Question 1

Suppose the country of Mooland imposes a tariff on imported beef from the country of Aqualand. As a result of the tariff, the

Accepted Answer

A)  price of beef in Mooland falls. 
B)  quantity of beef exported by Mooland increases. 
C)  quantity of beef imported by Mooland decreases. 
D)  quantity of beef imported by Mooland increases. 
A)  price of beef in Mooland falls. 
B)  quantity of beef exported by Mooland increases. 
C)  quantity of beef imported by Mooland decreases. 
D)  quantity of beef imported by Mooland increases.

Question 2

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

Accepted Answer

Wage rates must be weighed against produ

Question 3

The U.S.-Colombia Trade Promotion Agreement was signed on November 22, 2006, in Washington, D.C. This comprehensive trade agreement eliminated tariffs and other barriers to goods and services. Colombia will immediately eliminate tariffs on wheat, barley, peanuts, and many other products in which Columbia does not have a comparative advantage. This policy means that the price of peanuts in Columbia will become

Accepted Answer

A)  equal to the free trade price. 
B)  lower than the free trade price. 
C)  higher than the price when a tariff was in place. 
D)  higher than the free trade price. 
A)  equal to the free trade price. 
B)  lower than the free trade price. 
C)  higher than the price when a tariff was in place. 
D)  higher than the free trade price.

Question 4

The United States has a comparative advantage in producing airplanes if

Accepted Answer

A)  it can produce them at a lower opportunity cost than can other nations. 
B)  it can produce them at a lower dollar cost than can other nations. 
C)  it can produce a larger quantity than can other nations. 
D)  it has a larger quantity of skilled workers than do other nations. 
A)  it can produce them at a lower opportunity cost than can other nations. 
B)  it can produce them at a lower dollar cost than can other nations. 
C)  it can produce a larger quantity than can other nations. 
D)  it has a larger quantity of skilled workers than do other nations.

Question 5

Some observers opposing free trade argue that when we buy shoes from Brazil, U.S. workers lose their jobs. The fact of the matter is that

Accepted Answer

A)  no U.S. worker has actually lost a job because of free trade. 
B)  most jobs lost because of free trade pay less than the poverty level. 
C)  free trade creates jobs in export industries. 
D)  the jobs lost are really in Brazil. 
A)  no U.S. worker has actually lost a job because of free trade. 
B)  most jobs lost because of free trade pay less than the poverty level. 
C)  free trade creates jobs in export industries. 
D)  the jobs lost are really in Brazil.

Question 6

A reason tariffs and quotas are imposed is that

Accepted Answer

A)  their costs are spread among many people and their benefits are concentrated. 
B)  their costs are concentrated and their benefits are spread among many people. 
C)  they create net benefits in the long run. 
D)  they reduce import dependence. 
A)  their costs are spread among many people and their benefits are concentrated. 
B)  their costs are concentrated and their benefits are spread among many people. 
C)  they create net benefits in the long run. 
D)  they reduce import dependence.

Question 7

Dumping occurs when a foreign firm sells its exports at a lower price than it costs to produce them.

Accepted Answer

A) True 
 B)False

Question 8

When considering rent seeking, which of the following is TRUE?

Accepted Answer

A)  The anti-free trade group generally will lobby more than the pro-free trade group. 
B)  The pro-free trade group generally will lobby more than the anti-free trade group. 
C)  Usually only the anti-free trade group is concerned about what is best for society at large. 
D)  Only the pro-free trade group is concerned about the government's revenue from tariffs. 
A)  The anti-free trade group generally will lobby more than the pro-free trade group. 
B)  The pro-free trade group generally will lobby more than the anti-free trade group. 
C)  Usually only the anti-free trade group is concerned about what is best for society at large. 
D)  Only the pro-free trade group is concerned about the government's revenue from tariffs.

Question 9

The Smoot-Hawley tariff triggered a trade war during the Great Depression of the 1930s.

Accepted Answer

A) True 
 B)False

Question 10

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Suppose the Brazilian government subsidizes the export of coffee by $0.42 per pound. Which of the following would be an outcome of this subsidy?

Accepted Answer

A)  Brazilian producers experience an increase in producer surplus. 
B)  Brazilian consumers experience an increase in consumer surplus. 
C)  Producers from the rest of the world experience a gain in producer surplus. 
D)  Brazilian coffee exports would decrease. 
A)  Brazilian producers experience an increase in producer surplus. 
B)  Brazilian consumers experience an increase in consumer surplus. 
C)  Producers from the rest of the world experience a gain in producer surplus. 
D)  Brazilian coffee exports would decrease.

Question 11

The current U.S. average tariff rate is

Accepted Answer

A)  less than 5 percent. 
B)  greater than 10 percent. 
C)  approximately 20 percent. 
D)  over 50 percent. 
A)  less than 5 percent. 
B)  greater than 10 percent. 
C)  approximately 20 percent. 
D)  over 50 percent.

Question 12

A tariff is a

Accepted Answer

A)  tax on an exported good or service. 
B)  tax on an imported good or service. 
C)  subsidy on an exported good. 
D)  subsidy on an imported good. 
A)  tax on an exported good or service. 
B)  tax on an imported good or service. 
C)  subsidy on an exported good. 
D)  subsidy on an imported good.

Question 13

Using calculations of the cost to Americans per job saved in protected industries, it can be concluded that

Accepted Answer

A)  import quotas are an efficient way to redistribute income. 
B)  each job saved is worth more than the cost imposed on consumers per job saved. 
C)  each job saved is worth less than the cost imposed on consumers per job saved. 
D)  tariffs are an efficient way to redistribute income to disadvantaged groups. 
A)  import quotas are an efficient way to redistribute income. 
B)  each job saved is worth more than the cost imposed on consumers per job saved. 
C)  each job saved is worth less than the cost imposed on consumers per job saved. 
D)  tariffs are an efficient way to redistribute income to disadvantaged groups.

Question 14

International trade is restricted because

Accepted Answer

A)  there is an uneven distribution of benefits and costs of free trade. 
B)  free trade creates an inefficient use of resources. 
C)  free trade leads to higher costs. 
D)  free trade stifles diversity and stability. 
A)  there is an uneven distribution of benefits and costs of free trade. 
B)  free trade creates an inefficient use of resources. 
C)  free trade leads to higher costs. 
D)  free trade stifles diversity and stability.

Question 15

Tariffs

Accepted Answer

A)  generate revenue for consumers. 
B)  generate revenue for the government. 
C)  encourage domestic consumers to buy more imports. 
D)  encourage domestic producers to produce less. 
A)  generate revenue for consumers. 
B)  generate revenue for the government. 
C)  encourage domestic consumers to buy more imports. 
D)  encourage domestic producers to produce less.

Question 16

Which of the following statements about U.S. international trade in 2011 is correct?

Accepted Answer

A)  The value of U.S. exports exceeded the value of U.S. imports. 
B)  The value of U.S. exports was about 33 percent of the value of total U.S. production. 
C)  The United States imported only goods. 
D)  The United States was the world's largest trader. 
A)  The value of U.S. exports exceeded the value of U.S. imports. 
B)  The value of U.S. exports was about 33 percent of the value of total U.S. production. 
C)  The United States imported only goods. 
D)  The United States was the world's largest trader.

Question 17

The most efficient way to encourage the growth of an infant industry is through

Accepted Answer

A)  a voluntary export restraint. 
B)  a tariff. 
C)  a subsidy. 
D)  an import quota. 
A)  a voluntary export restraint. 
B)  a tariff. 
C)  a subsidy. 
D)  an import quota.

Question 18

A tariff

Accepted Answer

A)  is a tax imposed on imported goods. 
B)  is a tax imposed on exported goods. 
C)  encourages worldwide specialization according to the principle of comparative advantage. 
D)  has no effect on prices paid by domestic consumers, even though it increases the revenue collected by domestic producers. 
A)  is a tax imposed on imported goods. 
B)  is a tax imposed on exported goods. 
C)  encourages worldwide specialization according to the principle of comparative advantage. 
D)  has no effect on prices paid by domestic consumers, even though it increases the revenue collected by domestic producers.

Question 19

Which of the following statements is true?

Accepted Answer

A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true. 
A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true.

Question 20

The reason that average labor costs are higher in the United States than in Haiti is that

Accepted Answer

A)  workers are more productive in the United States. 
B)  U.S. workers have a comparative advantage. 
C)  Haitian workers have a comparative advantage. 
D)  Haitian workers do not have union representation. 
A)  workers are more productive in the United States. 
B)  U.S. workers have a comparative advantage. 
C)  Haitian workers have a comparative advantage. 
D)  Haitian workers do not have union representation.

Exam 7: Global Markets in Action

Suppose the country of Mooland imposes a tariff on imported beef from the country of Aqualand. As a result of the tariff, the

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

The United States has a comparative advantage in producing airplanes if

Some observers opposing free trade argue that when we buy shoes from Brazil, U.S. workers lose their jobs. The fact of the matter is that

A reason tariffs and quotas are imposed is that

Dumping occurs when a foreign firm sells its exports at a lower price than it costs to produce them.

When considering rent seeking, which of the following is TRUE?

The Smoot-Hawley tariff triggered a trade war during the Great Depression of the 1930s.

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Suppose the Brazilian government subsidizes the export of coffee by $0.42 per pound. Which of the following would be an outcome of this subsidy?

The current U.S. average tariff rate is

A tariff is a

Using calculations of the cost to Americans per job saved in protected industries, it can be concluded that

International trade is restricted because

Tariffs

Which of the following statements about U.S. international trade in 2011 is correct?

The most efficient way to encourage the growth of an infant industry is through

A tariff

Which of the following statements is true?

The reason that average labor costs are higher in the United States than in Haiti is that

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

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