Question 1

Tariffs raise the price of imported goods,but quotas rarely do.

Accepted Answer

A) True 
 B)False

Question 2

Producers' surplus is the difference between the price

Accepted Answer

A)  sellers receive for a good and the maximum price they would have paid for the good. 
B)  sellers receive for a good and the minimum price for which they could have sold the good. 
C)  buyers pay for a good and the maximum price they would have paid for the good. 
D)  buyers pay for a good and the minimum price for which they would have sold the good. 
A)  sellers receive for a good and the maximum price they would have paid for the good. 
B)  sellers receive for a good and the minimum price for which they could have sold the good. 
C)  buyers pay for a good and the maximum price they would have paid for the good. 
D)  buyers pay for a good and the minimum price for which they would have sold the good.

Question 3

If countries 1 and 2 produce only two goods,A and B,and they have the same opportunity cost for the production of good A (and thus good B),then

Accepted Answer

A)  each country will specialize in the production of one good and engage in trade. 
B)  neither country will specialize in the production of a good, but both will engage in trade. 
C)  one country will specialize in the production of a good, and both will engage in trade. 
D)  neither country will specialize in the production of a good, and there will be no incentive for trade. 
A)  each country will specialize in the production of one good and engage in trade. 
B)  neither country will specialize in the production of a good, but both will engage in trade. 
C)  one country will specialize in the production of a good, and both will engage in trade. 
D)  neither country will specialize in the production of a good, and there will be no incentive for trade.

Question 4

Which of the following statements is false?

Accepted Answer

A)  Consumers receive more consumers' surplus when tariffs do not exist. 
B)  Producers receive more producers' surplus when tariffs do exist. 
C)  A tariff results in a net loss to society. 
D)  With a tariff, the gains to the winners are less than the losses to the losers. 
E)  none of the above 
A)  Consumers receive more consumers' surplus when tariffs do not exist. 
B)  Producers receive more producers' surplus when tariffs do exist. 
C)  A tariff results in a net loss to society. 
D)  With a tariff, the gains to the winners are less than the losses to the losers. 
E)  none of the above

Question 5

Exhibit 34-11
  
-Refer to Exhibit 34-11.PW is the price that exists in the market before a tariff is imposed and PW ? T is the price that exists in the market after a tariff is imposed.Because of the tariff,consumers' surplus falls and producers' surplus rises by the area

Accepted Answer

A)  BCFE. 
B)  BCGE. 
C)  DBCG. 
D)  DBCF. 
E)  none of the above 
A)  BCFE. 
B)  BCGE. 
C)  DBCG. 
D)  DBCF. 
E)  none of the above

Question 6

The effects of tariffs and quotas are: a(n)__________ in the prices of imported goods to domestic consumers,and a(n)__________ in imports.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 7

The act of selling goods abroad at a price below their cost and below the price charged in the domestic market is called

Accepted Answer

A)  dumping. 
B)  slumping. 
C)  export manipulation. 
D)  constraining. 
E)  none of the above 
A)  dumping. 
B)  slumping. 
C)  export manipulation. 
D)  constraining. 
E)  none of the above

Question 8

Exhibit 34-6
  
-Refer to Exhibit 34-6.The opportunity cost of 1 unit of wine in terms of units of cheese is __________ for country A.

Accepted Answer

A)  1/2 
B)  2 
C)  10 
D)  5 
E)  none of the above 
A)  1/2 
B)  2 
C)  10 
D)  5 
E)  none of the above

Question 9

Which of the following is an example of a trade restriction?

Accepted Answer

A)  quotas 
B)  tariffs 
C)  dumping 
D)  a and b 
E)  a, b, and c 
A)  quotas 
B)  tariffs 
C)  dumping 
D)  a and b 
E)  a, b, and c

Question 10

The difference between the amount a seller receives for a good and the lowest amount for which he would sell the good is called

Accepted Answer

A)  producers' surplus. 
B)  windfall gain. 
C)  consumers' surplus. 
D)  excess profit. 
A)  producers' surplus. 
B)  windfall gain. 
C)  consumers' surplus. 
D)  excess profit.

Question 11

Exhibit 34-10
  
-Refer to Exhibit 34-10. Who has the comparative advantage when it comes to mowing lawns?

Accepted Answer

A)  Danielle 
B)  Jason 
C)  neither Jason nor Danielle 
D)  both Danielle and Jason 
A)  Danielle 
B)  Jason 
C)  neither Jason nor Danielle 
D)  both Danielle and Jason

Question 12

Exhibit 34-3
  
-Refer to Exhibit 34-3.The world price is PW.If a tariff is imposed,the price rises to PW + T.Because of the tariff,government collects tariff revenues equal to the area of

Accepted Answer

A)  1. 
B)  1 + 2. 
C)  3. 
D)  1 + 2 + 4. 
E)  1 + 3. 
A)  1. 
B)  1 + 2. 
C)  3. 
D)  1 + 2 + 4. 
E)  1 + 3.

Question 13

Exhibit 34-7
  
-Refer to Exhibit 34-7. Assume that the current price of X is $25 (which includes a $10 tariff on imports of product X). The government collects tariff revenue on product X in the amount of

Accepted Answer

A)  $100 
B)  $200 
C)  $250 
D)  $300 
E)  There is not enough information to answer this question. 
A)  $100 
B)  $200 
C)  $250 
D)  $300 
E)  There is not enough information to answer this question.

Question 14

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 34-8
  
-Refer to Exhibit 34-8.Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports).Americans purchase __________ million tons of sugar from U.S.producers and import __________ million tons of sugar from abroad.

Accepted Answer

A)  15; 10 
B)  15; 20 
C)  10; 5 
D)  10; 15 
E)  10; 20 
A)  15; 10 
B)  15; 20 
C)  10; 5 
D)  10; 15 
E)  10; 20

Question 16

Exhibit 34-2
  
-Refer to Exhibit 34-2.The U.S.demand and supply for a good are shown.Under a policy of free trade,the world price is PW.If there is a policy change such that imports are prohibited,the price becomes PN,U.S.consumers are worse off if imports are __________; specifically,their consumers' surplus changes by area __________.

Accepted Answer

A)  prohibited; PWABD 
B)  permitted; PWDE 
C)  prohibited; PNBCPW 
D)  permitted; PN BDPW 
E)  none of the above 
A)  prohibited; PWABD 
B)  permitted; PWDE 
C)  prohibited; PNBCPW 
D)  permitted; PN BDPW 
E)  none of the above

Question 17

Exhibit 34-12
  
-Refer to Exhibit 34-12.PW is the price that exists in a free world market.With the imposition of a quota that limits imports to Q4 - Q3,consumers lose more than producers and importers gain.The area of net loss is represented by

Accepted Answer

A)  LGK + JHI. 
B)  KGHJ. 
C)  GCH + JHI. 
D)  LGK. 
E)  none of the above 
A)  LGK + JHI. 
B)  KGHJ. 
C)  GCH + JHI. 
D)  LGK. 
E)  none of the above

Question 18

A tariff is a

Accepted Answer

A)  tax imposed on domestic producers of export goods. 
B)  legal limit on the amount of a good that can be imported. 
C)  tax imposed on imported goods. 
D)  legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country. 
A)  tax imposed on domestic producers of export goods. 
B)  legal limit on the amount of a good that can be imported. 
C)  tax imposed on imported goods. 
D)  legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country.

Question 19

Exhibit 34-3
  
-Refer to Exhibit 34-3.The world price is PW.If a tariff is imposed,the price rises to PW + T.Because of the tariff,producers' surplus is __________ by an amount equal to the area of __________.

Accepted Answer

A)  increased; 1 + 2 
B)  decreased; 1 
C)  increased; 3 + 4 
D)  increased; 1 
E)  decreased; 3 
A)  increased; 1 + 2 
B)  decreased; 1 
C)  increased; 3 + 4 
D)  increased; 1 
E)  decreased; 3

Question 20

The infant industry argument for trade protectionism holds that

Accepted Answer

A)  new industries sometimes need a protective environment in which to grow so that they can compete with older, more established foreign competitors. 
B)  foreign competitors are often viewed as "infants" by large U.S. firms. 
C)  tariffs are often preferred to quotas. 
D)  quotas raise prices more than tariffs raise prices. 
E)  a and c 
A)  new industries sometimes need a protective environment in which to grow so that they can compete with older, more established foreign competitors. 
B)  foreign competitors are often viewed as "infants" by large U.S. firms. 
C)  tariffs are often preferred to quotas. 
D)  quotas raise prices more than tariffs raise prices. 
E)  a and c

Exam 34: International Trade

Tariffs raise the price of imported goods,but quotas rarely do.

Producers' surplus is the difference between the price

If countries 1 and 2 produce only two goods,A and B,and they have the same opportunity cost for the production of good A (and thus good B),then

Which of the following statements is false?

Exhibit 34-11 -Refer to Exhibit 34-11.PW is the price that exists in the market before a tariff is imposed and PW ? T is the price that exists in the market after a tariff is imposed.Because of the tariff,consumers' surplus falls and producers' surplus rises by the area

The effects of tariffs and quotas are: a(n)__________ in the prices of imported goods to domestic consumers,and a(n)__________ in imports.

The act of selling goods abroad at a price below their cost and below the price charged in the domestic market is called

Exhibit 34-6 -Refer to Exhibit 34-6.The opportunity cost of 1 unit of wine in terms of units of cheese is __________ for country A.

Which of the following is an example of a trade restriction?

The difference between the amount a seller receives for a good and the lowest amount for which he would sell the good is called

Exhibit 34-10 -Refer to Exhibit 34-10. Who has the comparative advantage when it comes to mowing lawns?

Exhibit 34-3 -Refer to Exhibit 34-3.The world price is PW.If a tariff is imposed,the price rises to PW + T.Because of the tariff,government collects tariff revenues equal to the area of

Exhibit 34-7 -Refer to Exhibit 34-7. Assume that the current price of X is $25 (which includes a $10 tariff on imports of product X). The government collects tariff revenue on product X in the amount of

One of the arguments in favor of trade restrictions is the foreign export subsidies argument.

Exhibit 34-8 -Refer to Exhibit 34-8.Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports).Americans purchase __________ million tons of sugar from U.S.producers and import __________ million tons of sugar from abroad.

Exhibit 34-12 -Refer to Exhibit 34-12.PW is the price that exists in a free world market.With the imposition of a quota that limits imports to Q4 - Q3,consumers lose more than producers and importers gain.The area of net loss is represented by

A tariff is a

Exhibit 34-3 -Refer to Exhibit 34-3.The world price is PW.If a tariff is imposed,the price rises to PW + T.Because of the tariff,producers' surplus is __________ by an amount equal to the area of __________.

The infant industry argument for trade protectionism holds that

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

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Money and the Economy

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Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

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Consumer Choice: Maximizing Utility and Behavioral Economics

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Perfect Competition

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Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

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Market Failure: Externalities, Public Goods, and Asymmetric Information

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The Economic Case For and Against Government: Five Topics Considered

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Agriculture: Problems, Policies, and Unintended Effects

Filters

Exhibit 34-11 -Refer to Exhibit 34-11.P_W is the price that exists in the market before a tariff is imposed and P_W ? T is the price that exists in the market after a tariff is imposed.Because of the tariff,consumers' surplus falls and producers' surplus rises by the area

The effects of tariffs and quotas are: a(n) in the prices of imported goods to domestic consumers,and a(n) in imports.

Exhibit 34-3 -Refer to Exhibit 34-3.The world price is P_W.If a tariff is imposed,the price rises to P_W + T.Because of the tariff,government collects tariff revenues equal to the area of

Exhibit 34-8 -Refer to Exhibit 34-8.Assume that the current price of sugar in the United States is $300 per ton (which includes a $100 per ton tariff on sugar imports).Americans purchase million tons of sugar from U.S.producers and import million tons of sugar from abroad.

Exhibit 34-12 -Refer to Exhibit 34-12.PW is the price that exists in a free world market.With the imposition of a quota that limits imports to Q₄- Q₃,consumers lose more than producers and importers gain.The area of net loss is represented by

Exhibit 34-3 -Refer to Exhibit 34-3.The world price is P_W.If a tariff is imposed,the price rises to P_W + T.Because of the tariff,producers' surplus is by an amount equal to the area of .