Question 1

Suppose the nation of Alphonia was charged with dumping electric lawnmowers in the nation of Omegalon. The result of Omegalon imposing anti-dumping tariffs on electric lawnmowers manufactured in Alphonia would most likely be:

A. lower selling prices on electric lawnmowers in Alphonia.

B. an increased market share for Alphonian-manufactured electric lawnmowers in Omegalon.

C. higher selling prices on electric lawnmowers in Omegalon.

D. increased exports of electric lawnmowers from Alphonia.

Question 2 

The production possibilities curve represents the set of all:

A. factors of production that can be used to manufacture goods and services.

B. nonlinear forms of production in the economy.

C. feasible combinations of goods that the economy can produce given that a nation's resources are fully employed.

D. combinations of goods and services that can be used in the production of other goods and services.

Question 3 

Which of the following benefits from a quota or VER?

A. consumers

B. the government

C. domestic producers

D. all of the above

Question 4 

Table 1

Refer to Table 1. The opportunity cost of a glove in Panama is:

A. 1/8 of a hat.

B. 3/4 of a hat.

C. 4/3 hats.

D. 8 hats.

Question 5

Table 1

Refer to Table 1. Panama has a comparative advantage in:

A. hats.

B. gloves.

C. both hats and gloves.

D. neither hats nor gloves.

Question 6 

The opportunity cost of something is:

A. the price you pay for the good.

B. what you are willing to pay for the good.

C. what you sacrifice to get the good.

D. a measure of the scarcity of the good.

Question 7 

The case of Airbus, an airplane manufacturing consortium in Europe, which receives large subsidies from several European countries, best exemplifies which rationale for protectionist policies?

A. shielding workers from foreign competition

B. helping domestic firms establish monopolies in world markets

C. protecting infant industries

D. prevention of dumping in local markets

Question 8 

The government can facilitate the transfer of unskilled workers to high-skilled jobs by:

A. laying off skilled workers to provide jobs for unskilled workers.

B. increasing tariffs to speed the development of jobs requiring skilled labor.

C. providing assistance for education and training for unskilled workers.

D. increasing tariffs to help unskilled workers.

Question 9 

Import bans, import quotas, voluntary export restraints, and tariffs on goods all:

A. decrease equilibrium quantity and prices.

B. decrease equilibrium quantities, but increase prices.

C. increase equilibrium quantities, but decrease prices.

D. increase equilibrium quantity and prices.

Question 10 

If Italy can produce grapes at a lower opportunity cost than any other nation, Italy is said to have a(n) ________ in the production of grapes.

A. comparative advantage

B. autarky

C. comparative disadvantage

D. absolute advantage

Question 11 

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

A. encourage specialization in the good in which the nation has a comparative advantage.

B. increase the level of imports.

C. increase the welfare of domestic consumers.

D. help domestic firms establish a world monopoly in a particular market.

Question 12 

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

A. imports increase, domestic production decreases, prices decrease

B. imports decrease, domestic production increases, prices increase

C. imports increase, domestic production increases, prices increase

D. imports decrease, domestic production increases, prices decrease

Question 13 

The slope of the production possibilities curve is:

A. the opportunity cost of one good in terms of the other.

B. positive.

C. positive and decreasing.

D. positive and increasing.

Question 14 

________ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.

A. Voracious dumping

B. Deliberate dumping

C. Ravaging dumping

D. Predatory dumping

Question 15 

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

A. imports decrease, domestic production increases, prices increase

B. imports increase, domestic production increases, prices increase

C. imports increase, domestic production decreases, prices decrease

D. imports decrease, domestic production increases, prices decrease

Question 16 

Table 1

Refer to Table 1. The opportunity cost of a hat in Russia is:

A. 1/3 of a glove.

B. 1/2 of a glove.

C. 2 gloves.

D. 3 gloves.

Question 17 

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

A. imports increase, domestic production decreases, prices decrease

B. imports increase, domestic production increases, prices increase

C. imports decrease, domestic production increases, prices decrease

D. imports decrease, domestic production increases, prices increase

Question 18 

A U.S. boycott against Mexican tuna caught in nets was:

A. not upheld by the WTO on the grounds that killing dolphins in tuna nets does not harm the United States directly.

B. upheld by the WTO on the grounds that nations can impose any environmental standards on other nations.

C. not upheld by the WTO on the grounds that U.S. ships could still use nets to catch tuna.

D. upheld by the WTO on the grounds that the use of nets to catch tuna also kills dolphins.

Question 19 

Dumping occurs when a firm:

A. stops selling to a foreign market due to excessive tariffs.

B. generates toxic waste when producing export goods and then dumps the waste in the ocean.

C. charges a lower price to a foreign market than either the price charged in its home market or the production costs.

D. charges a higher price to a foreign market than either the price charged in its home market or the production costs.

Question 20 

The example of the VCRs from Korea illustrates dumping due to:

A. retaliatory trade practices.

B. predatory pricing.

C. price discrimination.

D. avoidance of environmental laws.