WHALES Economics 30 on 30: International Trade

Country X and country Y both produce rice and tables. Half of their resources are used to produce rice and the other half to produce tables. The resulting output of each product is given in the table shown.

What can be concluded from the table?

A Country X has a comparative advantage in the production of both goods.

B Country X has a comparative advantage in the production of rice.

C Country Y has a comparative advantage in the production of both goods.

D Country Y has a comparative advantage in the production of rice.

• A

• B

• C

• D

What best describes a country’s terms of trade?

A the difference between the volume of its exports and its imports

B the average price of its exports divided by the average price of its imports

C the total value of its exports divided by the total value of its imports

D the volume of its exports divided by the volume of its imports

• A

• B

• C

• D

The table shows the number of biscuits and cakes that can be produced by four workers in an hour.

Who has the greatest comparative advantage in producing biscuits?

A Laura

B Mo

C Nathan

D Omar

• A

• B

• C

• D

The diagram shows the effect of the United States (US) imposing a tariff on the import of steel in 2018.

• A

• B

• C

• D

Compared with Pakistan, Germany has a higher output of pharmaceuticals per unit of resources used. What could explain this?

A the existence of floating exchange rates

B the law of absolute advantage

C the Marshall–Lerner condition

D the terms of trade

• A

• B

• C

• D

The diagram shows the effect of removing a tariff on imports of good X into country Y.

• A

• B

• C

• D

A country’s terms of trade changed from 100 to 95. What is most likely to have caused this change?

A a depreciation of the country’s currency

B a reduction in import tariffs

C a rise in the price of exported goods

D an improvement in the balance of trade

• A

• B

• C

• D

The diagram shows Australia’s terms of trade per quarter from Q2, 2014 to Q1, 2017.In which period did Australia’s terms of trade decline and then improve?

A Q2, 2014 to Q4, 2014

B Q1, 2015 to Q3, 2015

C Q4, 2015 to Q2, 2016

D Q3, 2016 to Q1, 2017

• A

• B

• C

• D

The table shows the amount of good X or the amount of good Y that can be produced by country R and country T if each uses all of their resources. What can be concluded from the table?

A Country R has an absolute advantage in producing good Y and a comparative advantage in producing good X.

B Country R has an absolute advantage in producing good X and a comparative advantage in producing good Y.

C Country T has an absolute advantage in producing good X and a comparative advantage in producing good Y.

D Country T has an absolute advantage in producing good Y and a comparative advantage in producing good X.

• A

• B

• C

• D

When will the imposition of a tariff by a country on the goods and services of its major trading partners reduce the country’s expenditure on imports?

A when the income elasticity of demand for imports is greater than 1

B when the price elasticity of demand for imports is greater than 1

C when the price elasticity of demand for imports is less than 1

D when the price elasticity of supply of imports is greater than 1

• A

• B

• C

• D