Mr. Beck

SUNY College at Oneonta

Recent Exam Questions from Chapter 21

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Review Questions for Economics 111

Major Topics Covered in Chapter 21

International Trade (General questions):  #Q1  #Q9  #Q10  #Q11

Comparative and Absolute Advantage (table):  #Q2  #Q3  #Q4  #Q7  #Q13

Comparative and Absolute Advantage (graph):  #Q5  #Q6  #Q8  #Q12


1. Advocates of the infant industry argument call for

  1. temporary tariff protection while firms gain experience needed to compete with established foreign rivals.
  2. lowering prices to drive foreign rivals out of business.
  3. subsidizing firms that face competition from foreign firms subsidized by their governments.
  4. using the threat of tariffs as a negotiation tool to encourage foreign countries to reduce their tariffs.
  5. permanent tariff protection to protect jobs in selected key domestic industries.

    6. Q1 answer
Questions 2 - 4 refer to the following table which shows the alternative outputs which can be produced in 2 different countries with 1 year of labor:
 
Sweden
Chile
Autos
3
2
Computers
12
6


2. It can be concluded that Sweden has a(n)

  1. absolute advantage in both goods and a comparative advantage only in autos.
  2. absolute advantage in both goods and a comparative advantage only in computers.
  3. absolute advantage in both goods and a comparative advantage  in both goods.
  4. absolute advantage in both goods and a comparative advantage  in neither good.
  5. comparative advantage in both goods and an absolute advantage only in autos.
  6. comparative advantage in both goods and an absolute advantage only in computers.

    7. Q2 answer

3. For mutually beneficial trade to occur, the rate of exchange between computers and autos must be
  1. less than 3 computers per auto.
  2. between 1½ and 2 computers per auto.
  3. between 3 and 4 computers per auto.
  4. between 2 and 6 computers per auto.
  5. more than 4 computers per auto.

    6. Q3 answer

4. To maximize the benefits from trade between the 2 countries, Chile would
  1. only produce autos.
  2. only produce computers.
  3. produce both autos and computers.
  4. produce neither autos nor computers.

    5. Q4 answer
Questions 5 and 6 refer to the following 2 production possibilities graphs which show the alternative outputs which can be produced in 2 different countries with 1 year of labor:

Graph questions 5-6

5. It can be concluded that France has a(n)

  1. absolute advantage in both goods and a comparative advantage only in aircraft.
  2. absolute advantage in both goods and a comparative advantage only in trucks.
  3. absolute advantage in both goods and a comparative advantage  in both goods.
  4. absolute advantage in both goods and a comparative advantage  in neither good.
  5. comparative advantage in both goods and an absolute advantage only in aircraft.
  6. comparative advantage in both goods and an absolute advantage only in trucks.

    7. Q5 answer

6. Assume the exchange rate is 5 trucks for 1 aircraft. Spain needs only 1 aircraft per year. How many trucks per year can Spain have along with the 1 aircraft?
  1. 4 trucks without trade and 5 trucks with trade.
  2. 4 trucks without trade and 15 trucks with trade.
  3. 12 trucks without trade and 11 trucks with trade.
  4. 12 trucks without trade and 12 trucks with trade.
  5. 12 trucks without trade and 15 trucks with trade.

    6. Q6 answer

7. The following table shows the alternative outputs which can be produced in Hungary and Germany with 1 year of labor:
 
Hungary
Germany
Camcorders
10
20
Typewriters
60
180

 For mutually beneficial trade between Hungary and Germany to occur, the rate of exchange between typewriters and camcorders must be

  1. less than 2 typewriters per camcorder.
  2. between 2 and 3 typewriters per camcorder.
  3. between 3 and 6 typewriters per camcorder.
  4. between 3 and 18 typewriters per camcorder.
  5. between 6 and 9 typewriters per camcorder.
  6. more than 9 typewriters per camcorder.

    7. Q7 answer

8. The following 2 production possibilities graphs show the alternative output which can be produced in Mexico and the U.S. with 1 year of labor:

Graph question 15
 It can be concluded that the U.S. has a(n)

  1. absolute advantage in both goods and a comparative advantage only in printers.
  2. absolute advantage in both goods and a comparative advantage only in textiles.
  3. absolute advantage in both goods and a comparative advantage  in both goods.
  4. absolute advantage in both goods and a comparative advantage  in neither good.
  5. comparative advantage in both goods and an absolute advantage only in printers.
  6. comparative advantage in both goods and an absolute advantage only in textiles.

    7. Q8 answer

9. Compared to a Paraguayan worker, a French worker can produce 3 times as many cameras and 4 times as many computers. France has a(n)
  1. comparative advantage in both goods and an absolute advantage only in cameras.
  2. comparative advantage in both goods and an absolute advantage only in computers.
  3. comparative advantage in both goods and an absolute advantage  in both goods.
  4. absolute advantage in both goods and a comparative advantage only in cameras.
  5. absolute advantage in both goods and a comparative advantage only in computers.
  6. absolute advantage in both goods and a comparative advantage in neither good.

    7. Q9 answer

10. Eliminating tariffs on imported finished products into the U.S. is generally favored by
  1.  U.S. businesses and U.S. labor unions
  2.  U.S. businesses and U.S. consumers
  3.  only U.S. labor unions
  4.  only U.S. businesses
  5.  only U.S. consumers

    6. Q10 answer

11. Imposing tariffs on established foreign firms in an attempt to protect newly created domestic firms is an example of
  1.  strategic trade policy
  2.  the infant industry argument
  3.  government sponsored competition
  4.  trade adjustment assistance
  5.  national defense protectionist policy

    6. Q11 answer

12. The following 2 production possibilities graphs show the alternative outputs which can be produced in 2 countries with 1 year of labor:

Graph question 12

For mutually beneficial trade to occur, the rate of exchange between furniture and air conditioners must be

  1.  less than 1½ units of furniture per air conditioner.
  2.  between 1½ and 2 units of furniture per air conditioner.
  3.  between 3 and 4 units of furniture per air conditioner.
  4.  between 2 and 6 units of furniture per air conditioner.
  5.  more than 6 units of furniture per air conditioner.

    6. Q12 answer

13. The following table shows the alternative outputs which can be produced in 2 countries with 1 year of labor:
 
Russia
Norway
Tires
10
5
Radios
15
10
It can be concluded that Russia has a(n)
  1. absolute advantage in both goods and a comparative advantage only in tires.
  2. absolute advantage in both goods and a comparative advantage only in radios.
  3. absolute advantage in both goods and a comparative advantage  in both goods.
  4. absolute advantage in both goods and a comparative advantage  in neither good.
  5. comparative advantage in both goods and an absolute advantage only in tires.
  6. comparative advantage in both goods and an absolute advantage only in radios.

    7. Q13 answer
     

    Formulas

DY/DX  =  slope.
The slope of a production possibilities frontier represents the opportunity cost of good X in terms of good Y.
     

    Answers



 

1. a  Return to Q1
Solution to Q1

 

2. b  Return to Q2
Solution to Q2

 

3. c  Return to Q3
Solution to Q3

 

4. a  Return to Q4
Solution to Q4

 

5. b  Return to Q5
Solution to Q5

 

6. e  Return to Q6
Solution to Q6

 

7. e  Return to Q7
Solution to Q7

 

8. a  Return to Q8
Solution to Q8

 

9. e  Return to Q9
Solution to Q9

 

10. e  Return to Q10
Solution to Q10

 

11. b  Return to Q11
Solution to Q11

 

12. d  Return to Q12
Solution to Q12

 

13. a  Return to Q13
Solution to Q13

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