Question 1

Tariffs and import quotas tend to:

Accepted Answer

A) increase the quantity of imports as compared to free trade. 
B) generate government revenue. 
C) increase consumer surplus as compared to free trade. 
D) reduce total surplus as compared to free trade. 
A) increase the quantity of imports as compared to free trade. 
B) generate government revenue. 
C) increase consumer surplus as compared to free trade. 
D) reduce total surplus as compared to free trade.

Question 2

Use the following to answer question:  
-(Figure: The Market for Roses)Use Figure: The Market for Roses.Assume that PA is the autarky price and PW is the world price.Producer surplus with international trade would be area:

Accepted Answer

A) X + Y + Z. 
B) W + X + Y. 
C) X + Y. 
D) Y. 
A) X + Y + Z. 
B) W + X + Y. 
C) X + Y. 
D) Y.

Question 3

Use the following to answer question:  
-(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from PW to PT and domestic consumer surplus _____ to _____.

Accepted Answer

A) falls;F + L 
B) falls;F + G + I + J + K + L 
C) rises;F + L 
D) rises;F + G + I + J + K + L 
A) falls;F + L 
B) falls;F + G + I + J + K + L 
C) rises;F + L 
D) rises;F + G + I + J + K + L

Question 4

The World Trade Organization:

Accepted Answer

A) oversees trade agreements. 
B) is an example of a trade agreement. 
C) includes all nations. 
D) was established before World War II. 
A) oversees trade agreements. 
B) is an example of a trade agreement. 
C) includes all nations. 
D) was established before World War II.

Question 5

The World Trade Organization:

Accepted Answer

A) is the primary member of the North American Free Trade Agreement. 
B) resolves disputes between member nations arising from alleged violations of previous agreements dealing with international trade. 
C) is a world government with its own army. 
D) lends money to developing countries. 
A) is the primary member of the North American Free Trade Agreement. 
B) resolves disputes between member nations arising from alleged violations of previous agreements dealing with international trade. 
C) is a world government with its own army. 
D) lends money to developing countries.

Question 6

On a production possibility frontier,opportunity cost is:

Accepted Answer

A) the decrease in the output of one good when the output of the other good is increased. 
B) the rate at which people are willing to exchange goods as determined by demand and supply. 
C) the dollar cost of the good given up to get another good. 
D) independent of the slope of the curve. 
A) the decrease in the output of one good when the output of the other good is increased. 
B) the rate at which people are willing to exchange goods as determined by demand and supply. 
C) the dollar cost of the good given up to get another good. 
D) independent of the slope of the curve.

Question 7

Which trade pattern is BEST explained by increasing returns?

Accepted Answer

A) Honduras exports bananas to the United States,and the United States exports airplanes to Honduras. 
B) Pakistan exports clothing to the United States,and the United States exports airplanes to Pakistan. 
C) Japan exports cars to the United States,and the United States exports airplanes to Japan. 
D) Mexico exports beef to the United States,and the United States exports airplanes to Mexico. 
A) Honduras exports bananas to the United States,and the United States exports airplanes to Honduras. 
B) Pakistan exports clothing to the United States,and the United States exports airplanes to Pakistan. 
C) Japan exports cars to the United States,and the United States exports airplanes to Japan. 
D) Mexico exports beef to the United States,and the United States exports airplanes to Mexico.

Question 8

Use the following to answer question:  
-(Figure: The Domestic Supply and Demand for SUVs in the United States)Use Figure: The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.Calculate the loss of consumer surplus.

Accepted Answer

A) $41,250 million 
B) $30,000 million 
C) $52,500 million 
D) $22,250 million 
A) $41,250 million 
B) $30,000 million 
C) $52,500 million 
D) $22,250 million

Question 9

Use the following to answer question:  
-(Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.In the United States,the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

Accepted Answer

A) 80,000 
B) 60,000 
C) 40,000 
D) 20,000 
A) 80,000 
B) 60,000 
C) 40,000 
D) 20,000

Question 10

If a nation exports a good when the economy is opened to trade,relative to the autarky price,the domestic price of the good will _____ and domestic consumption will _____.

Accepted Answer

A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall 
A) rise;rise 
B) rise;fall 
C) fall;rise 
D) fall;fall

Question 11

Suppose the United States auctioned off all import quotas,the auctions were perfectly competitive,and the government received the revenues from the auction.In this case,the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.

Accepted Answer

A) less than 
B) greater than 
C) equal to 
D) in the case of demand being elastic,greater than 
A) less than 
B) greater than 
C) equal to 
D) in the case of demand being elastic,greater than

Question 12

Use the following to answer question:  
-(Figure: The Domestic Supply and Demand for SUVs in the United States)Use Figure: The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.The United States would _____ SUVs.

Accepted Answer

A) import 6 million 
B) export 6 million 
C) export 2 million 
D) import 2 million 
A) import 6 million 
B) export 6 million 
C) export 2 million 
D) import 2 million

Question 13

Use the following to answer question:  
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada.Both nations can produce cars and lumber.If these nations trade,Canada has the comparative advantage in _____ and should trade _____ to the United States in exchange for _____.

Accepted Answer

A) cars;cars;lumber. 
B) lumber;lumber;cars 
C) lumber;cars;lumber 
D) cars;lumber;cars 
A) cars;cars;lumber. 
B) lumber;lumber;cars 
C) lumber;cars;lumber 
D) cars;lumber;cars

Question 14

Use the following to answer question:  
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Tahoe has an absolute advantage in producing:

Accepted Answer

A) wheat only. 
B) cattle only. 
C) both wheat and cattle. 
D) neither wheat nor cattle. 
A) wheat only. 
B) cattle only. 
C) both wheat and cattle. 
D) neither wheat nor cattle.

Question 15

Use the following to answer question:  
-(Figure: The Market for Tea in Sri Lanka)Use Figure: The Market for Tea in Sri Lanka.In autarky,the price is P1.When the economy is opened to trade,the price rises to PW and consumer surplus _____ to _____.

Accepted Answer

A) falls;F 
B) falls;F + G 
C) rises;F + G + H + I 
D) rises;G + H + I 
A) falls;F 
B) falls;F + G 
C) rises;F + G + H + I 
D) rises;G + H + I

Question 16

Use the following to answer question:  
-(Figure: The Market for Laptops)Use Figure: The Market for Laptops.Assume that S and D are the domestic supply and demand curves and the world price is PW.Identify the area of consumer surplus when a tariff raises the domestic price from the world price to PT.

Accepted Answer

A) A + B 
B) A + B + C + D + E + F 
C) A + C + G 
D) D + F 
A) A + B 
B) A + B + C + D + E + F 
C) A + C + G 
D) D + F

Question 17

Use the following to answer question:  
-(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.Indonesia has an absolute advantage in producing:

Accepted Answer

A) microchips. 
B) tires. 
C) both microchips and tires. 
D) neither microchips nor tires. 
A) microchips. 
B) tires. 
C) both microchips and tires. 
D) neither microchips nor tires.

Question 18

Use the following to answer question:  
-(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.If the world price equals $100 and there is free trade,what is the gain in consumer surplus?

Accepted Answer

A) $5 million 
B) $2.5 million 
C) $2.25 million 
D) $750,000 
A) $5 million 
B) $2.5 million 
C) $2.25 million 
D) $750,000

Question 19

Use the following to answer question:  
-(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Accepted Answer

A) $140. 
B) $120. 
C) $110. 
D) $100. 
A) $140. 
B) $120. 
C) $110. 
D) $100.

Question 20

Use the following to answer question:  
-(Table: Production Possibilities for Machinery and Petroleum)Use Table: Production Possibilities for Machinery and Petroleum.The opportunity cost in the United States of producing 30 units of petroleum is _____ units of machinery.

Accepted Answer

A) 60 
B) 80 
C) 100 
D) 120 
A) 60 
B) 80 
C) 100 
D) 120

Tariffs and import quotas tend to:

Use the following to answer question: -(Figure: The Market for Roses)Use Figure: The Market for Roses.Assume that P_A is the autarky price and P_W is the world price.Producer surplus with international trade would be area:

Use the following to answer question: -(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from P_W to P_T and domestic consumer surplus _ to _.

The World Trade Organization:

The World Trade Organization:

On a production possibility frontier,opportunity cost is:

Which trade pattern is BEST explained by increasing returns?

Use the following to answer question: -(Figure: The Domestic Supply and Demand for SUVs in the United States)Use Figure: The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.Calculate the loss of consumer surplus.

Use the following to answer question: -(Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.In the United States,the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

If a nation exports a good when the economy is opened to trade,relative to the autarky price,the domestic price of the good will _ and domestic consumption will _.

Suppose the United States auctioned off all import quotas,the auctions were perfectly competitive,and the government received the revenues from the auction.In this case,the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.

Use the following to answer question: -(Figure: The Domestic Supply and Demand for SUVs in the United States)Use Figure: The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.The United States would _____ SUVs.

Use the following to answer question: -(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Tahoe has an absolute advantage in producing:

Use the following to answer question: -(Figure: The Market for Tea in Sri Lanka)Use Figure: The Market for Tea in Sri Lanka.In autarky,the price is P₁.When the economy is opened to trade,the price rises to P_W and consumer surplus _ to _.

Use the following to answer question: -(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.Indonesia has an absolute advantage in producing:

Use the following to answer question: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Use the following to answer question: -(Table: Production Possibilities for Machinery and Petroleum)Use Table: Production Possibilities for Machinery and Petroleum.The opportunity cost in the United States of producing 30 units of petroleum is _____ units of machinery.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 8: International Trade

Tariffs and import quotas tend to:

Use the following to answer question: -(Figure: The Market for Roses)Use Figure: The Market for Roses.Assume that PA is the autarky price and PW is the world price.Producer surplus with international trade would be area:

Use the following to answer question: -(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from PW to PT and domestic consumer surplus _____ to _____.

The World Trade Organization:

The World Trade Organization:

On a production possibility frontier,opportunity cost is:

Which trade pattern is BEST explained by increasing returns?

Use the following to answer question: -(Figure: The Domestic Supply and Demand for SUVs in the United States)Use Figure: The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.Calculate the loss of consumer surplus.

Use the following to answer question: -(Table: The Production Possibilities for Tractors and Crude Oil)Use Table: The Production Possibilities for Tractors and Crude Oil.In the United States,the opportunity cost of producing 40 tractors is _____ barrels of crude oil.

If a nation exports a good when the economy is opened to trade,relative to the autarky price,the domestic price of the good will _____ and domestic consumption will _____.

Suppose the United States auctioned off all import quotas,the auctions were perfectly competitive,and the government received the revenues from the auction.In this case,the deadweight loss from a quota would be _____ the deadweight loss from an equivalent tariff.

Use the following to answer question: -(Figure: The Domestic Supply and Demand for SUVs in the United States)Use Figure: The Domestic Supply and Demand for SUVs in the United States.Suppose the world price equals $50,000 and there is free trade.The United States would _____ SUVs.

Use the following to answer question: -(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.Tahoe has an absolute advantage in producing:

Use the following to answer question: -(Figure: The Market for Tea in Sri Lanka)Use Figure: The Market for Tea in Sri Lanka.In autarky,the price is P1.When the economy is opened to trade,the price rises to PW and consumer surplus _____ to _____.

Use the following to answer question: -(Figure: The Market for Laptops)Use Figure: The Market for Laptops.Assume that S and D are the domestic supply and demand curves and the world price is PW.Identify the area of consumer surplus when a tariff raises the domestic price from the world price to PT.

Use the following to answer question: -(Figure: The Production Possibilities for Two Countries)Use Figure: The Production Possibilities for Two Countries.Indonesia has an absolute advantage in producing:

Use the following to answer question: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that Sd represents the domestic supply curve and Dd represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals:

Use the following to answer question: -(Table: Production Possibilities for Machinery and Petroleum)Use Table: Production Possibilities for Machinery and Petroleum.The opportunity cost in the United States of producing 30 units of petroleum is _____ units of machinery.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Use the following to answer question: -(Figure: The Market for Roses)Use Figure: The Market for Roses.Assume that P_A is the autarky price and P_W is the world price.Producer surplus with international trade would be area:

Use the following to answer question: -(Figure: A Tariff on Oranges in South Africa)Use Figure: A Tariff on Oranges in South Africa.When the government imposes a tariff on imported oranges,the price of oranges in South Africa rises from P_W to P_T and domestic consumer surplus _ to _.

If a nation exports a good when the economy is opened to trade,relative to the autarky price,the domestic price of the good will _ and domestic consumption will _.

Use the following to answer question: -(Figure: The Market for Tea in Sri Lanka)Use Figure: The Market for Tea in Sri Lanka.In autarky,the price is P₁.When the economy is opened to trade,the price rises to P_W and consumer surplus _ to _.

Use the following to answer question: -(Figure: The Market for Beats by Dre)Use Figure: The Market for Beats by Dre.Assume that S_d represents the domestic supply curve and D_d represents the domestic demand curve.In the market for Beats by Dre,the autarky price equals: