ECO610 Quizzes Week 2 Quiz

Question 1

Export embargoes cause greater losses to consumer surplus in the target country

the more elastic is the target country’s domestic supply.

the more elastic is the target country’s demand schedule.

Correct!

the more inelastic the target country’s supply.

the lesser its initial dependence on foreign produced goods.

the larger the target country’s labor force is.

Question 2

Rapidly growing developing countries tend to be borrowers on the international capital markets. From this information we may surmise that they have a comparative advantage in

consumer goods.

present income.

capital goods.

Correct!

future income.

disposable income.

Question 3

The optimum tariff is most likely to apply to

a small tariff imposed by a small country.

a large tariff imposed by a large country.

an ad valorem tariff on a small country.

Correct!

a small tariff imposed by a large country.

a large tariff imposed by a small country.

Question 4

One advantage of the specialization that results from international trade is that countries can take advantage of

Correct!

scale economies.

lower transport costs.

taste reversals.

smaller countries.

production diversification

Question 5

The quantitative importance of U.S. protection of the domestic clothing industry is best explained by the fact that

this industry is an important employer of low skilled labor.

the technology involved is very advanced.

this industry is an important employer of highly skilled labor.

most of the exporters of clothing into the U.S. are poor countries.

Correct!

this industry is a politically well organized sector in the U.S.

Question 6

Internal economies of scale will ________ average cost when output is ________ by ________.

increase; increased; a firm

Correct!

reduce; increased; a firm

increase; increased; the industry

reduce; reduce; the industry

reduce; increased; the industry

Question 7

An export subsidy will cause the terms of trade of the ________ country to ________ and will ________ the country.

Correct!

exporting; suffer; harm

exporting; improve; benefit

importing; improve; harm

importing; suffer; benefit

importing; suffer; harm

Question 8

External economies of scale arise when the cost per unit

falls as the industry and the average firm grows larger.

Rises as the industry and the average firm grows larger.

rises as the industry grows larger and falls as the average firm grows larger.

Correct!

falls as the industry grows larger and rises as the average firm grows larger.

remains constant over a broad range of output.

Question 9

An import tariff will cause the terms of trade of the ________ country to ________ and will ________ the country.

exporting; improve; benefit

exporting; improve; harm

Correct!

importing; improve; benefit

importing; suffer; harm

importing; improve; harm

Question 10

Throughout the post-World War II era, the importance of tariffs as a trade barrier has

demonstrated a classic random walk with a mean-reversion tendency.

remained the same.

increased.

fluctuated wildly.

Correct!

decreased.

Quiz Score: 10 out of 10