Exam 7: Global Markets in Action

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. -In the figure above, international trade ________ total surplus in the United States by ________.

Lowering the tariff on imported ethanol

Who benefits from imports?

Reducing a tariff will ________ the domestic production of the good and ________ the total domestic consumption of the good.

The Smoot-Hawley Act was enacted in

Tariffs ________ a deadweight loss and import quotas ________ a deadweight loss .

A tariff imposed by the United States on Japanese cars ________ the price of cars in the United States and ________ the quantity of Japanese cars imported into the United States.

________ occurs when a foreign firm sells its exports at a lower price than it costs to produce the goods.

Suppose that elimination of tariffs on agricultural products means that 1,000 farm workers lose jobs that pay an average of $20,000 per year. At the same time, because of the importation of relatively cheaper foreign vegetables, 150 million consumers save $2 per year on their grocery bills. a) What is the total income lost by farm workers because of the free trade? b) What is the total dollar amount saved by all consumers combined? c) Which is greater, the lost income or the consumer savings? Do the benefits of free trade out-weigh the costs in this simple example? d) Which group is most likely to become politically involved over the issue of removing the tariffs, the farm workers or the consumers? Why?

A tariff hurts

A tariff will benefit

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. -In the figure above, with international trade the United States ________ million shirts per year.

A U.S. tariff imposed on items that can be produced more cheaply abroad

Usually the removal of trade barriers affecting a particular good benefits ________ people domestically, each of whom gains a ________.

Who benefits from a tariff on a good?

A tariff is

Who benefits from an import quota on a good?

A tax that is imposed by the importing country when an imported good crosses its international boundary is called

A tariff is imposed on a good. This will ________ the domestic producer surplus, ________ the domestic consumer surplus, and ________ total surplus in the home country.

When the United States exports a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus.