Question 1

An example of an import quota is a:

Accepted Answer

A)  limit on the total number of Honda automobiles imported from Japan. 
B)  regulation specifying that each imported Honda automobile must meet certain emission exhaust guidelines. 
C)  tax of 10% of the value of each Honda automobile imported from Japan. 
D)  subsidy from the Japanese government of $500 for each Honda automobile imported into the United States. 
A)  limit on the total number of Honda automobiles imported from Japan. 
B)  regulation specifying that each imported Honda automobile must meet certain emission exhaust guidelines. 
C)  tax of 10% of the value of each Honda automobile imported from Japan. 
D)  subsidy from the Japanese government of $500 for each Honda automobile imported into the United States.

Question 2

Use the following to answer questions:
Figure: The Market for Tea in Sri Lanka  
-(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW. Sri Lanka will _____ tea and the volume of trade will equal _____.

Accepted Answer

A)  import; QT - CT 
B)  export; QT - CT 
C)  import; QT - Q1 
D)  export; Q1 - CT 
A)  import; QT - CT 
B)  export; QT - CT 
C)  import; QT - Q1 
D)  export; Q1 - CT

Question 3

Use the following to answer questions:  
-(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Which of the following is TRUE?

Accepted Answer

A)  The opportunity cost of crude oil is lower in the United States than in Mexico. 
B)  The opportunity cost of crude oil is higher in the United States than in Mexico. 
C)  Crude oil costs are the same in the United States and in Mexico. 
D)  Tractor costs are the same in the United States and in Mexico. 
A)  The opportunity cost of crude oil is lower in the United States than in Mexico. 
B)  The opportunity cost of crude oil is higher in the United States than in Mexico. 
C)  Crude oil costs are the same in the United States and in Mexico. 
D)  Tractor costs are the same in the United States and in Mexico.

Question 4

If quota rents do not accrue to the government, then the net loss to the government from an import quota is _____ the deadweight loss from an equivalent tariff.

Accepted Answer

A)  less than 
B)  greater than 
C)  equal to 
D)  in the case of demand and supply both being elastic, less than 
A)  less than 
B)  greater than 
C)  equal to 
D)  in the case of demand and supply both being elastic, less than

Question 5

Use the following to answer questions:
Figure: The Market for Tea in Sri Lanka  
-(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW and consumer surplus _____ to _____.

Accepted Answer

A)  falls; F 
B)  falls; F + G 
C)  rises; F + G + H + I 
D)  rises; G + H + I 
A)  falls; F 
B)  falls; F + G 
C)  rises; F + G + H + I 
D)  rises; G + H + I

Question 6

The absolute value of the slope of the production possibility frontier at any point:

Accepted Answer

A)  gives the autarky price of the good on the vertical axis. 
B)  is found by dividing the horizontal change by a vertical change. 
C)  gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. 
D)  gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis. 
A)  gives the autarky price of the good on the vertical axis. 
B)  is found by dividing the horizontal change by a vertical change. 
C)  gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. 
D)  gives the autarky price of the good on the horizontal axis relative to the autarky price of the good on the vertical axis.

Question 7

Use the following to answer questions:
Figure: The Market for Thumb Drives  
-(Figure: The Market for Thumb Drives) Look at the figure The Market for Thumb Drives. Assume that PA is the autarky price, PW is the world price, and D and S represent domestic demand and supply, respectively. The loss of producer surplus when the market moves from autarky to free trade equals the area:

Accepted Answer

A)  B. 
B)  B + C + D +E. 
C)  B + C + D. 
D)  E. 
A)  B. 
B)  B + C + D +E. 
C)  B + C + D. 
D)  E.

Question 8

Use the following to answer questions:
Figure: The Domestic Supply and Demand for SUVs in the United States  
-(Figure: The Domestic Supply and Demand for SUVs in the United States) Look at the figure The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs.

Accepted Answer

A)  import 6 million 
B)  export 6 million 
C)  export 2 million 
D)  import 2 million 
A)  import 6 million 
B)  export 6 million 
C)  export 2 million 
D)  import 2 million

Question 9

Use the following to answer questions:  
-(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. In _____, the opportunity cost of _____ cars is _____ board feet of lumber.

Accepted Answer

A)  the United States; 1 million; 10 million 
B)  the United States; 10 million; 1 million 
C)  Canada; 1 million; 6 million 
D)  Canada; 1 million; 166,000 
A)  the United States; 1 million; 10 million 
B)  the United States; 10 million; 1 million 
C)  Canada; 1 million; 6 million 
D)  Canada; 1 million; 166,000

Question 10

Which of the following is an example of an import quota?

Accepted Answer

A)  A limit on the total number of shoes imported from Italy. 
B)  Regulations specifying that each imported toy from China must meet certain safety guidelines. 
C)  A tax of $100 on each Suzuki motorcycle produced in the United States. 
D)  A tax of 10% of the value of each Suzuki motorcycle imported from Japan. 
A)  A limit on the total number of shoes imported from Italy. 
B)  Regulations specifying that each imported toy from China must meet certain safety guidelines. 
C)  A tax of $100 on each Suzuki motorcycle produced in the United States. 
D)  A tax of 10% of the value of each Suzuki motorcycle imported from Japan.

Question 11

A tax on imports of foreign goods is called:

Accepted Answer

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

Question 12

Use the following to answer questions:
Figure: The Domestic Supply and Demand for SUVs in the United States  
-(Figure: The Domestic Supply and Demand for SUVs in the United States) Look at the figure The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. Calculate the loss of consumer surplus.

Accepted Answer

A)  $41,250 million 
B)  $30,000 million 
C)  $52,500 million 
D)  $22,250 million 
A)  $41,250 million 
B)  $30,000 million 
C)  $52,500 million 
D)  $22,250 million

Question 13

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the price of beef in Argentina:

Accepted Answer

A)  to fall. 
B)  to rise. 
C)  to remain at the autarky price. 
D)  to be 10 boxes of tulips. 
A)  to fall. 
B)  to rise. 
C)  to remain at the autarky price. 
D)  to be 10 boxes of tulips.

Question 14

Use the following to answer questions:
Figure: The Market for Melons in Russia  
-The World Trade Organization:

Accepted Answer

A)  oversees trade agreements. 
B)  is an example of a trade agreement. 
C)  includes all nations. 
D)  was established before World War II. 
A)  oversees trade agreements. 
B)  is an example of a trade agreement. 
C)  includes all nations. 
D)  was established before World War II.

Question 15

Goods and services purchased from abroad are _____, while goods and services sold abroad are _____.

Accepted Answer

A)  exports; imports 
B)  imports; exports 
C)  exports; quotas 
D)  quotas; factors 
A)  exports; imports 
B)  imports; exports 
C)  exports; quotas 
D)  quotas; factors

Question 16

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____ .

Accepted Answer

A)  fall; fall 
B)  fall; rise 
C)  rise; fall 
D)  rise; rise 
A)  fall; fall 
B)  fall; rise 
C)  rise; fall 
D)  rise; rise

Question 17

If Canada imposes a tariff of $5 per bottle on French wine, the most likely effect will be to raise the price of wine in Canada by:

Accepted Answer

A)  more than $5 per bottle. 
B)  $5 per bottle. 
C)  less than $5 per bottle and lower the price of wine in France by less than $5 per bottle. 
D)  less than $5 per bottle without affecting the price of wine in France. 
A)  more than $5 per bottle. 
B)  $5 per bottle. 
C)  less than $5 per bottle and lower the price of wine in France by less than $5 per bottle. 
D)  less than $5 per bottle without affecting the price of wine in France.

Question 18

If Japan must give up the production of 75 computers to produce 25 additional cellular telephones, the opportunity cost of producing 4 cellular telephones is _____ computers.

Accepted Answer

A)  4 
B)  12 
C)  71 
D)  79 
A)  4 
B)  12 
C)  71 
D)  79

Question 19

Use the following to answer questions:
Figure: The Market for Tea in Sri Lanka  
-(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW, and producer surplus _____ to _____.

Accepted Answer

A)  falls; J + K 
B)  falls; G + H + J + K 
C)  rises; G + H + I + J + K 
D)  rises; G + H + I 
A)  falls; J + K 
B)  falls; G + H + J + K 
C)  rises; G + H + I + J + K 
D)  rises; G + H + I

Question 20

When a country joins the World Trade Organization, it gives up all of its ability to determine its trade policy.

Accepted Answer

A) True 
 B)False

An example of an import quota is a:

Use the following to answer questions: -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Which of the following is TRUE?

If quota rents do not accrue to the government, then the net loss to the government from an import quota is _____ the deadweight loss from an equivalent tariff.

Use the following to answer questions: Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W and consumer surplus _ to _.

The absolute value of the slope of the production possibility frontier at any point:

Use the following to answer questions: -(Table: Production Possibilities for the United States and Canada) Look at the table Production Possibilities for the United States and Canada. Both nations can produce cars and lumber. In ___, the opportunity cost of _ cars is ___ board feet of lumber.

Which of the following is an example of an import quota?

A tax on imports of foreign goods is called:

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the price of beef in Argentina:

Use the following to answer questions: Figure: The Market for Melons in Russia -The World Trade Organization:

Goods and services purchased from abroad are _, while goods and services sold abroad are _.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _ and the quantity of shoes consumed in the domestic market to _ .

If Canada imposes a tariff of $5 per bottle on French wine, the most likely effect will be to raise the price of wine in Canada by:

If Japan must give up the production of 75 computers to produce 25 additional cellular telephones, the opportunity cost of producing 4 cellular telephones is _____ computers.

Use the following to answer questions: Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W, and producer surplus _ to _.

When a country joins the World Trade Organization, it gives up all of its ability to determine its trade policy.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 8: International Trade

An example of an import quota is a:

Use the following to answer questions: -(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The Production Possibilities for Tractors and Crude Oil. Which of the following is TRUE?

If quota rents do not accrue to the government, then the net loss to the government from an import quota is _____ the deadweight loss from an equivalent tariff.

Use the following to answer questions: Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW and consumer surplus _____ to _____.

The absolute value of the slope of the production possibility frontier at any point:

Which of the following is an example of an import quota?

A tax on imports of foreign goods is called:

In a single year, Argentina can raise 100 tons of beef or produce 1,000 boxes of tulips. In the same growing season, Venezuela can raise 50 tons of beef or produce 750 boxes of tulips. When the two countries begin trading beef for tulips, we expect the price of beef in Argentina:

Use the following to answer questions: Figure: The Market for Melons in Russia -The World Trade Organization:

Goods and services purchased from abroad are _____, while goods and services sold abroad are _____.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____ .

If Canada imposes a tariff of $5 per bottle on French wine, the most likely effect will be to raise the price of wine in Canada by:

If Japan must give up the production of 75 computers to produce 25 additional cellular telephones, the opportunity cost of producing 4 cellular telephones is _____ computers.

Use the following to answer questions: Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P1. When the economy is opened to trade, the price rises to PW, and producer surplus _____ to _____.

When a country joins the World Trade Organization, it gives up all of its ability to determine its trade policy.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Use the following to answer questions: Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W and consumer surplus _ to _.

Goods and services purchased from abroad are _, while goods and services sold abroad are _.

If a country imposes a tariff on imported shoes, we expect the domestic price of shoes to _ and the quantity of shoes consumed in the domestic market to _ .

Use the following to answer questions: Figure: The Market for Tea in Sri Lanka -(Figure: The Market for Tea in Sri Lanka) Look at the figure The Market for Tea in Sri Lanka. In autarky, the price is P₁. When the economy is opened to trade, the price rises to P_W, and producer surplus _ to _.