Countries usually impose restrictions on free foreign trade to...

• Protect foreign producers

• Protect foreign consumers

• Protect domestic producers

• Protect domestic consumers

If a country allows trade and the domestic price of a good is higher than the world price:

• The country will become an exporter of the good.

• The country will become an importer of the good.

• The country will neither import nor export.

• Additional information about demand is needed to determine whether the country will export or import the good.

When a country allows for trade and becomes an exporter of the good, which of the following would NOT be true?

• The price paid by the domestic consumer of the good increases

• The price received by the domestic producers of the good increases

• The losses of domestic consumers exceed the gains of domestic producers

• The gains of domestic producers exceed the losses of domestic consumers

If Brazil has a comparative advantage in producing rubber, and trade in rubber is allowed:

• Brazil will become an importer of rubber

• Brazil will become an exporter of rubber

• Brazil could become either an exporter or importer

• It is impossible to determine whether Brazil will become an importer or an exporter of rubber without additional information about rubber prices

Which of the following is an argument for restricting trade?

• Trade restrictions make Americans better off

• Trade restrictions increase economic efficiency

• Trade restrictions are necessary for economic growth

• Trade restrictions are necessary for increasing purchasing power.

A country that has a lower opportunity cost of producing a good:

• Has a comparative advantage.

• Can produce the good using fewer resources than another country.

• Requires fewer labor hours to produce the good.

• All of the answers are correct.

If one country can produce a good with fewer resources than another country, this is called:

• Specialisation.

• Geographic advantage.

• Comparative advantage.

• Absolute advantage.