Question 1

Which of the following is not a reason for international specialization?

Accepted Answer

A) some countries have educated, trained workers, while other countries have unskilled workers 
B) tastes and preferences tend to be different in different countries 
C) economies of scale can allow larger, specialized producers to operate at lower average cost 
D) mineral resources are often concentrated in particular countries 
E) the world price of a good is determined by the world supply and demand for it 
A) some countries have educated, trained workers, while other countries have unskilled workers 
B) tastes and preferences tend to be different in different countries 
C) economies of scale can allow larger, specialized producers to operate at lower average cost 
D) mineral resources are often concentrated in particular countries 
E) the world price of a good is determined by the world supply and demand for it

Question 2

An effective import quota is one that increases the amount of tariff revenues received.

Accepted Answer

A) True 
 B)False

Question 3

If a country has an absolute advantage in the production of every good, it cannot benefit from trade with other countries.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true concerning the impact of tariffs and quotas?

Accepted Answer

A) Tariffs raise the price of a good but quotas do not. 
B) Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus. 
C) Both tariffs and quotas increase the quantity demanded. 
D) The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product. 
E) The potential welfare loss is greater with tariffs than quotas. 
A) Tariffs raise the price of a good but quotas do not. 
B) Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus. 
C) Both tariffs and quotas increase the quantity demanded. 
D) The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product. 
E) The potential welfare loss is greater with tariffs than quotas.

Question 5

Exhibit 19-2   In Exhibit 19-2, the opportunity cost of a ton of rice in the United States is

Accepted Answer

A) 0 
B) 1/3 of a t-shirt 
C) 1/2 of a t-shirt 
D) 1 t-shirt 
E) 2 t-shirts 
A) 0 
B) 1/3 of a t-shirt 
C) 1/2 of a t-shirt 
D) 1 t-shirt 
E) 2 t-shirts

Question 6

Exhibit 19-5   If the country illustrated in Exhibit 19-5 is initially trading without restrictions at a world price of $1.00, the gain in producer surplus as a result of a tariff of $0.50 per unit is represented by area

Accepted Answer

A) c + h 
B) h 
C) c 
D) c + g 
E) g 
A) c + h 
B) h 
C) c 
D) c + g 
E) g

Question 7

Predatory dumping is the practice of

Accepted Answer

A) rejecting imports 
B) persistently selling a good in another country for a price lower than the world price 
C) persistently selling a good in another country for a price lower than the domestic price 
D) temporarily selling a good in another country for a price lower than the world price to drive out competing producers 
E) temporarily selling a good in another country for a price lower than the domestic price to drive out competing producers 
A) rejecting imports 
B) persistently selling a good in another country for a price lower than the world price 
C) persistently selling a good in another country for a price lower than the domestic price 
D) temporarily selling a good in another country for a price lower than the world price to drive out competing producers 
E) temporarily selling a good in another country for a price lower than the domestic price to drive out competing producers

Question 8

According to some economists, the protection granted to infant industries should be

Accepted Answer

A) terminated after one year. 
B) for new firms that eventually would develop significant economies of scale in their production processes 
C) restricted to firms that face little competition 
D) based on current absolute advantage 
E) permanent 
A) terminated after one year. 
B) for new firms that eventually would develop significant economies of scale in their production processes 
C) restricted to firms that face little competition 
D) based on current absolute advantage 
E) permanent

Question 9

The primary difference between an import tariff and an import quota is that

Accepted Answer

A) tariffs cause prices to rise, but quotas do not 
B) quotas cause prices to rise, but tariffs do not 
C) tariffs result in a net welfare loss, but quotas do not 
D) quotas result in a net welfare loss, but tariffs do not 
E) tariff revenues go to government, but quotas benefit those with the right to sell foreign goods domestically 
A) tariffs cause prices to rise, but quotas do not 
B) quotas cause prices to rise, but tariffs do not 
C) tariffs result in a net welfare loss, but quotas do not 
D) quotas result in a net welfare loss, but tariffs do not 
E) tariff revenues go to government, but quotas benefit those with the right to sell foreign goods domestically

Question 10

Exhibit 19-6   In Exhibit 19-6, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will be purchased in the United States?

Accepted Answer

A) 4, 000 
B) 6, 000 
C) 8, 000 
D) 10, 000 
E) 12, 000 
A) 4, 000 
B) 6, 000 
C) 8, 000 
D) 10, 000 
E) 12, 000

Question 11

Exhibit 19-6   In Exhibit 19-6, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

Accepted Answer

A) $4, 000 
B) $16, 000 
C) $20, 000 
D) $24, 000 
E) $48, 000 
A) $4, 000 
B) $16, 000 
C) $20, 000 
D) $24, 000 
E) $48, 000

Question 12

Exhibit 19-2   In Exhibit 19-2, the opportunity cost of 1 t-shirt in Costa Rica is

Accepted Answer

A) 0 
B) 1/40 ton of rice 
C) 3/4 ton of rice 
D) 1 ton of rice 
E) 2 tons of rice 
A) 0 
B) 1/40 ton of rice 
C) 3/4 ton of rice 
D) 1 ton of rice 
E) 2 tons of rice

Question 13

As a result of a tariff on an imported good,

Accepted Answer

A) domestic producers are better off because they sell more goods at the same price 
B) domestic producers are better off because they sell more goods at a higher price 
C) domestic producers are better off because they sell the same quantity of goods at a higher price 
D) domestic consumers are better off because there are more domestically produced goods available 
E) domestic consumers are neither better off nor worse off because imports do not change 
A) domestic producers are better off because they sell more goods at the same price 
B) domestic producers are better off because they sell more goods at a higher price 
C) domestic producers are better off because they sell the same quantity of goods at a higher price 
D) domestic consumers are better off because there are more domestically produced goods available 
E) domestic consumers are neither better off nor worse off because imports do not change

Question 14

Exhibit 19-2
   In Exhibit 19-2, the United States has an absolute advantage in the production of both rice and t-shirts.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 19-3   In Exhibit 19-3, if the world price of corn is $6 and there are no trade restrictions, the United States will

Accepted Answer

A) produce 7, 000, consume 3, 000, and import 4, 000 bushels of corn 
B) produce 7, 000, consume 3, 000, and export 4, 000 bushels of corn 
C) have an excess demand for corn 
D) be a net importer of corn 
E) not produce any corn 
A) produce 7, 000, consume 3, 000, and import 4, 000 bushels of corn 
B) produce 7, 000, consume 3, 000, and export 4, 000 bushels of corn 
C) have an excess demand for corn 
D) be a net importer of corn 
E) not produce any corn

Question 16

Exhibit 19-10   In Exhibit 19-10 the domestic demand for sugar is represented by D and the domestic supply is represented by S and the world price of sugar is $.13 per pound with a domestic tariff of $.02 per pound of sugar.This tariff will increase producer surplus by

Accepted Answer

A) $50, 000 
B) $170, 000 
C) $230, 000 
D) $300, 000 
E) $360, 000 
A) $50, 000 
B) $170, 000 
C) $230, 000 
D) $300, 000 
E) $360, 000

Question 17

Which of the following is not correct regarding dumping?

Accepted Answer

A) In the country where products are dumped, consumer surplus grows as a result of the dumping. 
B) Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C) Critics of dumping recommend applying a tariff as the correct antidumping measure. 
D) A major difficulty with dumping by firms in other countries is that it drives up prices to the domestic consumer. 
E) Predatory dumping is often aimed at driving domestic producers out of business. 
A) In the country where products are dumped, consumer surplus grows as a result of the dumping. 
B) Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C) Critics of dumping recommend applying a tariff as the correct antidumping measure. 
D) A major difficulty with dumping by firms in other countries is that it drives up prices to the domestic consumer. 
E) Predatory dumping is often aimed at driving domestic producers out of business.

Question 18

As a result of international trade,

Accepted Answer

A) the gain to producers in the importing country exceeds the loss to consumers in the importing country 
B) the loss to producers in the importing country is less than the gain to consumers in the importing country caused by a decrease in price 
C) the loss to producers in the importing country exceeds the gain to consumers in the importing country caused by an increase in price 
D) the loss to producers in the importing country is equal to the gain to consumers in the importing country because price increases and equilibrium quantity decreases 
E) the loss to producers in the importing country is equal to the gain to consumers in the importing country because price decreases and equilibrium quantity increases 
A) the gain to producers in the importing country exceeds the loss to consumers in the importing country 
B) the loss to producers in the importing country is less than the gain to consumers in the importing country caused by a decrease in price 
C) the loss to producers in the importing country exceeds the gain to consumers in the importing country caused by an increase in price 
D) the loss to producers in the importing country is equal to the gain to consumers in the importing country because price increases and equilibrium quantity decreases 
E) the loss to producers in the importing country is equal to the gain to consumers in the importing country because price decreases and equilibrium quantity increases

Question 19

For which of the following nations does international trade account for the largest percentage of GDP?

Accepted Answer

A) Japan 
B) The Netherlands 
C) Germany 
D) Great Britain 
E) the United States 
A) Japan 
B) The Netherlands 
C) Germany 
D) Great Britain 
E) the United States

Question 20

As a result of a tariff on imports, consumers in the importing country

Accepted Answer

A) purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of fewer total goods than without the tariff 
B) purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of more total goods than without the tariff 
C) purchase more domestically produced goods and more foreign goods, resulting in the consumption of fewer total goods than without the tariff 
D) purchase fewer domestically produced goods and fewer foreign goods, resulting in the consumption of more total goods than without the tariff 
E) cease importing any goods at all 
A) purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of fewer total goods than without the tariff 
B) purchase more domestically produced goods and fewer foreign goods, resulting in the consumption of more total goods than without the tariff 
C) purchase more domestically produced goods and more foreign goods, resulting in the consumption of fewer total goods than without the tariff 
D) purchase fewer domestically produced goods and fewer foreign goods, resulting in the consumption of more total goods than without the tariff 
E) cease importing any goods at all

Exam 19: International Trade

Which of the following is not a reason for international specialization?

An effective import quota is one that increases the amount of tariff revenues received.

If a country has an absolute advantage in the production of every good, it cannot benefit from trade with other countries.

Which of the following is true concerning the impact of tariffs and quotas?

Exhibit 19-2 In Exhibit 19-2, the opportunity cost of a ton of rice in the United States is

Exhibit 19-5 If the country illustrated in Exhibit 19-5 is initially trading without restrictions at a world price of $1.00, the gain in producer surplus as a result of a tariff of $0.50 per unit is represented by area

Predatory dumping is the practice of

According to some economists, the protection granted to infant industries should be

The primary difference between an import tariff and an import quota is that

Exhibit 19-6 In Exhibit 19-6, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will be purchased in the United States?

Exhibit 19-6 In Exhibit 19-6, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how much tariff revenue will the United States government collect?

Exhibit 19-2 In Exhibit 19-2, the opportunity cost of 1 t-shirt in Costa Rica is

As a result of a tariff on an imported good,

Exhibit 19-2 In Exhibit 19-2, the United States has an absolute advantage in the production of both rice and t-shirts.

Exhibit 19-3 In Exhibit 19-3, if the world price of corn is $6 and there are no trade restrictions, the United States will

Exhibit 19-10 In Exhibit 19-10 the domestic demand for sugar is represented by D and the domestic supply is represented by S and the world price of sugar is $.13 per pound with a domestic tariff of $.02 per pound of sugar.This tariff will increase producer surplus by

Which of the following is not correct regarding dumping?

As a result of international trade,

For which of the following nations does international trade account for the largest percentage of GDP?

As a result of a tariff on imports, consumers in the importing country

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Finance

Economic Development

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