Question 1

Explain why the government is often more responsive to producer interests than to consumer interests when it comes to the imposition of tariffs and quotas.

Accepted Answer

Government is generally more responsive

Question 2

Tariffs and quotas are often imposed when a government is more responsive to __________ interests,and the benefits of those trade restrictions are often __________.

Accepted Answer

A)  consumer; concentrated 
B)  consumer; widely dispersed 
C)  producer; concentrated 
D)  producer; widely dispersed 
A)  consumer; concentrated 
B)  consumer; widely dispersed 
C)  producer; concentrated 
D)  producer; widely dispersed

Question 3

International trade exists because countries

Accepted Answer

A)  can make themselves better off through trade. 
B)  want to be neighborly with each other. 
C)  want to be political allies. 
D)  want to improve diplomatic relations with each other. 
E)  want to avoid war with each other. 
A)  can make themselves better off through trade. 
B)  want to be neighborly with each other. 
C)  want to be political allies. 
D)  want to improve diplomatic relations with each other. 
E)  want to avoid war with each other.

Question 4

Exhibit 34-4
  
-Refer to Exhibit 34-4.Country 1 has a comparative advantage in the production of __________,and country 2 has a comparative advantage in the production of __________.

Accepted Answer

A)  good A; good B 
B)  good B; good A 
C)  both goods; neither good 
D)  neither good; both goods 
E)  neither good; neither good 
A)  good A; good B 
B)  good B; good A 
C)  both goods; neither good 
D)  neither good; both goods 
E)  neither good; neither good

Question 5

A country has a (an)__________ in the production of a good it produces at lower opportunity cost than another country.

Accepted Answer

A)  absolute advantage 
B)  specialization disadvantage 
C)  tariff-efficient advantage 
D)  infant-industry advantage 
E)  none of the above 
A)  absolute advantage 
B)  specialization disadvantage 
C)  tariff-efficient advantage 
D)  infant-industry advantage 
E)  none of the above

Question 6

Company Z is a U.S.company that is the first in this country to produce a good that is already produced in many foreign countries and sold in the United States.Most likely,the argument it will voice in its attempt to be protected from foreign competition is the __________ argument.

Accepted Answer

A)  anti-dumping 
B)  national-defense 
C)  job-creation 
D)  infant-industry 
E)  low-foreign-wages 
A)  anti-dumping 
B)  national-defense 
C)  job-creation 
D)  infant-industry 
E)  low-foreign-wages

Question 7

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 B.

Accepted Answer

A)  15 
B)  10 
C)  5 
D)  1 
A)  15 
B)  10 
C)  5 
D)  1

Question 8

A tariff raises the price of the product on which the tariff has been placed,decreases consumers' surplus,increases producers' surplus,and generates tariff revenue for the government.

Accepted Answer

A) True 
 B)False

Question 9

Consumers receive more consumers' surplus when tariffs exist than when they do not exist.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 34-1
  
-Refer to Exhibit 34-1.The opportunity cost of one unit of X in the Country A is

Accepted Answer

A)  1 unit of Y. 
B)  2 units of Y. 
C)  10 units of Y. 
D)  0.50 units of Y. 
A)  1 unit of Y. 
B)  2 units of Y. 
C)  10 units of Y. 
D)  0.50 units of Y.

Question 11

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,where imports are permitted,the world price is PW.If there is a policy change such that imports are prohibited,the price becomes PN,consumers' surplus equals __________ and producers' surplus equals __________.

Accepted Answer

A)  PNAB; PNBE 
B)  BCD; PNDE 
C)  PNAD; BCD 
D)  PNAD; PWBDE 
E)  none of the above 
A)  PNAB; PNBE 
B)  BCD; PNDE 
C)  PNAD; BCD 
D)  PNAD; PWBDE 
E)  none of the above

Question 12

Exhibit 34-5
  
-Refer to Exhibit 34-5.Country 1 has a comparative advantage in the production of __________,and country 2 has a comparative advantage in the production of __________.

Accepted Answer

A)  good A; good B 
B)  good B; good A 
C)  both goods; neither good 
D)  neither good; both goods 
E)  neither good; neither good 
A)  good A; good B 
B)  good B; good A 
C)  both goods; neither good 
D)  neither good; both goods 
E)  neither good; neither good

Question 13

It is necessary for government officials to analyze cost data to determine what their country should specialize in producing.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 34-9
  
-Refer to Exhibit 34-9.For country X,the opportunity cost of producing one unit of good B is __________ unit(s)of good A.

Accepted Answer

A)  3 
B)  1/10 
C)  1/2 
D)  1/3 
E)  10 
A)  3 
B)  1/10 
C)  1/2 
D)  1/3 
E)  10

Question 15

Producers' surplus is the difference between the price __________ receive for a good and the __________ price for which they would have __________ the good.

Accepted Answer

A)  sellers; maximum; sold 
B)  buyers; maximum; bought 
C)  sellers; minimum; sold 
D)  buyers; minimum; bought 
A)  sellers; maximum; sold 
B)  buyers; maximum; bought 
C)  sellers; minimum; sold 
D)  buyers; minimum; bought

Question 16

Arguments made against free trade include all of the following except

Accepted Answer

A)  national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. 
B)  infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. 
C)  dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. 
D)  free trade is inflationary and should be restricted in the domestic interest. 
E)  if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against. 
A)  national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. 
B)  infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries. 
C)  dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. 
D)  free trade is inflationary and should be restricted in the domestic interest. 
E)  if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against.

Question 17

The national defense argument has been used in the past to justify trade restrictions by firms in the peanut industry and the pottery industry.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that a tariff is imposed on imported cheese.This will have the effect of __________ the price of cheese,__________ consumers' surplus,and __________ producers' surplus.

Accepted Answer

A)  increasing; increasing; increasing 
B)  decreasing; decreasing; decreasing 
C)  increasing; increasing; decreasing 
D)  increasing; decreasing; increasing 
E)  decreasing; decreasing; increasing 
A)  increasing; increasing; increasing 
B)  decreasing; decreasing; decreasing 
C)  increasing; increasing; decreasing 
D)  increasing; decreasing; increasing 
E)  decreasing; decreasing; increasing

Question 19

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.As a result of the tariff,producers' surplus __________ by the area __________.

Accepted Answer

A)  rises; EBCF 
B)  falls; DBE 
C)  rises; FCG 
D)  falls; DBCG 
E)  none of the above 
A)  rises; EBCF 
B)  falls; DBE 
C)  rises; FCG 
D)  falls; DBCG 
E)  none of the above

Question 20

The answer is: "It allows the inhabitants of a country to consume at a level beyond its production possibilities frontier." What is the question?

Accepted Answer

A)  What do newly discovered resources do? 
B)  What does technology do? 
C)  What does specialization and international trade do? 
D)  What does specialization do? 
E)  a and b 
A)  What do newly discovered resources do? 
B)  What does technology do? 
C)  What does specialization and international trade do? 
D)  What does specialization do? 
E)  a and b

Exam 34: International Trade

Explain why the government is often more responsive to producer interests than to consumer interests when it comes to the imposition of tariffs and quotas.

Tariffs and quotas are often imposed when a government is more responsive to __________ interests,and the benefits of those trade restrictions are often __________.

International trade exists because countries

Exhibit 34-4 -Refer to Exhibit 34-4.Country 1 has a comparative advantage in the production of __________,and country 2 has a comparative advantage in the production of __________.

A country has a (an)__________ in the production of a good it produces at lower opportunity cost than another country.

Company Z is a U.S.company that is the first in this country to produce a good that is already produced in many foreign countries and sold in the United States.Most likely,the argument it will voice in its attempt to be protected from foreign competition is the __________ argument.

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 B.

A tariff raises the price of the product on which the tariff has been placed,decreases consumers' surplus,increases producers' surplus,and generates tariff revenue for the government.

Consumers receive more consumers' surplus when tariffs exist than when they do not exist.

Exhibit 34-1 -Refer to Exhibit 34-1.The opportunity cost of one unit of X in the Country A is

Exhibit 34-5 -Refer to Exhibit 34-5.Country 1 has a comparative advantage in the production of __________,and country 2 has a comparative advantage in the production of __________.

It is necessary for government officials to analyze cost data to determine what their country should specialize in producing.

Exhibit 34-9 -Refer to Exhibit 34-9.For country X,the opportunity cost of producing one unit of good B is __________ unit(s)of good A.

Producers' surplus is the difference between the price __________ receive for a good and the __________ price for which they would have __________ the good.

Arguments made against free trade include all of the following except

The national defense argument has been used in the past to justify trade restrictions by firms in the peanut industry and the pottery industry.

Suppose that a tariff is imposed on imported cheese.This will have the effect of __________ the price of cheese,__________ consumers' surplus,and __________ producers' surplus.

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.As a result of the tariff,producers' surplus __________ by the area __________.

The answer is: "It allows the inhabitants of a country to consume at a level beyond its production possibilities frontier." What is the question?

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

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

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

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Tariffs and quotas are often imposed when a government is more responsive to interests,and the benefits of those trade restrictions are often .

Exhibit 34-4 -Refer to Exhibit 34-4.Country 1 has a comparative advantage in the production of ,and country 2 has a comparative advantage in the production of .

Exhibit 34-5 -Refer to Exhibit 34-5.Country 1 has a comparative advantage in the production of ,and country 2 has a comparative advantage in the production of .

Producers' surplus is the difference between the price receive for a good and the price for which they would have __ the good.

Suppose that a tariff is imposed on imported cheese.This will have the effect of the price of cheese, consumers' surplus,and __ producers' surplus.

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.As a result of the tariff,producers' surplus by the area .