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AP Trade practice

Total questions: 25

Worksheet time: 1hrs 15mins

Name
Class
Date
1.
In the graph shown, S is the original supply curve and S1 is the supply curve including an excise tax. What is the area that represents the tax revenue to the government?
a)
P1, P3, V, T
b)
P2, P4, R, Z
c)
P2, P4, X, U
d)
P3, V, Q2, 0
2.
The world price is Pw is equal to $100. When the economy moves from autarky to free trade, consumer surplus rises by area ___ and producer surplus falls by area ___.
a)
B+K+L;  B
b)
B+C+K+L;  B+C+K+L
c)
C+H+I;  B+C
d)
B+C+G+H+I+J+K+L;  B+C
3.
The world price is Pw is equal to $100. The government imposes a tariff of $20/calculator. Compared to free trade, the tariff leads to a deadweight loss equal to area ___.
a)
K+L
b)
G+H+I+J
c)
G+J
d)
There is no deadweight loss created
4.
In the accompanying graph, consumer surplus WITHOUT trade is equal to area ___.
a)
W+X+Y
b)
W
c)
Y
d)
W+X
5.
In the accompanying graph, consumer surplus WITH trade is equal to area ___.
a)
W+X+Y
b)
W
c)
Y
d)
W+X
6.
In the accompanying graph, producer surplus WITHOUT trade is equal to area ___.
a)
Y
b)
X+Y+Z
c)
W+X+Y
d)
X+Y
7.
In the accompanying graph, producer surplus WITH trade is equal to area ___.
a)
Y
b)
X+Y+Z
c)
W+X+Y
d)
X+Y
8.
In the accompanying graph, consumer surplus WITHOUT trade is equal to area ___.
a)
W+X+Y
b)
Z
c)
W+X+Z
d)
W
9.
In the accompanying graph, consumer surplus WITH trade is equal to area ___.
a)
W+X+Y
b)
Z
c)
W+X+Z
d)
W
10.
In the accompanying graph, producer surplus WITHOUT trade is equal to area ___.
a)
X+Y+Z
b)
W+X+Y
c)
X+Y
d)
Y
11.
In the accompanying graph, producer surplus WITH trade is equal to area ___.
a)
X+Y+Z
b)
W+X+Y
c)
X+Y
d)
Y
12.
The simplified production possibilities curves for country A and B are shown. Which one of the following statements is correct?
a)
Country A has the comparative advantage in both goods
b)
Country A has the comparative advantage in chairs & Country B has the comparative advantage in shirts
c)
Country B has the absolute advantage in shirts only
d)
Country A has the comparative advantage in shirts & Country B has the comparative advantage in chairs
13.
Based on the table provided, which one of the following statements is correct?
a)
Japan has the absolute advantage in producing cars
b)
Japan has the comparative advantage in producing cars
c)
The United States has the absolute advantage in producing both cars and computers
d)
The opportunity cost of producing a car in Japan is 1/2 a computer
14.
Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true?
a)
Sam has an absolute advantage in making blankets
b)
Sam has neither a comparative nor an absolute advantage in knitting sweaters or making blankets
c)
Sam has a comparative advantage in making blankets
d)
Sam has a comparative advantage in knitting sweaters
15.
If nations specialize according to their comparative advantage and engage in trade with each other, each nation can:
a)
Consume outside its production possibilities curve 
b)
Produce outside its production possibilities curve 
c)
Shift its production possibilities curve to the right 
d)
Produce more of all goods 
16.

If Spain can produce 10 tons of olives or 1 ton of olive oil and Italy can produce 5 tons of olives and 5 tons of olive oil, then

a)

Spain has the absolute advantage in producing olive oil

b)

Spain has the comparative advantage in producing olives.

c)

Italy has the absolute advantage in producing olives.

d)

Italy has the comparative advantage in producing olives.

e)

All of these.

17.

Countries will export goods and services that they can produce at lower costs. This is called —

a)

oligarchy

b)

monopoly

c)

comparative advantage

d)

capitalism

18.

When one country is good at producing in a particular commodity, they have a(n) _____ .

a)

Comparative advantage

b)

Complete specialization

c)

Absolute advantage

d)

None of the above

19.

Identify the basis of trade of the following table:

a)

Malaysia has comparative advantage in Cloth

b)

Malaysia has absolute advantage in Cloth production

c)

Japan has comparative advantage in Car

d)

Japan has absolute advantage in Cloth

20.

William's opportunity cost for producing 1 cake is

a)

1/2 pies

b)

2 pies

c)

2/3 pies

d)

3/2 pies

e)

1 pie

21.

A nation can have an absolute advantage without having a comparative advantage in production.

a)

True

b)

False

22.
This is a tax on imports that is used to increase price of foreign products and raise government revenue. 
a)
tariff
b)
quota
c)
subsidy
d)
embargo
23.
If nations limit trade in of clothing who will benefit?
a)
Domestic Consumers of clothing
b)
Domestic producers of clothing
c)
Foreign Producers of clothing 
d)
department stores who sell clothing
24.
Limit of the amount of a good that can be imported
a)
Subsidy
b)
Quota
c)
Exports
d)
Appreciation 
25.

Who has the ABSOLUTE advantage in making bracelets?

a)

Marie

b)

Isabella

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