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Which of the following best expresses the benefit from international trade?

With trade, each country can concentrate on producing those goods and services that it produces most efficiently.

Imports of goods and services account for what percent of GDP in the United States in 2010?

16%

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true concerning production possibilities curves in both countries?

On a graph with cheese on the vertical axis, the slope of Germany's production possibilities frontier is steeper than Denmark's.

Mutually beneficial trade will occur between two countries for all of the following reasons except one. Which is the exception?

One country has an absolute advantage over the other.

The basis for international trade is

comparative advantage

The opportunity cost of producing one car in Germany is 2,000 bushels of wheat, and the opportunity cost of producing one car in Canada is 1,200 bushels of wheat. The two countries can realize mutual gains from trade if they agree on terms of trade that are

greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces wheat

Which of the following is true?

International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.

If production is subject to economies of scale,

countries can gain from trade if each nation specializes

In Exhibit 19-1, if the world price of corn is $2 and there are no trade restrictions, the United States will

produce 3,000, consume 7,000, and import 4,000 bushels of corn

In Exhibit 19-4, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

$4,000

In Exhibit 19-4, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, which area represents the United States' net loss as a result of the tariff?

b + f

As a result of a tariff on imports, consumers in the importing country

purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of fewer total goods than without the tariff

Which of the following is true concerning the impact of tariffs and quotas?

The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product.

If the country in Exhibit 19-7 is initially trading without restrictions at a world price of $2.00 and an import quota of 50 units per month is enacted, the gain to those awarded the right to import the 50 units and sell it at the new domestic price is represented by area

c+d

To be effective, an import quota must

restrict imports to less than would be imported under free trade

Which of the following is not a type of trade restriction?

economies of scale

The establishment of GATT resulted in

lower tariff rates

Which of the following is not an argument in favor of restricting trade?

to increase consumer surplus

Which of the following is not correct regarding dumping?

A major difficulty with dumping by firms in other countries is that it drives up prices to the domestic consumer.

When a country establishes trade restrictions, domestic producers of goods that compete with imported goods

may lose in the long run if protection stifles innovation and leaves the industry vulnerable

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