Question 1

A country opens up to trade.In an import industry,

Accepted Answer

A) domestic producers lose and domestic consumers gain. 
B) domestic consumers lose and domestic producers gain. 
C) the government loses and domestic consumers gain. 
D) domestic producers lose and the government gains. 
E) none of the above. 
A) domestic producers lose and domestic consumers gain. 
B) domestic consumers lose and domestic producers gain. 
C) the government loses and domestic consumers gain. 
D) domestic producers lose and the government gains. 
E) none of the above.

Question 2

When an import quota is imposed,the gap between the domestic price and the price received in the exporting country is captured by

Accepted Answer

A) consumers in the importing country. 
B) the domestic producers of the good. 
C) the government of the importing country. 
D) foreign exporters. 
E) the importers of the good. 
A) consumers in the importing country. 
B) the domestic producers of the good. 
C) the government of the importing country. 
D) foreign exporters. 
E) the importers of the good.

Question 3

Table 31.2.1
Canada's Market for Widgets
   
Refer to the table below to answer the following questions.
-Table 31.2.1 shows the Canadian supply of and demand for widgets.Widgets are available on the world market for $7.Canadian widget producers convince the government to protect the domestic industry from cheap imports.If the Canadian government sets an import quota of 8 million widgets,the resulting price of a widget in Canada will be ________,and domestic production will be ________.

Accepted Answer

A) $6;40 million 
B) $7;36 million 
C) $8;32 million 
D) $9;28 million 
E) $10;32 million 
A) $6;40 million 
B) $7;36 million 
C) $8;32 million 
D) $9;28 million 
E) $10;32 million

Question 4

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. 
E) none of the above. 
A) a voluntary export restraint. 
B) a tariff. 
C) a subsidy. 
D) an import quota. 
E) none of the above.

Question 5

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

Accepted Answer

A) a few;little 
B) a few;lot 
C) many;little 
D) many;lot 
E) We can't determine the relative benefits from the imposition of trade barriers. 
A) a few;little 
B) a few;lot 
C) many;little 
D) many;lot 
E) We can't determine the relative benefits from the imposition of trade barriers.

Question 6

When the Canadian government imposes a tariff ________.

Accepted Answer

A) Canadian consumers gain and Canadian producers lose, and the gain exceeds the loss 
B) the tariff revenue earned by the government is a social loss 
C) a social loss occurs because increased domestic production could have been obtained at a lower cost as an import 
D) Canadian producers lose 
E) A and B are both correct 
A) Canadian consumers gain and Canadian producers lose, and the gain exceeds the loss 
B) the tariff revenue earned by the government is a social loss 
C) a social loss occurs because increased domestic production could have been obtained at a lower cost as an import 
D) Canadian producers lose 
E) A and B are both correct

Question 7

The winners from a tariff on imports are

Accepted Answer

A) producers and government. 
B) producers only. 
C) consumers only. 
D) consumers, producers, and government. 
E) government only. 
A) producers and government. 
B) producers only. 
C) consumers only. 
D) consumers, producers, and government. 
E) government only.

Question 8

Compared to the situation before international trade,after Canada exports a good,production in Canada ________ and consumption in Canada ________.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
E) increases;does not change

Question 9

A difference between a quota and a tariff is that

Accepted Answer

A) a tariff generates a higher price than does an import quota. 
B) a tariff generates a greater reduction in exports than does an import quota. 
C) an import quota increases profits of domestic producers more than a tariff. 
D) the government collects revenue from a tariff but does not collect revenue from an import quota. 
E) an import quota creates a social loss and a tariff does not. 
A) a tariff generates a higher price than does an import quota. 
B) a tariff generates a greater reduction in exports than does an import quota. 
C) an import quota increases profits of domestic producers more than a tariff. 
D) the government collects revenue from a tariff but does not collect revenue from an import quota. 
E) an import quota creates a social loss and a tariff does not.

Question 10

An import quota is a

Accepted Answer

A) tariff imposed on goods that are dumped in the country. 
B) law that prevents ecologically damaging goods from being imported into a country. 
C) market-imposed balancing factor that keeps prices of imports and exports in equilibrium. 
D) government-imposed restriction on the quantity of a specific good that can be imported. 
E) tax in an international market. 
A) tariff imposed on goods that are dumped in the country. 
B) law that prevents ecologically damaging goods from being imported into a country. 
C) market-imposed balancing factor that keeps prices of imports and exports in equilibrium. 
D) government-imposed restriction on the quantity of a specific good that can be imported. 
E) tax in an international market.

Question 11

Refer to the figure below to answer the following questions.
   
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve.The world price is $20 per shirt.Canada imposes a tariff on imported shirts of $4 per shirt.
Figure 31.2.1
-Refer to Figure 31.2.1,the tariff ________ the domestic production of shirts in Canada by ________ per year.

Accepted Answer

A) increases;8 million 
B) decreases;16 million 
C) increases;4 million 
D) decreases;8 million 
E) increases;24 million 
A) increases;8 million 
B) decreases;16 million 
C) increases;4 million 
D) decreases;8 million 
E) increases;24 million

Question 12

The proposition that protection is necessary to allow an infant industry to grow into a mature industry so that it can compete in world markets is the ________.

Accepted Answer

A) infant-maturity argument 
B) infant-industry argument 
C) new industry proposition 
D) growth proposition 
E) dynamic comparative advantage argument 
A) infant-maturity argument 
B) infant-industry argument 
C) new industry proposition 
D) growth proposition 
E) dynamic comparative advantage argument

Question 13

The infant industry argument is based on the idea of

Accepted Answer

A) global comparative advantage. 
B) global absolute advantage. 
C) tariff maximization. 
D) learning-by-doing. 
E) tariff minimization. 
A) global comparative advantage. 
B) global absolute advantage. 
C) tariff maximization. 
D) learning-by-doing. 
E) tariff minimization.

Question 14

Canada has a comparative advantage in producing airplanes if

Accepted Answer

A) it can produce them at a lower dollar cost than another country. 
B) it can produce a larger quantity than another country. 
C) it has a larger quantity of skilled workers than another country. 
D) it can produce them at a higher opportunity cost than another country. 
E) it can produce them at a lower opportunity cost than another country. 
A) it can produce them at a lower dollar cost than another country. 
B) it can produce a larger quantity than another country. 
C) it has a larger quantity of skilled workers than another country. 
D) it can produce them at a higher opportunity cost than another country. 
E) it can produce them at a lower opportunity cost than another country.

Question 15

Table 31.2.1
Canada's Market for Widgets
   
Refer to the table below to answer the following questions.
-Table 31.2.1 shows the Canadian supply of and demand for widgets.Widgets are available on the world market for $7.If the Canadian government imposes a tariff of $1,the domestic selling price will be ________ and quantity bought will be ________.

Accepted Answer

A) $6;48 million 
B) $7;44 million 
C) $8;16 million 
D) $8;24 million 
E) $8;40 million 
A) $6;48 million 
B) $7;44 million 
C) $8;16 million 
D) $8;24 million 
E) $8;40 million

Question 16

Refer to the figure below to answer the following questions.
   
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve.Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
Figure 31.1.2
-In Figure 31.1.2,with international trade ________ helicopters per year are produced in Canada.

Accepted Answer

A) 360 
B) 480 
C) 720 
D) 240 
E) 600 
A) 360 
B) 480 
C) 720 
D) 240 
E) 600

Question 17

Canada has a comparative advantage in producing hardwood if the Canadian price of hardwood before international trade is ________ the world price.

Accepted Answer

A) equal to 
B) greater than 
C) not comparable to 
D) at least double 
E) less than 
A) equal to 
B) greater than 
C) not comparable to 
D) at least double 
E) less than

Question 18

Offshoring occurs when a firm in Canada

Accepted Answer

A) hires foreign labour and produces in other countries. 
B) buys finished goods, components, or services from other firms in other countries. 
C) hires Canadian labour and produces in Canada. 
D) buys finished goods, components, or services from other firms in Canada. 
E) Both A and B are correct. 
A) hires foreign labour and produces in other countries. 
B) buys finished goods, components, or services from other firms in other countries. 
C) hires Canadian labour and produces in Canada. 
D) buys finished goods, components, or services from other firms in Canada. 
E) Both A and B are correct.

Question 19

Goods and services that we buy from other countries are our

Accepted Answer

A) balance of payments. 
B) exports. 
C) imports. 
D) terms of trade. 
E) comparative goods and services. 
A) balance of payments. 
B) exports. 
C) imports. 
D) terms of trade. 
E) comparative goods and services.

Question 20

Dumping occurs when a foreign firm ________.

Accepted Answer

A) pollutes international waters 
B) disposes of waste material internationally 
C) sells inferior output to foreigners 
D) sells its exports at a lower price than its cost of production 
E) sells its output at a lower price in a foreign country than in the country where it produces the good 
A) pollutes international waters 
B) disposes of waste material internationally 
C) sells inferior output to foreigners 
D) sells its exports at a lower price than its cost of production 
E) sells its output at a lower price in a foreign country than in the country where it produces the good

Exam 31:International Trade Policy

A country opens up to trade.In an import industry,

When an import quota is imposed,the gap between the domestic price and the price received in the exporting country is captured by

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

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

When the Canadian government imposes a tariff ________.

The winners from a tariff on imports are

Compared to the situation before international trade,after Canada exports a good,production in Canada ________ and consumption in Canada ________.

A difference between a quota and a tariff is that

An import quota is a

The proposition that protection is necessary to allow an infant industry to grow into a mature industry so that it can compete in world markets is the ________.

The infant industry argument is based on the idea of

Canada has a comparative advantage in producing airplanes if

Canada has a comparative advantage in producing hardwood if the Canadian price of hardwood before international trade is ________ the world price.

Offshoring occurs when a firm in Canada

Goods and services that we buy from other countries are our

Dumping occurs when a foreign firm ________.

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

Filters

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

Compared to the situation before international trade,after Canada exports a good,production in Canada and consumption in Canada .