Question 1

Exports ________ society's total surplus because of the ________ in price and ________ in production.
A) increase; rise; increase
B) increase; rise; decrease
C) decrease; fall; increase
D) decrease; fall; decrease
E) increase; fall; increase

Accepted Answer

Exports increase society's total surplus because they allow domestic producers to sell their goods at higher prices on the international market, leading to an increase in production to meet this demand.

Question 2

If the opportunity cost of producing a T-shirt is ________ in China than in the United States,China has ________ advantage in producing T-shirts.
A) lower; a comparative
B) lower; an absolute
C) higher; a comparative
D) higher; an absolute
E) higher; no

Accepted Answer

If the opportunity cost of producing a T-shirt is lower in China than in the United States, it means that China can produce T-shirts at a lower cost (in terms of alternative goods or services that could have been produced instead). This gives China a comparative advantage in producing T-shirts compared to the United States. Option B is incorrect because an absolute advantage would mean that China can produce T-shirts at a lower cost in terms of resources or labor compared to the United States, which is not given in the question. Option C and D are incorrect because if the opportunity cost is higher, it means that China would have to give up more of other goods or services to produce one T-shirt, indicating a comparative or absolute disadvantage. Option E is also incorrect as it is not a valid answer choice.

Question 3

Who gains from exports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from exports?

Accepted Answer

The answer of Who gains from exports? How do they...

Question 4

How can a nation and its producers determine whether or not it has a comparative advantage in producing a particular good or service?

Accepted Answer

The answer of How can a nation and its producers...

Question 5

Imports ________ society's total surplus because of the ________ in price and ________ in consumption.
A) increase; rise; increase
B) increase; rise; decrease
C) decrease; fall; increase
D) decrease; fall; decrease
E) increase; fall; increase

Accepted Answer

Imports increase society's total surplus because they lead to a fall in price and an increase in consumption. Lower prices make goods more affordable, which typically leads to more consumption, benefiting both consumers and the economy at large.

Question 6

Which of the following is true?
i.When the world price of a good is lower than the price that balances domestic supply and demand,a country gains from exporting the good.
ii.Compared to a no-trade situation,in a market with imports,consumer surplus is larger.
iii.Quotas raise the domestic price of imported goods.
A) only i
B) only ii
C) only iii
D) i and ii
E) ii and iii

Accepted Answer

ii. When a country imports goods, consumers have access to a larger variety of goods often at lower prices, which increases consumer surplus. iii. Quotas limit the quantity of goods that can be imported, reducing supply and causing the domestic price of these goods to rise.

Question 7

A few years ago,as oil and gas prices continued to increase,a growing number of Americans called for the United States to become less reliant on Middle-Eastern oil.Would it make sense for the United States to try to become totally self-reliant in the production of oil? Why or why not?

Accepted Answer

The answer of A few years ago,as oil and gas...

Question 8

-The United States imports television sets from Japan.The table above contains the U.S.demand and U.S.supply schedules for television sets.The world price of a television set is $600 per set.
a.With no trade,what is the domestic price and quantity of television sets?
b.At the world price,what is the quantity of sets demanded in the United States?
c.At the world price,how many sets are produced in the United States?
d.At the world price,how many sets are imported into the United States?
e.What is the opportunity cost of producing the 4-millionth television set in the United States? In Japan?

Accepted Answer

The answer of 
-The United States imports television sets from...

Question 9

Which of the following is true?
i.Compared to a no-trade situation,in a market with exports,consumer surplus is larger.
ii.Tariffs decrease consumer surplus.
iii.Trade is restricted because protection brings small losses to a large number of people and large gains to a small number of people.
A) only i
B) only ii
C) only iii
D) i and iii
E) ii and iii

Accepted Answer

ii. Tariffs decrease consumer surplus because they increase the prices of imported goods, making them more expensive for consumers. iii. Trade is often restricted because protectionist policies can bring large gains to specific industries or groups, despite causing small losses to the broader population.

Question 10

After NAFTA was signed,the United States allowed more tomatoes to be imported from Mexico.What happened to the price of tomatoes in the United States when the United States allowed more tomatoes to be imported?

Accepted Answer

The answer of After NAFTA was signed,the United States allowed...

Question 11

-The figure above shows the U.S.demand and the U.S.supply curves of canned peaches.
a.In the absence of trade,what is price of canned peaches in the United States?
b.In the absence of trade,what is the level of production in the United States?
c.If the world price of canned peaches is $1 a can and the United States engages in trade,does the United States import or export canned peaches?
d.If the world price of canned peaches is $1 a can and the United States engages in trade,what is the quantity produced in the United States and what is the quantity consumed? What is the quantity imported or exported?
e.If the world price of canned peaches is $2 a can and the United States engages in trade,does the United States import or export canned peaches?
f.If the world price of canned peaches is $2 a can and the United States engages in trade,what is the quantity produced in the United States and what is the quantity consumed? What is the quantity imported or exported?

Accepted Answer

The answer of 
-The figure above shows the U.S.demand and...

Question 12

How do imports affect sellers' producer surplus?

Accepted Answer

The answer of How do imports affect sellers' producer surplus?...

Question 13

-The table above has the domestic supply and domestic demand schedules for a product.What is the equilibrium price with no trade? Over what range of prices will the country export the good? Over what range will it import the good? Suppose the world price is $20.What is the quantity demanded,the quantity supplied,and the amount of the good exported or imported?

Accepted Answer

The answer of 
-The table above has the domestic supply...

Question 14

The world price of steel is $100 a ton.Before international trade,the price of steel in India is $60 a ton.If India begins trading internationally,the price of steel in India ________ and steel mills in India ________ the quantity they produce.
A) rises; increase
B) falls; increase
C) does not change; increase
D) rises; decrease
E) falls; decease

Accepted Answer

When India begins trading internationally, the price of steel in India will rise to the world price of $100 a ton. This is because Indian steel mills will be able to sell their steel at a higher price on the international market. As a result, steel mills in India will increase the quantity they produce in order to take advantage of the higher prices.

Question 15

Which of the following is true?
i.Comparative advantage drives international trade.
ii.Compared to a no-trade situation,in a market with imports,producer surplus is larger.
iii.Tariffs lower the domestic price of imported goods.
A) only i
B) only ii
C) only iii
D) i and ii
E) i and iii

Accepted Answer

i. Comparative advantage is indeed a key principle that drives international trade, as it allows countries to specialize in the production of goods and services that they can produce more efficiently than others. ii. In a market with imports, producer surplus typically decreases because domestic producers face competition from foreign goods, which can lead to lower prices and reduced producer surplus. iii. Tariffs actually increase the domestic price of imported goods by adding a tax on them, making them more expensive for consumers.

Question 16

-Merck,an American pharmaceutical company,produces a vaccination that is used against chicken pox.The table shows the domestic demand for,and supply of,this medication,measured in thousands of doses per day.The world price of this medicine is $24 per dose.
a.With no trade,what is the U.S.price and quantity of the vaccine?
b.At the world price,how many doses are demanded in the United States?
c.At the world price,how many doses are produced in the United States?
d.At the world price,how many doses are exported?

Accepted Answer

The answer of 
-Merck,an American pharmaceutical company,produces a vaccination that...

Question 17

We find that the world price of sugar is 20 cents a pound,the U.S.does not trade internationally,and the U.S.equilibrium price of sugar is 30 cents a pound.If the U.S.begins to trade internationally,the price of sugar in the U.S.________ to the world price and U.S.consumers buy ________ sugar.
A) falls; more
B) falls; less
C) rises; more
D) rises; less
E) falls; no

Accepted Answer

When the U.S. begins to trade internationally, the domestic price will adjust to the world price. In this case, the world price is lower at 20 cents a pound than the U.S. equilibrium price of 30 cents a pound. Therefore, the price in the U.S. will fall to match the world price. This will make sugar cheaper for U.S. consumers, so they will likely buy more sugar.

Question 18

How do imports affect buyers' consumer surplus?

Accepted Answer

The answer of How do imports affect buyers' consumer surplus?...

Question 19

Who gains from imports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from imports?

Accepted Answer

The answer of Who gains from imports? How do they...

Question 20

Because the United States has ________ advantage compared to China in producing airplanes,China can buy airplanes from the United States at a ________ opportunity cost than that at which China can produce them.
A) comparative; lower
B) comparative; higher
C) absolute; lower
D) absolute; higher
E) None of the above because China will produce airplanes and sell them to the United States.

Accepted Answer

The blank refers to comparative advantage, which is the ability to produce a good or service at a lower opportunity cost than another country. Therefore, the correct answer is A because the United States has a comparative advantage in producing airplanes compared to China, resulting in China being able to buy airplanes from the United States at a lower opportunity cost than producing them domestically.

Quiz 9: Global Markets in Action

Exports society's total surplus because of the in price and in production.

If the opportunity cost of producing a T-shirt is in China than in the United States,China has advantage in producing T-shirts.

Who gains from exports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from exports?

How can a nation and its producers determine whether or not it has a comparative advantage in producing a particular good or service?

Imports society's total surplus because of the in price and in consumption.

A few years ago,as oil and gas prices continued to increase,a growing number of Americans called for the United States to become less reliant on Middle-Eastern oil.Would it make sense for the United States to try to become totally self-reliant in the production of oil? Why or why not?

Which of the following is true? i.Compared to a no-trade situation,in a market with exports,consumer surplus is larger. ii.Tariffs decrease consumer surplus. iii.Trade is restricted because protection brings small losses to a large number of people and large gains to a small number of people.

After NAFTA was signed,the United States allowed more tomatoes to be imported from Mexico.What happened to the price of tomatoes in the United States when the United States allowed more tomatoes to be imported?

How do imports affect sellers' producer surplus?

The world price of steel is $100 a ton.Before international trade,the price of steel in India is $60 a ton.If India begins trading internationally,the price of steel in India and steel mills in India the quantity they produce.

Which of the following is true? i.Comparative advantage drives international trade. ii.Compared to a no-trade situation,in a market with imports,producer surplus is larger. iii.Tariffs lower the domestic price of imported goods.

We find that the world price of sugar is 20 cents a pound,the U.S.does not trade internationally,and the U.S.equilibrium price of sugar is 30 cents a pound.If the U.S.begins to trade internationally,the price of sugar in the U.S. to the world price and U.S.consumers buy sugar.

How do imports affect buyers' consumer surplus?

Who gains from imports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from imports?

Because the United States has advantage compared to China in producing airplanes,China can buy airplanes from the United States at a opportunity cost than that at which China can produce them.