Question 1

Tariffs and import quotas both result in

Accepted Answer

A)  lower levels of domestic production. 
B)  the domestic government gaining revenue. 
C)  lower levels of imports. 
D)  higher levels of domestic consumption. 
A)  lower levels of domestic production. 
B)  the domestic government gaining revenue. 
C)  lower levels of imports. 
D)  higher levels of domestic consumption.

Question 2

If the United States imposes a tariff on $1 per imported shirt, the tariff will

Accepted Answer

A)  raise the price of a shirt to U.S. consumers. 
B)  benefit U.S. shirt producers. 
C)  decrease imports of shirts into the United States. 
D)  all of the above. 
A)  raise the price of a shirt to U.S. consumers. 
B)  benefit U.S. shirt producers. 
C)  decrease imports of shirts into the United States. 
D)  all of the above.

Question 3

A tax that is imposed by the importing country when an imported good crosses its international boundary is called

Accepted Answer

A)  an import quota. 
B)  dumping. 
C)  a voluntary export restraint. 
D)  a tariff. 
A)  an import quota. 
B)  dumping. 
C)  a voluntary export restraint. 
D)  a tariff.

Question 4

The U.S.-Colombia Trade Promotion Agreement was signed on November 22, 2006, in Washington, D.C. This comprehensive trade agreement eliminated tariffs and other barriers to goods and services. Colombia will immediately eliminate tariffs on wheat, barley, peanuts, and many other products in which Columbia does not have a comparative advantage. This policy means that the price of peanuts in Columbia will become

Accepted Answer

A)  equal to the free trade price. 
B)  lower than the free trade price. 
C)  higher than the price when a tariff was in place. 
D)  higher than the free trade price. 
A)  equal to the free trade price. 
B)  lower than the free trade price. 
C)  higher than the price when a tariff was in place. 
D)  higher than the free trade price.

Question 5

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I. Low-wage foreigners are just as productive as U.S. workers.
II) U.S. workers have a comparative advantage in low-wage jobs.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II is correct. 
A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II is correct.

Question 6

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

Accepted Answer

A)  country B has an absolute advantage in the production of product X. 
B)  country B has a comparative advantage in the production of product X. 
C)  country A has an absolute advantage in the production of product X. 
D)  country A has a comparative advantage in the production of product X. 
A)  country B has an absolute advantage in the production of product X. 
B)  country B has a comparative advantage in the production of product X. 
C)  country A has an absolute advantage in the production of product X. 
D)  country A has a comparative advantage in the production of product X.

Question 7

A payment by the government to the producer of an exported good is called

Accepted Answer

A)  an export subsidy. 
B)  a VER. 
C)  a GATT. 
D)  a WTO. 
A)  an export subsidy. 
B)  a VER. 
C)  a GATT. 
D)  a WTO.

Question 8

The United States imports cars from Japan. If the United States imposes a tariff on cars imported from Japan

Accepted Answer

A)  U.S. consumers lose and Japanese producers gain. 
B)  U.S. tariff revenue equals the loss of U.S. consumer surplus. 
C)  U.S. consumers lose and U.S. producers gain. 
D)  U.S. car manufacturers gain revenue equal to the revenue lost by Japanese car manufacturers. 
A)  U.S. consumers lose and Japanese producers gain. 
B)  U.S. tariff revenue equals the loss of U.S. consumer surplus. 
C)  U.S. consumers lose and U.S. producers gain. 
D)  U.S. car manufacturers gain revenue equal to the revenue lost by Japanese car manufacturers.

Question 9

Give a brief description of the history of tariffs in the United States.

Accepted Answer

Today, U.S. tariffs are low compared to

Question 10

Consider a market in which there is an import tariff. Which of the following is TRUE?

Accepted Answer

A)  The lost consumer surplus equals the gain in producer surplus plus the government revenue plus the deadweight loss. 
B)  The lost consumer surplus equals the gain in producer surplus. 
C)  The lost consumer surplus equals the gain in producer surplus plus the government revenue. 
D)  The lost consumer surplus plus the deadweight loss equal the gain in producer surplus plus the government revenue. 
A)  The lost consumer surplus equals the gain in producer surplus plus the government revenue plus the deadweight loss. 
B)  The lost consumer surplus equals the gain in producer surplus. 
C)  The lost consumer surplus equals the gain in producer surplus plus the government revenue. 
D)  The lost consumer surplus plus the deadweight loss equal the gain in producer surplus plus the government revenue.

Question 11

The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, international trade ________ consumer surplus in the United States by ________.

Accepted Answer

A)  decreases; $2.88 billion 
B)  decreases; $1.92 billion 
C)  increases; $2.88 billion 
D)  increases; $4.8 billion 
A)  decreases; $2.88 billion 
B)  decreases; $1.92 billion 
C)  increases; $2.88 billion 
D)  increases; $4.8 billion

Question 12

-The United States imports cheese from a variety of countries. The table above gives the domestic supply of, and demand for, cheese in the United States. The world price of cheese is $12 per pound, and trade is unrestricted.
a) How many pounds of cheese are consumed in the United States?
b) How many pounds of cheese are produced in the United States?
c) How many pounds of cheese are imported into the United States?
If a $3 per pound tariff is imposed,
d) How many pounds of cheese are consumed in the United States?
e) How many pounds of cheese are produced in the United States?
f) How many pounds of cheese are imported into the United States?
g) How much will the U.S. government collect in tariff revenue?
h) Who benefits from the tariff? Who loses?

Accepted Answer

a) 180,000 pounds of cheese are consumed

Question 13

Japan imposes a tariff on imported rice. In Japan, surplus will be redistributed from

Accepted Answer

A)  consumers to producers and government. 
B)  consumers to producers. 
C)  consumers to government. 
D)  government to producers. 
A)  consumers to producers and government. 
B)  consumers to producers. 
C)  consumers to government. 
D)  government to producers.

Question 14

The goods and services that our country sells to other countries are termed

Accepted Answer

A)  exports. 
B)  imports. 
C)  unilateral transfers. 
D)  gifts. 
A)  exports. 
B)  imports. 
C)  unilateral transfers. 
D)  gifts.

Question 15

Selling a product in a foreign nation at a price less than its cost of production is called

Accepted Answer

A)  infant-industry exploitation. 
B)  absolute advantage. 
C)  dumping. 
D)  net exporting. 
A)  infant-industry exploitation. 
B)  absolute advantage. 
C)  dumping. 
D)  net exporting.

Question 16

When a firms "dumps" some of its products in another country, it

Accepted Answer

A)  creates an environmental hazard in the receiving country. 
B)  sells its goods abroad at a price lower than it costs to produce the goods. 
C)  increases the total level of employment in the receiving country. 
D)  is specializing according to comparative advantage. 
A)  creates an environmental hazard in the receiving country. 
B)  sells its goods abroad at a price lower than it costs to produce the goods. 
C)  increases the total level of employment in the receiving country. 
D)  is specializing according to comparative advantage.

Question 17

If the United States imposes a tariff on imported steel, the tariff will

Accepted Answer

A)  raise the U.S. price of imported steel. 
B)  decrease the U.S. production of steel. 
C)  increase the total U.S. consumption of steel. 
D)  decrease employment in the U.S. steel industry. 
A)  raise the U.S. price of imported steel. 
B)  decrease the U.S. production of steel. 
C)  increase the total U.S. consumption of steel. 
D)  decrease employment in the U.S. steel industry.

Question 18

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. 
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.

Question 19

-The above figure shows the domestic supply of and domestic demand for an imported good. The world price is $15 per unit.
a) At the world price of $15 per unit, what is the domestic consumption and domestic production?
b) At the world price of $15 per unit, what is the quantity imported?
c) If the government imposes a tariff of $5 per unit, what is the domestic consumption and domestic production?
d) With the $5 per unit tariff, what is the quantity imported?
e) How much revenue does the government collect with a tariff of $5 per unit?

Accepted Answer

a) Domestic consumption is 8 million uni

Question 20

Almost all economists support protectionist policies because protection

Accepted Answer

A)  saves jobs. 
B)  prevents rich countries from exploiting poorer countries. 
C)  is a good way for governments in developed nations to raise revenue. 
D)  The premise of the question is wrong because most economists would not support any of the above reasons. 
A)  saves jobs. 
B)  prevents rich countries from exploiting poorer countries. 
C)  is a good way for governments in developed nations to raise revenue. 
D)  The premise of the question is wrong because most economists would not support any of the above reasons.

Tariffs and import quotas both result in

If the United States imposes a tariff on $1 per imported shirt, the tariff will

A tax that is imposed by the importing country when an imported good crosses its international boundary is called

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I. Low-wage foreigners are just as productive as U.S. workers. II) U.S. workers have a comparative advantage in low-wage jobs.

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

A payment by the government to the producer of an exported good is called

The United States imports cars from Japan. If the United States imposes a tariff on cars imported from Japan

Give a brief description of the history of tariffs in the United States.

Consider a market in which there is an import tariff. Which of the following is TRUE?

Japan imposes a tariff on imported rice. In Japan, surplus will be redistributed from

The goods and services that our country sells to other countries are termed

Selling a product in a foreign nation at a price less than its cost of production is called

When a firms "dumps" some of its products in another country, it

If the United States imposes a tariff on imported steel, the tariff will

An import quota is a

Almost all economists support protectionist policies because protection

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 7: Global Markets in Action

Tariffs and import quotas both result in

If the United States imposes a tariff on $1 per imported shirt, the tariff will

A tax that is imposed by the importing country when an imported good crosses its international boundary is called

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I. Low-wage foreigners are just as productive as U.S. workers. II) U.S. workers have a comparative advantage in low-wage jobs.

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

A payment by the government to the producer of an exported good is called

The United States imports cars from Japan. If the United States imposes a tariff on cars imported from Japan

Give a brief description of the history of tariffs in the United States.

Consider a market in which there is an import tariff. Which of the following is TRUE?

Japan imposes a tariff on imported rice. In Japan, surplus will be redistributed from

The goods and services that our country sells to other countries are termed

Selling a product in a foreign nation at a price less than its cost of production is called

When a firms "dumps" some of its products in another country, it

If the United States imposes a tariff on imported steel, the tariff will

An import quota is a

Almost all economists support protectionist policies because protection

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters