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King: Economics

Chapter 27

Instructions

Answer the following questions and then press 'Submit' to get your score.

Question 1

Suppose Countries A and B use only labour as an input and produce only cloth and wheat. In A, a worker in a day could produce 2 units of cloth or 4 units of wheat. In B, a worker in a day could produce 3 units of cloth or 9 units of wheat. At present the countries do not trade. Which of the following statements is false?

Question 2

Return to the countries in question 1. Suppose trade opens up. Which of the following statements is true?

Question 3

Suppose Countries C and D use only labour as an input and produce only tables and tents. In A, a worker in a week could produce 4 tables or 2 tents. In B, a worker in a week could produce 6 tables. Initially the countries do not trade, and then trade opens up. Under which circumstances will country C export tables?

Question 4

Suppose two countries E and F use many inputs. Country E exports tractors and imports televisions. Assuming there are no economies of scale, which of the following statements is true?

Question 5

Which of the following statements is false?

Question 6

Suppose a small country imposes a tariff on a good. Which of the following statements is false?

Question 7

Suppose a large country imposes a tariff on a good. Which of the following statements is false?

Question 8

Which of the following arguments for trade barriers offers potential benefits to consumers?

Question 9

Two large countries currently impose tariffs against each other. Each country would be better off with free trade. Which of the following statements are true?

1. Each country might think 'if the other country maintains its tariff, we will be better off maintaining our tariff.'
2. Each country may think 'if the other country unilaterally abolishes its tariff, we may be better off maintaining our tariff.

Question 10

Which of the following statements is false?