based on the scenario, Albert’s opportunity cost of one hot dog is:

            

Based on the scenario, Albert’s opportunity cost of one hamburger is:

            

Based on the scenario, Esther’s opportunity cost of one hot dog is:

            

Based on the scenario, Esther’s opportunity cost of one hamburger is:

            

Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.

 

If both Amy and Jim produce only cheese, how much cheese can they produce per year?

            

Amy’s opportunity cost of producing one house is ____________ pound(s) of cheese.

            

Amy’s opportunity cost of producing one pound of cheese is _____________ house(s).

            

Jim’s opportunity cost of producing one house is _____________ pound(s) of cheese.

            

Jim’s opportunity cost of producing one pound of cheese is ____________ house(s).

            

Amy has a comparative advantage in the production of ___________, and Jim has a comparative advantage in the production of _____________.

            

By the principle of comparative advantage, Amy should specialize in producing:

            

By the principle of comparative advantage, Jim should specialize in producing:

            

If both Amy and Jim produce the good for which each has a comparative advantage, total output of this economy will be:

            

 If this economy produces more than 20 houses per year, the opportunity cost of a house will ____________ because _____________.

            

Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.

            

Based on the scenario, which of the following is true?

            

Based on the scenario, Rosa’s opportunity cost of one football is:

            

Based on the scenario, Rosa’s opportunity cost of one basketball is:

            

Based on the scenario, Dirk’s opportunity cost of one football is:

            

Based on the scenario, Dirk’s opportunity cost of one basketball is:

 

Based on the scenario, which of the following is true?

            

Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.

 

Based on the scenario, which of the following is true?

            

Based on the scenario, Karl’s opportunity cost of one truck is:

            

Based on the scenario, Karl’s opportunity cost of one car is:

            

Based on the scenario, Pete’s opportunity cost of one truck is:

            

Based on the scenario, Pete’s opportunity cost of one car is:

            

Based on the scenario, which of the following is true?

            

An economy has two workers, Smith and Ricardo. Every day they work, Smith can produce 4 computers or 16 smartphones, and Ricardo can produce 6 computers or 12 smartphones.

 

If Smith and Ricardo spend one-half of their time producing computers and the other half of their time producing smartphones, what will be the total output per day?

            

What is the opportunity cost for Smith to produce one computer?

            

What is the opportunity cost for Ricardo to produce one computer?

            

What is the opportunity cost for Smith to produce one smartphone?

            

What is the opportunity cost for Ricardo to produce one smartphone?

            

 ____________ has the comparative advantage in computers and ____________ has the comparative advantage in smartphones.

            

 To maximize total output, Smith should specialize in producing ___________, whereas Ricardo should specialize in producing ____________.

            

What is the maximum number of each item that can be produced if each worker fully specializes and produces according to his comparative advantage?

            

RayRay and Andrew produce baseballs and golf balls. RayRay can produce six baseballs per hour or four golf balls per hour. Andrew can produce three baseballs per hour or one golf ball per hour.

 

Based on the scenario, which of the following is true?

            

Countries engaged in international trade tend to specialize in production based on:

            

International trade and the associated increase in international competition has forced American businesses to:

            

While comparative advantage is the biggest reason many nations engage in trade, two other important reasons are:

            

When a smaller country with fewer resources specializes its production and gains access to larger, international markets, this can create:

            

Which of the following groups of countries are members of NAFTA?

            

The members of NAFTA are the United States, Canada, and:

            

The North American Free Trade Agreement (NAFTA) was intended to increase U.S. trade with which other countries?

            

The World Trade Organization (WTO):

            

Bans on imports, import quotas, voluntary quotas, and tariffs on goods:

            

A tax on imports is known as a(n):

            

A tariff:

            

A tariff is a tax imposed on _____________ good.

            

 There is a 5% average tax on imported goods in the United States. This tax is known as a(n):

            

An example of a tariff is:

            

The United States feels that it has become too dependent on oil from Saudi Arabia, so it charges a tax of $10 per barrel on oil that can be imported from Saudi Arabia. This is an example of a(n):

            

Assume there is a 35% tariff on bananas imported into the United States. Also, assume that the market competition is at its beginning and the law of one price is not in effect. If the domestic market price of Hawaiian bananas is one dollar per bunch, imported bananas will sell for:

            

A limit imposed on the volume of total imports of a particular good is known as a(n):

            

A quota:

            

 Limits on the quantity or total value of specific products imported to a nation are:

            

An agreement by one country to limit the volume of exports to another country is known as a(n):

            

The United States feels that it has become too dependent on oil from Saudi Arabia, so it places a limit on the amount of oil that is imported from Saudi Arabia. This is an example of a(n):

            

An example of an import quota is:

            

The United States has placed a limit on the amount of oil that can be imported. This is an example of a(n):

            

An example of a voluntary quota is:

            

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber exported to the United States. This is an example of a(n):

            

 An import quota:

            

Exporting nations often agree to voluntary export restraints in an attempt to:

            

Which of the following situations will arise in the domestic market following the imposition of an import quota?

            

Which of the following situations will arise in the domestic market following the imposition of a voluntary quota?

            

 Which of the following situations will arise in the domestic market following the removal of an import quota?

            

Which of the following is NOT one of the four main reasons given for the persistence of trade barriers?

            

Many people argue that certain industries, such as weapons, energy, and transportation, should be protected by trade barriers in the interest of:

            

The argument that calls for the trade protection of only newly developing industries is known as the ______________ argument.

            

A possible explanation that a nation might offer for the imposition of a protectionist policy such as a tariff is to:

            

 One argument for trade restriction focuses on new industries. It can be summarized in the following manner:

            

When a foreign supplier sells a good below the price it charges in its home country, this is called:

            

When a foreign supplier tries to “dump” goods into another country in order to gain a foothold in a foreign market, this is often a result of ____________ within the foreign country.

            

One of the reasons given for the imposition of a protectionist policy such as a tariff is to:

            

Why do politicians sometimes resist free trade and “globalization”?

            

The trade-restriction view assumes that free trade is __________ and should be _____________.

            

 A possible reason a nation might impose a restrictive policy such as a tariff is to: