Question 1

In the case of declining industries,wage subsidies or special tax breaks that decline over time:

Accepted Answer

A) can be more efficient than tariffs. 
B) are permanent import restrictions. 
C) can result in increasing shocks in the economy. 
D) equal or exceed the direct welfare loss from tariffs. 
E) result from diseconomies of scale. 
A) can be more efficient than tariffs. 
B) are permanent import restrictions. 
C) can result in increasing shocks in the economy. 
D) equal or exceed the direct welfare loss from tariffs. 
E) result from diseconomies of scale.

Question 2

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the tariff revenue collected by the United States government is _____.

Accepted Answer

A) $4,000 
B) $16,000 
C) $20,000 
D) $24,000 
E) $48,000 
A) $4,000 
B) $16,000 
C) $20,000 
D) $24,000 
E) $48,000

Question 3

The following graph shows the market equilibrium for corn in the United States.If the world price of corn is $2 and there are no trade restrictions,the United States will:

Accepted Answer

A) produce 3,000 bushels of corn,consume 7,000 bushels of corn,and import 4,000 bushels of corn. 
B) produce 3,000 bushels of corn,consume 7,000 bushels of corn,and export 4,000 bushels of corn. 
C) have an excess supply of corn. 
D) produce 7,000 bushels of corn. 
E) produce 5,000 bushels of corn,consume 7,000 bushels of corn,and import 2,000 bushels of corn. 
A) produce 3,000 bushels of corn,consume 7,000 bushels of corn,and import 4,000 bushels of corn. 
B) produce 3,000 bushels of corn,consume 7,000 bushels of corn,and export 4,000 bushels of corn. 
C) have an excess supply of corn. 
D) produce 7,000 bushels of corn. 
E) produce 5,000 bushels of corn,consume 7,000 bushels of corn,and import 2,000 bushels of corn.

Question 4

The basis of the benefits of specialization is:

Accepted Answer

A) comparative advantage. 
B) absolute advantage. 
C) the size of the country. 
D) identical production costs between two countries. 
E) agreeable terms of trade. 
A) comparative advantage. 
B) absolute advantage. 
C) the size of the country. 
D) identical production costs between two countries. 
E) agreeable terms of trade.

Question 5

The following table shows per-day production data of rice and T-shirts for two countries,Cambria and Bodoni.Which of the following is true in such a case?
Table 19.1
?
$$\begin{array} { | c | c | c | c | } 
\hline  { \text { Cambria } } & & { \text { Bodoni } } \
\hline \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } & \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } \
\hline 20 & 0 & 100 & 0 \
\hline 18 & 80 & 90 & 100 \
\hline 16 & 160 & 80 & 200 \
\hline 14 & 240 & 70 & 300 \
\hline 12 & 320 & 60 & 400 \
\hline 10 & 400 & 50 & 500 \
\hline 8 & 480 & 40 & 600 \
\hline 6 & 560 & 30 & 700 \
\hline 4 & 640 & 20 & 800 \
\hline 2 & 720 & 10 & 900 \
\hline 0 & 800 & 0 & 1,000 \
\hline
\end{array}$$

Accepted Answer

A) Bodoni has an absolute advantage in the production of both rice and T-shirts. 
B) Bodoni has an absolute advantage in the production of only rice. 
C) Bodoni has an absolute advantage in the production of T-shirts only. 
D) Cambria has an absolute advantage in the production of both rice and T-shirts. 
E) Cambria has an absolute advantage in the production of only T-shirts. 
A) Bodoni has an absolute advantage in the production of both rice and T-shirts. 
B) Bodoni has an absolute advantage in the production of only rice. 
C) Bodoni has an absolute advantage in the production of T-shirts only. 
D) Cambria has an absolute advantage in the production of both rice and T-shirts. 
E) Cambria has an absolute advantage in the production of only T-shirts.

Question 6

The following table shows the demand,supply,and price of tulips in the Netherlands.If the world price of tulips is $4 and there are no trade restrictions,the Netherlands will:
Table 19.2
?
?
Domestic Supply and Demand 
for Tulips in the Netherlands
$\begin{array}{|c|c|c|c|}
\hline {\text { Demand }} & &{\text { Supply }} \
\hline Q & P(\$) & Q & P(\$) \
\hline 12,000 & 0 & 6,000 & 0 \
\hline 10,000 & 1 & 7,000 & 1 \
\hline 8,000 & 2 & 8,000 & 2 \
\hline 6,000 & 3 & 9,000 & 3 \
\hline 4,000 & 4 & 10,000 & 4 \
\hline
\end{array}$

Accepted Answer

A) produce 10,000,consume 4,000,and import 6,000 tulips. 
B) produce 10,000 and consume 10,000 tulips. 
C) produce 8,000 and consume 8,000 tulips. 
D) import all the tulips it consumes. 
E) consume only some of the tulips it produces. 
A) produce 10,000,consume 4,000,and import 6,000 tulips. 
B) produce 10,000 and consume 10,000 tulips. 
C) produce 8,000 and consume 8,000 tulips. 
D) import all the tulips it consumes. 
E) consume only some of the tulips it produces.

Question 7

The following image shows the market for wheat for the country of Palatino.SD is the domestic supply of wheat,and DD is the domestic demand for wheat.Suppose the world price of wheat is $9 per bushel.Suppose a specific tariff of $6 is imposed on each bushel of wheat imported.The total loss in consumer surplus after the tariff is shown by the area _____.

Accepted Answer

A) F and E 
B) G 
C) A,B,C,and D 
D) I​ 
E) H 
A) F and E 
B) G 
C) A,B,C,and D 
D) I​ 
E) H

Question 8

If a country has an absolute advantage in the production of every good,it cannot benefit from trade with other countries.

Accepted Answer

A) True 
 B)False

Question 9

World output will be maximized if each country:

Accepted Answer

A) attempts to be self-sufficient. 
B) specializes in producing those goods in which it has a comparative advantage. 
C) specializes in producing those goods in which it has an absolute advantage. 
D) reduces its consumption possibilities. 
E) equals their consumption possibilities. 
A) attempts to be self-sufficient. 
B) specializes in producing those goods in which it has a comparative advantage. 
C) specializes in producing those goods in which it has an absolute advantage. 
D) reduces its consumption possibilities. 
E) equals their consumption possibilities.

Question 10

Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true of free trade zones?

Accepted Answer

A) Central American countries and the Dominican Republic (CAFTA-DR)is a free trade agreement between the U.S.and Europe that has resulted in greater exports of U.S.beef to Europe. 
B) North American Free Trade Agreement (NAFT
A) is a free trade agreement between the U.S.,Canada,and Mexico that has reduced illegal migration of Mexicans to the U.S. 
C) Association of Southeast Asian nations (ASEAN)is a free trade agreement between the U.S.and a group of South Asian countries that has led to an increase in U.S.outsourcing to countries like India. 
D) Mercosur is a free trade association of Latin American countries that aims to increase export subsidies and domestic content requirements in each member country. 
E) The Trans-Pacific Partnership is a free trade association of South Africa and its four neighbouring countries. 
A) Central American countries and the Dominican Republic (CAFTA-DR)is a free trade agreement between the U.S.and Europe that has resulted in greater exports of U.S.beef to Europe. 
B) North American Free Trade Agreement (NAFT
A) is a free trade agreement between the U.S.,Canada,and Mexico that has reduced illegal migration of Mexicans to the U.S. 
C) Association of Southeast Asian nations (ASEAN)is a free trade agreement between the U.S.and a group of South Asian countries that has led to an increase in U.S.outsourcing to countries like India. 
D) Mercosur is a free trade association of Latin American countries that aims to increase export subsidies and domestic content requirements in each member country. 
E) The Trans-Pacific Partnership is a free trade association of South Africa and its four neighbouring countries.

Question 12

The world demand for and the world supply of a good will together determine the _____.

Accepted Answer

A) tariff 
B) world price 
C) exchange rate 
D) terms of trade 
E) quota 
A) tariff 
B) world price 
C) exchange rate 
D) terms of trade 
E) quota

Question 13

Retaliation of trade restrictions can:

Accepted Answer

A) set off still greater trade restrictions,leading to an outright trade war. 
B) recover the surplus lost during the period of trade barriers. 
C) decrease rent-seeking activities in the economy. 
D) increase the potential gains from trade through specialization. 
E) lead to phasing out of tariffs and quotas. 
A) set off still greater trade restrictions,leading to an outright trade war. 
B) recover the surplus lost during the period of trade barriers. 
C) decrease rent-seeking activities in the economy. 
D) increase the potential gains from trade through specialization. 
E) lead to phasing out of tariffs and quotas.

Question 14

The establishment of GATT resulted in:

Accepted Answer

A) lower tariff rates. 
B) an increase in the net welfare loss of economies. 
C) a decrease in the total world trade. 
D) increased protectionism. 
E) a rise in the price of imports. 
A) lower tariff rates. 
B) an increase in the net welfare loss of economies. 
C) a decrease in the total world trade. 
D) increased protectionism. 
E) a rise in the price of imports.

Question 15

Dumping refers to selling a commodity abroad at a price that is below its cost of production or below the price charged in the domestic market.

Accepted Answer

A) True 
 B)False

Question 16

If quota rights accrue to foreigners,then _____.

Accepted Answer

A) the domestic economy is better off with a quota than with a tariff 
B) the domestic economy is worse off with a quota than with a tariff 
C) consumer surplus and economic welfare increase 
D) production costs decrease 
E) part of the decrease in consumer surplus is redistributed to the domestic government 
A) the domestic economy is better off with a quota than with a tariff 
B) the domestic economy is worse off with a quota than with a tariff 
C) consumer surplus and economic welfare increase 
D) production costs decrease 
E) part of the decrease in consumer surplus is redistributed to the domestic government

Question 17

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,the government revenue from a tariff of $0.50 per unit is represented by the area _____.

Accepted Answer

A) c 
B) e + g 
C) i + e + f 
D) d + e 
E) e 
A) c 
B) e + g 
C) i + e + f 
D) d + e 
E) e

Question 18

Which of the following is a type of trade restriction?

Accepted Answer

A) Diseconomies of scale 
B) Autarky 
C) Diminishing marginal returns 
D) Health,safety,or technical standards 
E) Import concession 
A) Diseconomies of scale 
B) Autarky 
C) Diminishing marginal returns 
D) Health,safety,or technical standards 
E) Import concession

Question 19

The following graph shows U.S.demand for and domestic supply of a good.Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of imported good.In such a case,the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by the area _____.

Accepted Answer

A) a 
B) b + d 
C) c + i + e + f 
D) c 
E) d 
A) a 
B) b + d 
C) c + i + e + f 
D) c 
E) d

Question 20

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,then:

Accepted Answer

A) domestic production will increase from 100 to 200 units per month. 
B) imports will increase from 25 to 50 units per month. 
C) domestic production will increase from 100 to 175 units per month. 
D) domestic production will increase from 100 to 125 units per month. 
E) domestic production will increase from 100 to 150 units per month. 
A) domestic production will increase from 100 to 200 units per month. 
B) imports will increase from 25 to 50 units per month. 
C) domestic production will increase from 100 to 175 units per month. 
D) domestic production will increase from 100 to 125 units per month. 
E) domestic production will increase from 100 to 150 units per month.

In the case of declining industries,wage subsidies or special tax breaks that decline over time:

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the tariff revenue collected by the United States government is _____.

The following graph shows the market equilibrium for corn in the United States.If the world price of corn is $2 and there are no trade restrictions,the United States will:

The basis of the benefits of specialization is:

If a country has an absolute advantage in the production of every good,it cannot benefit from trade with other countries.

World output will be maximized if each country:

Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.

Which of the following statements is true of free trade zones?

The world demand for and the world supply of a good will together determine the _____.

Retaliation of trade restrictions can:

The establishment of GATT resulted in:

Dumping refers to selling a commodity abroad at a price that is below its cost of production or below the price charged in the domestic market.

If quota rights accrue to foreigners,then _____.

Which of the following is a type of trade restriction?

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,then:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Finance

Economic Development

Filters

Exam 17: International Trade

In the case of declining industries,wage subsidies or special tax breaks that decline over time:

The following graph shows the supply of and demand for baseballs in the United States.If the world price is $3 per baseball and a tariff of $1 per baseball is imposed,then the tariff revenue collected by the United States government is _____.

The following graph shows the market equilibrium for corn in the United States.If the world price of corn is $2 and there are no trade restrictions,the United States will:

The basis of the benefits of specialization is:

If a country has an absolute advantage in the production of every good,it cannot benefit from trade with other countries.

World output will be maximized if each country:

Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.

Which of the following statements is true of free trade zones?

The world demand for and the world supply of a good will together determine the _____.

Retaliation of trade restrictions can:

The establishment of GATT resulted in:

Dumping refers to selling a commodity abroad at a price that is below its cost of production or below the price charged in the domestic market.

If quota rights accrue to foreigners,then _____.

Which of the following is a type of trade restriction?

The following graph shows the demand for and the supply of a good in a country.If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed,then:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Finance

Economic Development

Filters