AS Economics: International Trade Economics

Japan has a comparative advantage over Germany in the production of cars if
1. Japan can produce more cars than Germany
2. The opportunity costs of car production are lower in Japan than in Germany
3. The variable costs of car production are lower in Japan than in Germany
4. Germany has more efficient production methods than Japan in the production of cars
A major objective of the World Trade Organisation is to
1. Provide short term loans for countries with balance of payments difficulties
2. Provide financial help and advice to developing countries
3. Reduce the general level of protection in world trade
4. Achieve an orderly system of fixed exchange rates between countries so that trade can take place
Imports into the UK would tend to rise if
1. UK real national income rose due to a consumer boom
2. Uk prices rose more slowly than other countries' prices
3. The external value of the pound sterling decreased
4. Import quotas were reduced
The European Union might impose tariffs on goods from outside the EU in order to
1. Increase the budget deficits of member countries
2. Prevent the dumping of goods into the EU
3. Maximise the benefits of trade and specialisation
4. Increase consumer surplus and reduce prices
The theory of comparative advantage suggests that countries should
1. Only trade if each country has an absolute advantage in at least one product
2. Seek to become self sufficient
3. Only trade if the opportunity costs of production differ between countries
4. Diversify as much as possible
The law of comparative advantage implies that trade between two countries
1. Is always to the advantage of both
2. Can be to the advantage of both even though one may be more productively efficient at producing everything
3. Is beneficial to both if the exporter uses less resources than the importer would use to produce the same quantity of goods
4. Is to the advantage of both if countries import only those goods that they are incapable of priducing themselves
The diagram shows the various combinations of two goods, freezers and dishwashers, which can be produced in two countries, A and B from a given set of resources. If trade takes place on the basis of comparative advantage
1. Italy will export freezers and import dishwashers
2. Italy will export both freezers and dishwashers
3. Italy will import freezers and export dishwashers
4. There are no gains from trade between the two countries
The diagram shows the production possibility frontier for two countries each producing two goods, Y and S. From the diagrams we can conclude that
1. Germany has a comparative advantage in Good Y
2. Germany has a comparative advantage in Good S
3. France has an absolute advantage in producing both goods Y and S
4. The opportunity cost ratios for both countries are the same and thus there are no potential gains from trade
Which one of the following types of import control would have a direct effect on decreasing imports by a specific amount?
1. An increase in import tariffs
2. Changes in import safety specifications
3. An increase in the number of import licences
4. A decrease in import quotas
In the diagram above, P1 is the world supply price for a product which is imported into a country. After a tariff is imposed on imports of the product, the world supply curve shifts upwards and the goods are imported at price P2. Which area represents the revenue to the government from the imposition of the tariff?
1. AGHB
2. ADCB
3. EAD
4. BCF
In the diagram above, P1 is the world supply price for a product which is imported into a country. After a tariff is imposed on imports of the product, the world supply curve shifts upwards and the goods are imported at price P2. Which area in the diagram represents the loss of consumer surplus due to the imposition of the tariff?
1. BCF
2. EAD
3. ADCB
4. EFBA
Which one of the following measures would reduce competition from abroad?
1. A reduction in tariffs
2. The elimination of existing import quotas
3. The removals of subsidies to domestic producers
4. A depreciation of the domestic currency
"The UK economy has a positive marginal propensity to import goods and services". This statement implies that,
1. as income rises, UK consumers tend to buy less imports
2. as income rises, UK consumers tend to buy more imports
3. as income falls, UK consumers tend to buy more imports
4. as income rises, UK consumers tend to increase their savings
In the context of international trade, the term "dumping" refers to
1. Exporting inferior products to developing countries
2. Exporting at a price below average total cost
3. Polluting international waters by tipping goods from freight tankers
4. Burning surplus output
If both countries specialise according to the principle of comparative advantage for the two goods W and X shown in the diagram above, then
1. the United States will export Good X and import Good W
2. the United States will import Good X and export Good W
3. the United States will import Good X and export Good W
4. Neither country can benefit from specialisation and trade
Both countries could gain from specialisation and trade using the example shown in the PPF diagrams above if trade takes place at the following terms of trade
1. 4 units of Good W are exchanged for 2 units of Good X
2. 5 units of Good W are exchanged for 1 unit of Good X
3. 2 units of Good W are exchanged for 2 units of Good X
4. 5 units of Good W are exchanged for 2 units of Good X

AS Economics: International Trade Economics

Economics Multiple-choice Quiz