Relative to a no-international-trade initial situation, if the United States imported wine from other countries with a comparative advantage in wine production, the U.S. domestic price of wine:
a. would rise, but domestic output would fall.
b. would fall, but domestic output would rise.
c. would rise, and domestic output would rise.
d. would fall, and domestic output would fall.
Question 2The concept of the best level of pollution suggests that:
a. increased concerns about pollution control shifted the marginal social cost curve to the left.
b. the opportunity cost of reducing pollution may sometimes exceed the benefit.
c. unregulated markets generally reduce pollution to efficient levels with marginal social cost equal to marginal social benefit.
d. none of the above
Question 3The export supply curve is the portion of the domestic supply curve below the no-trade equilibrium price.
a. True
b. False
Indicate whether the statement is true or false
Question 4Import tariffs generally ____ the output of domestic producers of the affected products and also ____ the output of domestic exporters.
a. increase; increase
b. increase; decrease
c. decrease; increase
d. decrease; decrease
Question 5If both the marginal social benefit of abatement function and the marginal social benefit of abatement function shifted up.
a. The greater would be the efficient level of pollution abatement.
b. The smaller would be the efficient level of pollution abatement.
c. There would be no change in the efficient level of pollution abatement.
d. We do not know whether the efficient level of pollution abatement would rise or fall.
Question 6If the international price of oranges is less than the domestic price of oranges in Spain, then Spain will export oranges to other countries.
a. True
b. False
Indicate whether the statement is true or false
Question 7Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?
a. Iceland has both a comparative and absolute advantage in producing food.
b. Iceland has a comparative advantage, but not an absolute advantage in producing food.
c. Lavaland has both a comparative and absolute advantage in producing clothing.
d. Lavaland has an absolute advantage, but not a comparative advantage in producing clothing.
Question 8The efficient level of pollution abatement is greater
a. The higher the marginal social benefit of abatement function and the higher the marginal social benefit of abatement function.
b. The higher the marginal social benefit of abatement function and the lower the marginal social benefit of abatement function.
c. The lower the marginal social benefit of abatement function and the higher the marginal social benefit of abatement function.
d. The lower the marginal social benefit of abatement function and the lower the marginal social benefit of abatement function.
Question 9If the world price is above the domestic no-trade equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.
a. True
b. False
Indicate whether the statement is true or false
Question 10Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?
a. Iceland has both a comparative and absolute advantage in producing food.
b. Iceland has a comparative advantage, but not an absolute advantage in producing food.
c. Lavaland has both a comparative and absolute advantage in producing clothing.
d. None of the above are true.
Question 11The efficient level of pollution is greater
a. The higher the marginal social benefit of abatement function and the higher the marginal social benefit of abatement function.
b. The higher the marginal social benefit of abatement function and the lower the marginal social benefit of abatement function.
c. The lower the marginal social benefit of abatement function and the higher the marginal social benefit of abatement function.
d. The lower the marginal social benefit of abatement function and the lower the marginal social benefit of abatement function.
Question 12If the export supply curve of tomatoes and the import demand curve of tomatoes of Luxembourg intersect at the international price level of tomatoes, then Luxembourg will suspend trading tomatoes in the international market.
a. True
b. False
Indicate whether the statement is true or false
Question 13Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 16 units of food per year or 8 units of clothing. Which of the following is true?
a. Iceland has an absolute advantage, but not a comparative advantage in producing food.
b. Iceland has a comparative advantage, but not an absolute advantage in producing food.
c. Lavaland has both a comparative and absolute advantage in producing clothing.
d. Lavaland has a comparative advantage, but not an absolute advantage in producing clothing.
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