The Gains From International Trade
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- Economic Issues and ConceptsEconomic Theories,Data,and GraphsDemand,Supply,and PriceElasticityPrice Controls and Market EfficiencyConsumer BehaviourProducers in the Short RunProducers in the Long RunCompetitive MarketsMonopoly,cartels,and Price DiscriminationImperfect Competition and Strategic BehaviourEconomic Efficiency and Public PolicyHow Factor Markets WorkLabour Markets and Income InequalityInterest Rates and the Capital MarketMarket Failures and Government InterventionThe Economics of Environmental ProtectionTaxation and Public ExpenditureWhat Macroeconomics Is All AboutThe Measurement of National IncomeThe Simplest Short-Run Macro ModelAdding Government and Trade to the Simple Macro ModelOutput and Prices in the Short RunFrom the Short Run to the Long Run: The Adjustment of Factor PricesLong-Run Economic GrowthMoney and BankingMoney,Interest Rates,and Economic ActivityMonetary Policy in CanadaInflation and DisinflationUnemployment Fluctuations and the NairuGovernment Debt and DeficitsThe Gains From International TradeTrade PolicyExchange Rates and the Balance of Payments
Question 1
Free
Multiple Choice
Since 1950,the world's real GDP has increased by seven times and the volume of world trade has increased by roughly
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the same amount.
two times.
ten times.
fifteen times.
thirty-five times.
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Question 2
Free
Multiple Choice
In 2014 the value of goods exported from Canada was approximately $ ________ while the value of goods imported was approximately $ ________ .Each of these flows represents ________ % of Canada's GDP.
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50 billion; 30 billion; 6
530 billion; 525 billion; 32
12 billion; 12 billion; 1
100 billion; 100 billion; 15
25 billion; 25 billion; 10
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Question 3
Free
Multiple Choice
A country that engages in no foreign trade is said to be in a situation of
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comparative advantage.
absolute advantage.
reciprocal absolute advantage.
autarky.
isolation.
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Question 4
Free
Multiple Choice
The increases in a nation's output and consumption that result from specialization and trade are called
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the terms of trade.
the gains from trade.
autarky.
absolute advantage.
comparative advantage.
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Question 5
Free
Multiple Choice
Trade,whether between individuals or nations,generally promotes
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self-sufficiency.
specialization.
lower living standards.
higher product prices.
autarky.
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Question 6
Multiple Choice
The existence of any "gains from trade" relies on
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closed economies.
absolute advantage.
comparative advantage.
both absolute and comparative advantage.
tariffs.
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Question 7
Multiple Choice
The existence of "absolute advantage"
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implies that there will be no benefits from trade between two nations.
refers to a situation where one country can produce one unit of a given product with fewer resources than the other country.
fosters the self-sufficiency of nations.
refers to a situation where one country can produce one unit of all goods with fewer resources than can another country.
is not physically possible.
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Question 8
Multiple Choice
One region is said to have an absolute advantage over another region in the production of good X when
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the first region has a more productive labour force than the second.
the first region has a larger supply of the raw materials required to produce good X.
an equal quantity of resources can produce more of good X in the first region than in the second region.
there is no demand for good X in the second region.
the opportunity cost of one unit of X is lower in the first region than in the second region.
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Question 9
Multiple Choice
The concept of "comparative advantage" refers to the
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ability of one region to produce a commodity at a lower opportunity cost than another region.
ability of one region to produce a commodity with less labour input than another region.
ability of one region to produce a commodity with fewer total inputs than another region.
gains from international trade.
terms of trade index.
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Question 10
Multiple Choice
The principle of comparative advantage was first formulated in the 18th century by
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David Hume.
Thomas Malthus.
Karl Marx.
David Ricardo.
Adam Smith.
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Question 11
Multiple Choice
Consider two countries that can produce rice and other products.If neither country has an absolute advantage in the production of rice,
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there is no possibility that either country will import rice from the other.
neither country can possibly have a comparative advantage in the production of rice.
rice will still be traded as long as one of the countries has a comparative advantage in its production.
the opportunity cost of producing rice must be identical in the two countries.
then rice should not be produced.
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Question 12
Multiple Choice
If a country has a comparative advantage in the production of soybeans,and it trades freely with other countries,it will most probably
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derive no advantage from any trade in soybeans.
increase its consumption of soybeans.
export soybeans.
import soybeans.
not consume soybeans.
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Question 13
Multiple Choice
Consider a country that is initially autarkic and then engages freely in international trade.If this country has a comparative advantage in the production of soybeans,it will most probably
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derive no advantage from any trade in soybeans.
decrease the production of soybeans for domestic consumption.
increase the production of soybeans for domestic consumption.
increase the production of soybeans to allow for the export of soybeans.
import soybeans
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Question 14
Multiple Choice
Consider the following information about the production of two goods,X and Y,in two countries,A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
-Refer to Table 32-1.Country A has an absolute advantage in producing good X if
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(Xa/Ya)is less than (Xb/Yb).
Xa is less than Xb.
Xa is less than Ya.
(Xa/Xb) is less than (Ya/Yb).
Xa = Xb.
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Question 15
Multiple Choice
Consider the following information about the production of two goods,X and Y,in two countries,A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
-Refer to Table 32-1.Country A has a comparative advantage in producing good X if
Choose correct answer/s
(Xa/Ya)is less than (Xb/Yb).
(Xa/Xb)is greater than (Ya/Yb).
(Xa/Ya)is greater than (Xb/Yb).
Xa is less than Yb.
Xa = Xb.
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Question 16
Multiple Choice
Consider the following information about the production of two goods,X and Y,in two countries,A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
-Refer to Table 32-1.There is no scope for gains from trade due to specialization between the two countries if
Choose correct answer/s
(Xa/Ya)is greater than (Xb/Yb).
Xa is equal to Yb.
(Xa/Ya)is equal to (Xb/Yb).
Xa is less than Yb and Ya is less than Yb.
Xa is less than Xb.
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Question 17
Multiple Choice
Consider the following information about the production of two goods,X and Y,in two countries,A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
-Refer to Table 32-1.If 
is less than 
,we can conclude with certainty that
Choose correct answer/s
The opportunity cost of producing good X in Country A is less than in Country B.
Country A has a comparative advantage in the production of good X.
Country A has an absolute advantage in the production of good X.
The price of good X in Country A is less than the price in Country B.
The opportunity cost of producing good X in Country A is higher than in Country B.
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Question 18
Multiple Choice
Consider the following information about the production of two goods,X and Y,in two countries,A and B:
∙ In Country A it takes Xa units of resources to produce one unit of X and Ya units of resources to produce one unit of Y.
∙ In Country B it takes Xb units of resources to produce one unit of X and Yb units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
-Refer to Table 32-1.If the ratio 
/ 
is less than the ratio 
/ 
,then we can say with certainty that
Choose correct answer/s
The opportunity cost of producing good X in Country A is less than in Country B.
Country A has a comparative advantage in the production of good X.
Country A has an absolute advantage in the production of good X.
The opportunity cost of producing good X in Country A is higher than in Country B.
Both A and B are correct.
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Question 19
Multiple Choice
If two nations want to trade with one another,they can determine their respective comparative advantages by
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hiring economists to gather and interpret the relevant data.
first determining which has absolute advantage in the production of goods and services.
allowing firms in each country to freely engage in international trade.
making certain that the prices of tradable goods and services are equal in both nations.
computing the opportunity costs of all goods and services.
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Question 20
Multiple Choice
Two nations want to engage in trade but discover that one of them is more efficient in producing all goods.In this case,
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each nation should export the good in which it has a comparative advantage.
no trade is possible.
the more efficient country should produce all goods and export them.
the less efficient country should engage in importation of goods only.
the more efficient country should import all goods.
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