International Economics, 8e (Husted/Melvin) Tutorial 1 and 2 Chapter 1 An Introduction to International Trade 1.

1 Multiple-Choice Questions 1) Countries of the world differ in terms of their A) geographic size. B) population size. C) standards of living. D) All of the a ove. !) "he difference etween a countr#$s %ross &ational 'roduct (%&') and its %ross Domestic product (%D') is that A) %&' refers to production within the nation while %D' refers to production # domestic factors no matter where the# are located. B) %&' is alwa#s igger than %D'. C) %D' refers to production within the nation while %&' refers to production # domestic factors no matter where the# are located. D) "wo of the a ove are true. )) 'er capita %&' is defined as a countr#$s %&' divided # its A) population. B) la or force. C) capitalists. D) &one of the a ove. *) +hich of the following statements is false, A) -icher countries tend to e found in &orth America. +estern /urope. and 0apan. B) Countries with large populations tend to e rich. C) %rowth of per capita %&' tends to e 1uite sta le a out 1.2-) percent per #ear in industrialized countries. D) 3ver the past several decades. growth of per capita %&' tends to e higher on average in industrialized countries than in low or middle-income countries. 2) "he ratio of a countr#$s e4ports to its total output (%&' or %D') A) is 5nown as the inde4 of openness. B) provides a rough measure of the importance of international trade to that econom#. C) if calculated for the 6nited 7tates would e 1uite low. D) All of the a ove . 8) +hich of the following statements is false, A) Between 19:; and !;;8. the inde4 of openness has risen for most countries. B) 7ince 192;. international trade has een growing faster than the growth of world output. C) A countr# cannot e a leading world e4porter without a high inde4 of openness. D) "wo of the a ove are true

<) Barriers to trade A) include government policies such as tariffs and 1uotas. B) have een falling with technological improvements in transportation and communication. C) have risen since +orld +ar == as man# countries have imposed higher tariffs. D) "wo of the a ove are true. :) +hich of the following is true, A) Much of the trade of the /uropean 6nion (/6) countries is with /6 countries. B) =ndustrialized countries tend to trade relativel# little and largel# with developing countries. C) Developing countries in Africa and 7outh America tend to trade the most and largel# with themselves. D) All of the a ove are true. 9) "he leading trading partner of the 6nited 7tates is A) Canada. B) 0apan. C) %erman#. D) Me4ico. 1;) +hich of the following statements is true, A) Countries tend to trade e4tensivel# with their neigh ors. B) "he 6nited 7tates is an important trading partner for man# countries. C) "he largest amount of international trade occurs etween industrialized countries. D) All of the a ove are true. 11) "he most commonl# traded product ( # value) in recent #ears has een A) automo iles. B) wheat. C) televisions. stereos. and >C-s. D) steel International Economics, 8e (Husted/Melvin) Chapter 2 Tools of Analysis for International Trade Models !.1 Multiple-Choice Questions 1) ???????? anal#sis # economists refers to the attempt to answer 1uestions such as what are the effects of a ta4 on production and consumption decisions. A) 'ositive B) &egative C) &ormative D) =nvestigative !) ???????? anal#sis # economists refers to the attempt to answer 1uestions such as should a ta4 e imposed. A) 'ositive B) &egative C) &ormative D) =nvestigative )) /conomists use general e1uili rium models of an econom# to e4plain

A) consumption levels. B) production levels. C) relative prices. D) All of the a ove. *) =f individuals have mone# illusion then the# A) thin5 that mone# is worthless. B) ignore the effects on their income or wealth of some price changes in the econom#. C) the# ase their production and consumption decisions on relative rather than a solute prices. D) Both B and C.

Answer the 1uestion(s) elow ased on the following diagram.

2) -efer to the figure a ove. "he relative price of 7 (in terms of ") is A) !. B) 1@!. C) 2;;. D) 1;;;. 8) -efer to the figure a ove. "he relative price of " (in terms of 7) is A) !. B) 1@!. C) 2;;. D) 1; <) -efer to the figure a ove. =f the relative price of 7 were to increase. then the price line would A) shift out in a parallel fashion. B) shift in in a parallel fashion. C) ecome steeper. D) ecome flatter. :) -efer to the figure a ove. =f the relative price of " were to increase. then the price line would A) shift out in a parallel fashion. B) shift in a parallel fashion. C) ecome steeper. D) ecome flatter. 9) =f a countr# has a owed out (concave to the origin) production possi ilit# frontier. then production is said to e su Aect to A) constant opportunit# costs. B) decreasing opportunit# costs. C) first increasing and then decreasing opportunit# costs. D) increasing opportunit# costs. 1;) =f a countr# has a straight (downward sloping) production possi ilities frontier. then production is said to e su Aect to A) constant opportunit# costs. B) decreasing opportunit# costs. C) first increasing and then decreasing opportunit# costs. D) increasing opportunit# costs. 11) =ndifference curves are downward sloping ecause A) when some of one good is ta5en awa# the consumer must e compensated with more of the other. B) higher prices mean less 1uantit# demanded. C) higher indifference curves mean higher utilit#. D) Both A and B. 1!) An indifference curve A) is a locus of undles of goods such that each good in ever# undle #ields e1ual satisfaction.

B) is a locus of undles of goods such that the consumer is indifferent etween each good in ever# undle. C) is a locus of undles of goods such that the consumer is indifferent etween each of the undles. D) All of the a ove. 1)) 6sing communit# indifference curves to reflect tastes of the communit# A) is a simple e4tension of indifference curve anal#sis ecause people are so different. B) cannot usuall# e done ecause the communit# ma# have inconsistent tastes even though its residents do not. C) is a simple e4tension of indifference curve anal#sis if people are all ali5e. D) Both B and C. 1*) =n autar5#. when a communit# ma4imizes its standard of living. its consumption point is A) elow the production possi ilit# frontier. B) on the production possi ilit# frontier. C) a ove the production possi ilit# frontier. D) can$t tell without more information. 12) =n autar5# e1uili rium. A) production e1uals consumption. B) e4ports e1ual imports. C) there is no trade. D) All of the a ove.