Question

Question 14 pts

The Heckscher-Olin model uses differences in factor abundance to determine whether any nation has a comparative advantage in any good.

Group of answer choices

True

False

Flag this Question

Question 24 pts

The limits of the terms of trade are determined by the:

Group of answer choices

stock of foreign exchange in each country.

opportunity costs in each country.

currency exchange rate between the trading partners.

average total costs of producing the commodities in each country.

distribution costs in each country.

Flag this Question

Question 34 pts

Between two countries, comparative advantage is found by comparing the:

Group of answer choices

level of interest rates in each country.

labor hours required to produce a bundle of products in each country.

shipping and transportation costs of each country.

relative costs of production in each country.

absolute costs of production in each country after accounting for inflation.

Flag this Question

Question 44 pts

Absolute advantage is irrelevant, because knowing the absolute number of labor hours required to produce a good does not indicate if a country benefits from trade.

Group of answer choices

True

False

Flag this Question

Question 54 pts

Workers in industrial countries earn much higher wages than workers in developing countries because:

Group of answer choices

the industrial countries are labor rich and capital poor economies.

the marginal productivity of labor is high in the industrial economies.

the marginal productivity of labor is low in the industrial economies.

the industrial countries lack a steady supply of unskilled laborers.

the industrial countries produce labor intensive goods.

Flag this Question

Question 64 pts

The theory of comparative advantage is based on:

Group of answer choices

a comparison of marginal cost with average variable costs.

absolute opportunity costs.

relative opportunity costs.

total costs of production.

the number of units produced by a firm.

Flag this Question

Question 74 pts

According to the Heckscher-Ohlin theory, comparative advantage is based on:

Group of answer choices

consumer tastes and preferences.

the availability of skilled resources.

product life cycles.

labor productivity differences.

the relative abundance of the factors of production.

Flag this Question

Question 84 pts

The table below shows units of wheat and cloth produced by each worker per day in both the countries.
Table 20.1

Which of the following can be inferred from the information provided in Table 20.1?

Group of answer choices

India will be better off by producing and exporting cloth.

The U.S. has a comparative advantage in the production of both wheat and cloth.

India has a comparative advantage in the production of wheat.

It will be beneficial for the U.S. to produce and export cloth.

India has a comparative advantage in the production of both wheat and cloth.

Flag this Question

Question 94 pts

If the international price of oranges is less than the domestic price of oranges in Spain, then Spain will export oranges to other countries.

Group of answer choices

True

False

Flag this Question

Question 104 pts

Differences in the productivity of labor accounts for comparative advantage if:

Group of answer choices

the strength of workforce varies across countries.

the laborers are paid different wages in different countries.

the labor hours required to produce each good varies across countries

the minimum wage varies across countries.

the size of the domestic market varies across countries.

Flag this Question

Question 114 pts

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.
Figure 21.2

According to Figure 21.2, if the world price of wheat is $25, and a tariff of $25 is imposed by the domestic government, the total tariff revenue collected by the government is:

Group of answer choices

$100.

$2,000.

$200.

$0.

$4,000

Flag this Question

Question 124 pts

When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses.

Group of answer choices

True

False

Flag this Question

Question 134 pts

In reality international trade is determined solely by comparative advantage and the free market forces of supply and demand.

Group of answer choices

True

False

Flag this Question

Question 144 pts

Trade diversion reduces worldwide efficiency, because:

Group of answer choices

production is diverted away from the country with comparative advantage.

consumption is diverted to the country having inadequate demand.

the cost of transhipment of the goods increases thus raising their prices in the world market.

production is diverted to the country with comparative advantage.

unnecessary trade restrictions are created in the economies.

Flag this Question

Question 154 pts

Nascent industries require adequate protection from foreign competition because:

Group of answer choices

they could undermine other developed industries by selling higher quality products at lower prices.

they experience economies of scale at the initial stages of production.

they experience diseconomies of scale at high levels of output.

the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.

their initial costs of production are considerably high and they incur losses.

Flag this Question

Question 164 pts

Every country imposes tariffs on at least some imports.

Group of answer choices

True

False

Flag this Question

Question 174 pts

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.
Figure 21.1

In the figure,
P₁: Price of the good in the international market.
P₂: Price of the good in the domestic market after the imposition of tariff by the government.
P₃: No-trade price of the good in the domestic market.

According to Figure 21.1, the domestic equilibrium quantity of the good is:

Group of answer choices

Q₂.

Q₄.

Q₅.

Q₃.

Q₁.

Flag this Question

Question 184 pts

Which of the following tools of commercial policy acts as a quantitative restriction on imports?

Group of answer choices

Quota

Tariff

Government procurement

Health and Safety regulations

Subsidy

Flag this Question

Question 194 pts

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

Group of answer choices

foreign producers; domestic consumers

domestic consumers; government

domestic producers; domestic consumers

foreign producers; domestic producers

domestic consumers; domestic producers

Flag this Question

Question 204 pts

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.
Figure 21.2

According to Figure 21.2, if the world price per bushel of wheat is $25, what is the domestic production?

Group of answer choices

400 bushels

300 bushels

150 bushels

450 bushels

200 bushels

Flag this Question

Question 214 pts

When the world price of the traded good is lower than the domestic no-trade equilibrium price, free trade causes domestic production to fall and domestic consumption to rise.

Group of answer choices

True

False

Flag this Question

Question 224 pts

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.
Figure 21.2

In Figure 21.2, if the world price of wheat is $35 and a $15 tariff is imposed:

Group of answer choices

there will be no trade, and the domestic equilibrium quantity will prevail.

the government will collect $200 in revenue from the tariff.

domestic consumption will decrease from 400 to 350 bushels of wheat.

domestic price for wheat will be higher than its world price.

domestic consumption will increase from 150 to 200 bushels of wheat.

Flag this Question

Question 234 pts

Protection provided to the infant industries is rarely withdrawn because:

Group of answer choices

the larger and more successful the industry becomes, the more political power it wields.

it leads to a loss of government revenue.

the industries produce goods which are close substitutes of the imported goods.

the industries begin to experience diseconomies of scale.

the costs of withdrawing protection outweigh the benefits.

Flag this Question

Question 244 pts

According to strategic trade policy, international trade largely involves firms that:

Group of answer choices

have high opportunity costs.

generate adequate employment in the domestic economy.

enjoy monopolistic power in the domestic market.

pursue economies of scale.

have a high initial cost of production.

Flag this Question

Question 254 pts

Which of the following is true of a tariff?

Group of answer choices

It is a monetary benefit received by importers from the government.

It is a monetary benefit received by exporters from the government.

It is a quantitative restriction on imports imposed by the government.

It is a tax on import and export levied by the government.

It is a tax levied by the government on domestic production of goods and services.

Answer 1

Q(14)

The Heckscher-Ohlin theorem broadly states about two countries by taking the example of two goods which are produced by using the two factors of production i.e. labor and capital to produce the two goods, and he states that each country will export the good that makes the most use of the factor of production that is most abundant in any other part.

Answer - True

Q(15)

So Terms of trade (TOT) mainly represent the ratio between the country's export prices and that of its country import prices, so When the Terms of trade is greater than 100%, then that means the country is accumulating more capital from exports then what it is spending on their imports goods.

Answer - stock of foreign exchange in each country, opportunity costs in each country.

Q(24)

So a limits of the terms of trade are mainly determined by the participating countries' opportunity costs while comparing their goods and services produced and it may vary depending on the product.

Answer - opportunity costs in each country

Q(34)

A comparative advantage mainly exists (in any country or a sector) when a country can produce a certain set of goods at lower opportunity cost compared to the cost of other countries. but It is not possible for a country that they can have a comparative advantage in all goods produced. However, in some rare case, a country can have an absolute advantage in all of the goods being produced.

Answer - labor hours required to produce a bundle of products in each country, relative costs of production in each country. absolute costs of production in each country after accounting for inflation

Q(44)

Absolute advantage is mainly defined as the ability of an individual or for a group to carry out their particular economic activity as more efficient than any other individual or group.

Answer - False

Q(54)

So a Workers in most of developed countries are preferred as more productive than those working in the developing ones. a workers in a developed country can produce more with less effort because now they have more access to the advanced machines, tools, and other equipment to perform many of the work effectively.

Answer - the marginal productivity of labor is high in the industrial economies.

Q(64)

competitive advantage is mainly based on the labor theory of value and on that basis costs and prices of the product are mainly determined by labor content

Answer - Total costs of production.

Q(184)

So if we have to look at the tools of commercial policy which can act as a quantitative restriction on imports or in import related to any country is the tariff and the subsidy regulation by the country government

Answer - Tariff, Subsidy