Question 1

The Smoot-Hawley Act introduced

Accepted Answer

A)  opportunities for expanding U.S. foreign trade. 
B)  the highest tariffs set by the United States in the last 80 years. 
C)  a framework promoting international free trade. 
D)  revenue tariffs as a major source of U.S. government revenues. 
A)  opportunities for expanding U.S. foreign trade. 
B)  the highest tariffs set by the United States in the last 80 years. 
C)  a framework promoting international free trade. 
D)  revenue tariffs as a major source of U.S. government revenues.

Question 2

When the United States exports a good, U.S. consumer surplus ________ and U.S. total surplus ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 3

Suppose sugar is exported from a nation. In the sugar market who does NOT benefit from the exports?

Accepted Answer

A)  domestic consumers 
B)  domestic producers 
C)  workers in the industry 
D)  foreign consumers 
A)  domestic consumers 
B)  domestic producers 
C)  workers in the industry 
D)  foreign consumers

Question 4

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. Who gains from this trade?

Accepted Answer

A)  European rice consumers gain from trade. 
B)  There is no gain from trade. 
C)  European rice producers gain from trade. 
D)  American rice consumers gain from trade. 
A)  European rice consumers gain from trade. 
B)  There is no gain from trade. 
C)  European rice producers gain from trade. 
D)  American rice consumers gain from trade.

Question 5

Tariffs ________ the domestic price of the good and import quotas ________ the domestic price of the good.

Accepted Answer

A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise 
A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise

Question 6

Agriculture Secretary Ed Schafer today announced that Chile's Livestock and Agricultural Service approved the U.S. inspection, control and certification systems for poultry, allowing these products to enter the Chilean market effective immediately. What is NOT an effect of this change in Chilean policy on the Chilean poultry market?

Accepted Answer

A)  Chile's tariff revenue will increase. 
B)  The quantity of poultry consumed in Chile will increase. 
C)  The quantity of Chilean imports will increase. 
D)  The price for poultry in Chile will decrease. 
A)  Chile's tariff revenue will increase. 
B)  The quantity of poultry consumed in Chile will increase. 
C)  The quantity of Chilean imports will increase. 
D)  The price for poultry in Chile will decrease.

Question 7

International trade arises from

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  importation duties. 
D)  the advantage of execution. 
A)  absolute advantage. 
B)  comparative advantage. 
C)  importation duties. 
D)  the advantage of execution.

Question 8

-The United States imports cheese from a variety of countries. The table above gives the domestic supply of, and demand for, cheese in the United States. The world price of cheese is $12 per pound, and trade is unrestricted.
a) How many pounds of cheese are consumed in the United States?
b) How many pounds of cheese are produced in the United States?
c) How many pounds of cheese are imported into the United States?
If a $3 per pound tariff is imposed,
d) How many pounds of cheese are consumed in the United States?
e) How many pounds of cheese are produced in the United States?
f) How many pounds of cheese are imported into the United States?
g) How much will the U.S. government collect in tariff revenue?
h) Who benefits from the tariff? Who loses?

Accepted Answer

a) 180,000 pounds of cheese are consumed

Question 9

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 ________ consumer surplus in the United States by ________.

Accepted Answer

A)  increases; $320 million 
B)  decreases; $192 million 
C)  increases; $192 million 
D)  decreases; $320 million 
A)  increases; $320 million 
B)  decreases; $192 million 
C)  increases; $192 million 
D)  decreases; $320 million

Question 10

If the United States imposes a tariff on imported steel, the tariff will

Accepted Answer

A)  raise the U.S. price of imported steel. 
B)  decrease the U.S. production of steel. 
C)  increase the total U.S. consumption of steel. 
D)  decrease employment in the U.S. steel industry. 
A)  raise the U.S. price of imported steel. 
B)  decrease the U.S. production of steel. 
C)  increase the total U.S. consumption of steel. 
D)  decrease employment in the U.S. steel industry.

Question 11

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

Accepted Answer

Governments use tariffs and nontariff ba

Question 12

An import quota on sugar

Accepted Answer

A)  increases the imports of sugar and lowers its price. 
B)  increases the imports of sugar and raises its price. 
C)  increases the demand for sugar and raises its price. 
D)  decreases the imports of sugar and raises its price. 
A)  increases the imports of sugar and lowers its price. 
B)  increases the imports of sugar and raises its price. 
C)  increases the demand for sugar and raises its price. 
D)  decreases the imports of sugar and raises its price.

Question 13

-The above figure shows the domestic supply of and domestic demand for an imported good. The world price is $15 per unit.
a) At the world price of $15 per unit, what is the domestic consumption and domestic production?
b) At the world price of $15 per unit, what is the quantity imported?
c) If the government imposes a tariff of $5 per unit, what is the domestic consumption and domestic production?
d) With the $5 per unit tariff, what is the quantity imported?
e) How much revenue does the government collect with a tariff of $5 per unit?

Accepted Answer

a) Domestic consumption is 8 million uni

Question 14

Which of the following is a reason why only limited attempts are made to compensate those who lose from free international trade?

Accepted Answer

A)  Free trade advocates consistently lobby to eliminate compensation. 
B)  It would be difficult to determine the extent to which someone's sufferings were because of free trade and not due to reasons under their own control. 
C)  No one loses in the from free trade in the long run. 
D)  None of the above answers are correct. 
A)  Free trade advocates consistently lobby to eliminate compensation. 
B)  It would be difficult to determine the extent to which someone's sufferings were because of free trade and not due to reasons under their own control. 
C)  No one loses in the from free trade in the long run. 
D)  None of the above answers are correct.

Question 15

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I. Low-wage foreigners are just as productive as U.S. workers.
II) U.S. workers have a comparative advantage in low-wage jobs.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II is correct. 
A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II is correct.

Question 16

The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realized when

Accepted Answer

A)  trade occurs and resources are reallocated within the two countries. 
B)  the two countries continue to produce the same quantities of wheat and coffee. 
C)  each country has an absolute advantage in one of the two commodities. 
D)  the demand curves in both countries shift inward. 
A)  trade occurs and resources are reallocated within the two countries. 
B)  the two countries continue to produce the same quantities of wheat and coffee. 
C)  each country has an absolute advantage in one of the two commodities. 
D)  the demand curves in both countries shift inward.

Question 17

The argument that protection ________.

Accepted Answer

A)  penalizes poor environmental standards is true 
B)  allows us to compete with cheap foreign wages is true 
C)  is necessary for infant industries is true 
D)  saves jobs is flawed 
A)  penalizes poor environmental standards is true 
B)  allows us to compete with cheap foreign wages is true 
C)  is necessary for infant industries is true 
D)  saves jobs is flawed

Question 18

Tariffs and import quotas both decrease the amount of a good consumed and raise the price paid by domestic residents for the good.

Accepted Answer

A) True 
 B)False

Question 19

Japan was accused of dumping in the steel industry within the United States when it

Accepted Answer

A)  negotiated an illegal agreement to raise prices with U.S. steel industries. 
B)  prohibited imports of U.S. steel into Japan. 
C)  sold steel in the United States at a price below its cost of production. 
D)  negotiated an illegal trade deal with Canada. 
A)  negotiated an illegal agreement to raise prices with U.S. steel industries. 
B)  prohibited imports of U.S. steel into Japan. 
C)  sold steel in the United States at a price below its cost of production. 
D)  negotiated an illegal trade deal with Canada.

Question 20

Which of the following statements concerning tariffs is NOT true?

Accepted Answer

A)  A tariff results in a deadweight loss. 
B)  A tariff creates revenue for the government. 
C)  A tariff decreases international trade. 
D)  A tariff leaves the price of imports unchanged. 
A)  A tariff results in a deadweight loss. 
B)  A tariff creates revenue for the government. 
C)  A tariff decreases international trade. 
D)  A tariff leaves the price of imports unchanged.

Exam 7: Global Markets in Action

The Smoot-Hawley Act introduced

When the United States exports a good, U.S. consumer surplus ________ and U.S. total surplus ________.

Suppose sugar is exported from a nation. In the sugar market who does NOT benefit from the exports?

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. Who gains from this trade?

Tariffs ________ the domestic price of the good and import quotas ________ the domestic price of the good.

International trade arises from

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 ________ consumer surplus in the United States by ________.

If the United States imposes a tariff on imported steel, the tariff will

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

An import quota on sugar

Which of the following is a reason why only limited attempts are made to compensate those who lose from free international trade?

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I. Low-wage foreigners are just as productive as U.S. workers. II) U.S. workers have a comparative advantage in low-wage jobs.

The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realized when

The argument that protection ________.

Tariffs and import quotas both decrease the amount of a good consumed and raise the price paid by domestic residents for the good.

Japan was accused of dumping in the steel industry within the United States when it

Which of the following statements concerning tariffs is NOT true?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

When the United States exports a good, U.S. consumer surplus and U.S. total surplus .

Tariffs the domestic price of the good and import quotas the domestic price of the good.

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 consumer surplus in the United States by .