D) Ricardo's principle of comparative advantage

11 Each country can benefit from trade by: C

A) balancing its imports and exports so that it does not send its financial resources to other countries.

B) controlling imports so that imported products do not compete with domestically produced products.

C) exporting products in which it has the greatest relative advantage and importing products in which it has the least relative advantage.

D) importing only products for which it has a comparative disadvantage.

12 Normal trade on an ongoing basis will be conducted at: C A) whatever price is set by countries with absolute advantages. B) whatever price is set by countries with comparative advantages. C) the world equilibrium price.

D) the price set by government regulation in the importing country.

13 Countries can have a(n) _______________ even if they do not have a(n) ______________________. A

A) comparative advantage, absolute advantage B) absolute advantage, comparative advantage C) absolute advantage, labor efficiency D) comparative advantage, labor efficiency

14 Having an absolute disadvantage in all products means that a country: B A) cannot profitably engage in international trade. B) is less productive than other countries.

C) is able to negotiate below- market prices for imports. D) can import products but cannot export products.

15 ______________________ illustrates all combinations of amounts of different products that an economy can produce with full employment of its resources and maximum feasible productivity of those resources. C A) Absolute advantage B) Comparative advantage

C) Production possibilities curve D) Ricardo's Constant Cost Case

16 The opening of trade will lead to the loss of jobs that produced the products that are imported as a result of the opening of trade, D

A) and that job loss will offset any economic gains that result from the opening of trade.

B) but that economic detriment caused by that job loss will be offset by economic gains from increased imports.

C) and reduce the country's production possibilities curve.

D) but those workers who lose jobs because of imports can shift to the expanding export-oriented industries.

17 The cost of producing a unit of a product is the ratio between the wage rate and productivity of the worker. Production costs can be low: C

A) only if wages are low and worker productivity is high. B) if wages are low and if worker productivity is low. C) if wages are low or if worker productivity is high. D) if wages and worker productivity are high.

18 A country with a current account deficit pays for that deficit by: B A) increasing its imports.

B) either piling up debts or giving up assets to foreigners. C) increasing its exports.

D) borrowing heavily from foreign governments.

19 Complete specialization by countries is not common. For instance, the U.S.: B A) imports essentially the same value of goods as it exports.

B) produces some products that are consumed domestically and that it also imports. C) imports significantly more than it exports.

D) does not specialize in the production of any category of goods.

20 The theory of comparative advantage as an explanation of international trade is based on the concept of: A

A) opportunity costs.

B) Smith's absolute advantage. C) Ricardo's Constant Cost Case. D) world equilibrium price.

第四章

1 Ricardo's principle of comparative advantage unrealistically assumes that: A

A) marginal opportunity costs will be constant when, in fact, they are generally increasing. B) prices will continue to increase so comparative advantages may disappear over time. C) the number of countries that import and export will remain constant in the short term. D) total production costs will remain constant so long as input prices remain the same.

2 As one industry expands, the expanding industry's increased use of resources means that: D A) the cost of the resources used by that industry will decrease and the cost of producing the product will increase.

B) additional resources will have to be found to satisfy the increased need and costs will probably decrease.

C) there will be an overall decrease in exports which will increase the price of domestic products.

D) those resources are taken away from other industries, resulting in increasing marginal costs.

3 A country's production possibility curve is determined by total resource supplies and: D A) the cost of those resources for both domestic and export production.

B) consumer demand for the outputs of the products included in the production possibilities curve.

C) the level of the country's exports relative to the export potential of other countries.

D) how those resources can be used to produce the outputs of the products included in the production possibilities curve.

4 ____________________ show the various combinations of consumption quantities of products that lead to the same level of well-being or happiness of consumers. B A) Production possibilities curves B) Indifference curves

C) Theories of international trade D) Production combinations

5 Actual consumption points chosen by consumers depend on: B A) which products are available.

B) budget constraints of domestic consumers.

C) which products are available domestically and which must be imported. D) quality of products that are available.

6 _____________________ show how the economic well-being of a whole group depends on the whole group's consumption of products. C A) Production possibilities curves B) Theories of international trade C) Community indifference curves D) Production combinations

7 Individual indifference curves differ from person to person: C

A) but they can still be combined to determine a community indifference curve if a large enough sample is used.

B) so they must be averaged to determine a community indifference curve for an individual product.

C) so there is no completely accurate way to combine individual indifference curves to arrive at a community indifference curve.

D) so they are not considered in determining benefits of international trade

8 With no trade, a country must be self-sufficient, which means that the country: D

A) will have individual indifference curves that are similar for similar products and consumers. B) will have community indifference curves that are different for similar products and consumers.

C) must increase domestic production to satisfy the varied demand of domestic consumers. D) must find the combination of domestically-produced products that will maximize

community well-being.

9 China is: C

A) land-abundant and labor-abundant. B) land-scarce and labor-scarce. C) labor-abundant and land-scarce. D) land-abundant and labor-scarce.

10 The demand curve for a product shows: A

A) how the quantity of the product demanded responds to the price of that product.

B) the price at which most producers will supply the product if a single product is considered. C) the optimum quantity of a product that will produce the greatest overall well-being of a nation.

D) how a country can increase domestic production for the product.

11 A country gains more from trade if: C

A) it exports a variety of products and imports products that are not produced domestically. B) other countries lose from trade because they do not produce as effectively as the rest of the world.

C) it receives a higher price for its exports relative to the price it pays for its imports. D) its domestic production is well-established and protected from imports..

12 ____________________ refers to the price a country receives from foreign buyers for exported products relative to the price the country pays foreign sellers for imported products. C A) Net export price B) Free trade C) Terms of trade D) Trade patterns

13 One reason that the production possibilities curves for different countries differ is that: D A) different countries import different amounts and kinds of products from different international sources.

B) the industries that are considered in creating the production possibilities curve are different for different countries.

C) production costs are the same in each country but these costs are affected by what each country imports or exports.

D) production conditions in each country differ so the effectiveness with which a country produces differs.

14 Community indifference curves differ between countries because: A A) demand conditions differ from country to country. B) production conditions in each country differ. C) production costs are different in each country. D) technology differs from country to country.