International Trade Exam 2 Save

INTERNATIONAL TRADE EXAM 2 WITH
CORRECT ANSWERS

If rthe rexpansion rof rthe rsize rof ran rindustry ris rresponsible rfor ra rdecline rin raverage
rcost, rthen r_______ rare rpresent.
a. rinternal reconomies rof rscale r
b. rexternal reconomies rof rscale r
c. rno reconomies rof rscale r
d. rNone rof rthe rabove r- rCORRECT✅✅b. rexternal reconomics rof rscale

Which rof rthe rfollowing ris ra rbasis rfor rtrade rin ra rmonopolistically rcompetitive rmarket? r
a. rscale reconomies r
b. rproduct rstandards r
c. rboth ra rand rb r
d. rnone rof rthe rabove r- rCORRECT✅✅c. rboth ra rand rb

In ra rmonopolistically rcompetitive rmarket, rif rcurrently rP r< rAC, rto rrestore rthe
requilibrium, rthe rnumber rof rvarieties rwill rhave rto r_______. rAs ra rresult rthe rprice rwill
r_______ rand raverage rcost rwill r________. r
a. rincrease; rincrease; rdecrease r
b. rincrease; rdecrease; rincrease r
c. rdecrease; rincrease; rdecrease r
d. rdecrease; rdecrease; rincrease r- rCORRECT✅✅c. rdecrease; rincrease; rdecrease

In ra rmonopolistically rcompetitive rmarket, ras rthe rmarket rsize rincreases, rthe rprice
rcurve r_______ rand rthe runit rcost rcurve r_______. r
a. rshifts rdown; rshifts rto rthe rright r
b. rshifts rup; rdoes rnot rshift r
c. rdoes rnot rshift; rshifts rto rthe rleft r
d. rNone rof rthe rabove r- rCORRECT✅✅a. rshifts rdown; rshifts rto rthe rright

In rthe rmonopolistic rcompetition rmodel rof rinternational rtrade, rwhen rtwo rcountries
rmove rfrom rautarky r(no rtrade) rto rfree rtrade, rthe rnumber rof rvarieties ravailable r(for
rconsumption) rin reach rcountry r________ rand rthe rnumber rof rvarieties rproduced rin
rthe rworld ras ra rwhole r________. r
a. rfalls; rfalls r
b. rfalls; rrises r
c. rrises; rfalls r
d. rrises; rrises r- rCORRECT✅✅d. rrises, rrises

, Which reffects ron rwelfare rof ra rcountry rare rpresent rwhen ra rlarge rcountry rlevies ra
rtariff ron rimports?
a. rproduction reffect rand rconsumption reffect r
b. rproduction reffect rand rterms rof rtrade reffect r
c. rconsumption reffect rand rterms rof rtrade reffect r
d. rproduction, rconsumption, rand rterms rof rtrade reffects r- rCORRECT✅✅d.
rproduction, rconsumption, rand rterms rof rtrade reffects


In rthe rideal rworld rof rfirst rbest, rin rwhich rof rthe rfollowing rcase rwill ra rcountry rnever
rgain rfrom ra rtariff? r
a. rA rsmall rcountry rlevying ra rsmall rtariff r
b. rA rlarge rcountry rlevying ra rsmall rtariff r
c. rBoth ra rand rb rabove r
d. rNone rof rthe rabove r- rCORRECT✅✅a. rA rsmall rcountry rlevying ra rsmall rtariff

Which rof rthe rfollowing ris ra rprinciple rof rGATT ror rWTO? r
a. rLiberalization rof rtrade r
b. rEstablishment rof rregional rtrading rareas r
c. rNeither ra rnor r
b rd. rBoth ra rand rb r- rCORRECT✅✅a. rLiberalization rof rtrade

Which rof rthe rfollowing ris rnot ran rexample rof ra rnon-tariff rbarrier? r
a. rQuota r
b. rVER r
c. rProduct rStandards r
d. rNone rof rthe rabove r- rCORRECT✅✅d. rNone rof rthe rabove

An rindustry rpollution rthat ris rnot rtaken rinto raccount rby rfirms. rWhich rof rthe rfollowing
rmust rbe rtrue rabout rsocial rand rprivate rcosts rand rbenefits rfor rthis rindustry rin rthe
rmarket requilibrium? r
a. rSMC r< rSMB rand rPMC r> rPMB r
b. rPMB r> rSMB rand rPMC r= rPMB r
c. rSMC r< rSMB rand rPMC r= rPMB r
d. rNone rof rthe rabove r- rCORRECT✅✅c. rSMC r< rSMB rand rPMC r= rPMB

Bhutan, ra rsmall rcountry, rhas rrecently rdoubled rits rtariffs rto rraise rmore rrevenues rfor
rthe rgovernment. rAs ra rresult, rit ris rcurrently rlosing ran restimate r$320 rmillion rdue rto
rtariffs. rHow rmuch rwas rBhutan rwas rleaving rbefore rthe rdoubling rof rthe rtariffs? r
a. r$1280 rmillion r
b. r$80 rmillion r
c. r$ r640 rmillion r
d rNot renough rinformation r- rCORRECT✅✅a. r$1280 rmillion

In rwhich rof rthe rfollowing rcase rwill rthe rresulting rtrade rbe rprimarily rintra-industry
rtrade? r
a. rThe rtrading rcountries rdiffer rin rendowments. r