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Post-test
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1

Refer to the graph below.
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We can conclude from the diagram that:
A)Islandia has a comparative advantage in both goods.
B)Ricardia has an absolute advantage in both goods.
C)Ricardia has a comparative advantage in manufacturing and Islandia has a comparative advantage in agriculture.
D)Ricardia has a comparative advantage in agriculture and Islandia has a comparative advantage in manufacturing.
2

All of the following are included in the arm embargoes against Libya except:
A)prohibitions against flights to and from Libya.
B)prohibitions against technical assistance to any Libyan pilot, flight engineer, or maintenance personnel.
C)prohibitions against terrorist camps in Libya.
D)prohibitions against financing, extending credit, or advancing funds directly or indirectly to Libya.
3

One reason trade restrictions exist is that:
A)workers can be easily shifted from one industry to another.
B)workers cannot be easily shifted from one industry to another.
C)the long-run gains from free trade are small relative to the short-run costs.
D)the short-run gains from free trade are small relative to the long-run costs.
4

A free trade association is a group of countries that allows free trade among its members and, as a group, puts up common barriers against all other countries' goods.
A)True
B)False
5

The introduction of a tariff on widgets reduces:
A)both widget imports and widget exports.
B)widget exports but not widget imports.
C)widget imports but not widget exports.
D)neither widget imports nor widget exports.
6

Refer to the table below.
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In this example:
A)there are gains from trade for Botswana.
B)there are gains from trade for Zimbabwe.
C)there are gains from trade for both countries.
D)there are no possible gains from trade.
7

A quota:
A)increases both domestic production and domestic prices.
B)increases domestic production and reduces domestic prices.
C)reduces domestic production and increases domestic prices.
D)reduces both domestic production and domestic prices.
8

If the primary purpose of a tariff is to completely eliminate foreign competition, it will be expected to:
A)raise either a large or a small amount of revenue depending on the magnitude of the tariff imposed.
B)raise a relatively large amount of tax revenue.
C)raise an amount of revenue equal to the amount of the tariff multiplied by the volume of exports.
D)raise a relatively small amount of tax revenue.
9

Strategic bargaining:
A)always reduces the number of trade restrictions.
B)always increases the number of trade restrictions.
C)may increase the number of trade restrictions if it is successful.
D)may reduce the number of trade restrictions if it is successful.
10

Assume that in Canada the opportunity cost of producing 1 television set is 2 bushels of wheat. Assume that in the U.S. the opportunity cost of producing 1 bushel of wheat is 2 television sets. All other things being equal:
A)Canada should import both televisions and wheat.
B)Canada should import wheat and export televisions.
C)the U.S. should import wheat and export televisions.
D)the U.S. should import both televisions and wheat.







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