Question 1

The imposition of a tariff will typically ________ government revenue and ________ domestic production of the good.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  increase; not change 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
E)  increase; not change

Question 2

When a nation exports a good or service in which it has a comparative advantage,employment in that industry

Accepted Answer

A)  decreases. 
B)  stays the same. 
C)  increases. 
D)  might change, but more information about what else the country exports is needed to determine if employment increases, decreases, or does not change. 
E)  might change, but more information about what the country imports is needed to determine if employment increases, decreases, or does not change. 
A)  decreases. 
B)  stays the same. 
C)  increases. 
D)  might change, but more information about what else the country exports is needed to determine if employment increases, decreases, or does not change. 
E)  might change, but more information about what the country imports is needed to determine if employment increases, decreases, or does not change.

Question 3

Suppose the United States subsidizes domestic chicken production and then sells surpluses on the world market at a price below the cost of production.In foreign countries,the argument that would made to restrict chicken trade with the United States would be the

Accepted Answer

A)  penalizes lax environmental standards argument. 
B)  saves jobs argument. 
C)  infant-industry argument. 
D)  dumping argument. 
E)  national security argument. 
A)  penalizes lax environmental standards argument. 
B)  saves jobs argument. 
C)  infant-industry argument. 
D)  dumping argument. 
E)  national security argument.

Question 4

When governments specify the maximum amount of a good that may be imported in a given period of time,they are establishing a

Accepted Answer

A)  tariff. 
B)  quota. 
C)  dynamic tariff. 
D)  tax. 
E)  dumping limit. 
A)  tariff. 
B)  quota. 
C)  dynamic tariff. 
D)  tax. 
E)  dumping limit.

Question 5

The world price of steel is $100 a ton.Before international trade,the price of steel in India is $60 a ton.If India begins trading internationally,the price of steel in India ________ and steel mills in India ________ the quantity they produce.

Accepted Answer

A)  rises; increase 
B)  falls; increase 
C)  does not change; increase 
D)  rises; decrease 
E)  falls; decease 
A)  rises; increase 
B)  falls; increase 
C)  does not change; increase 
D)  rises; decrease 
E)  falls; decease

Question 6

A quota is

Accepted Answer

A)  a tax on imports. 
B)  a specified minimum amount that must be imported. 
C)  a specified maximum amount that can be imported. 
D)  a tariff on exports. 
E)  the minimum amount that domestic firms can dump. 
A)  a tax on imports. 
B)  a specified minimum amount that must be imported. 
C)  a specified maximum amount that can be imported. 
D)  a tariff on exports. 
E)  the minimum amount that domestic firms can dump.

Question 7

Which of the following is an argument that is used for protection from free trade?
i.the national security argument
ii.the infant-industry argument
iii.the dumping argument

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii

Question 8

-The above figure shows the U.S.market for 1 carat diamonds.Area A + area B + area C + area D is the

Accepted Answer

A)  deadweight loss from the import quota. 
B)  importers' profit from the quota. 
C)  decrease in consumer surplus due to the import quota. 
D)  gain in total surplus due to the import quota. 
E)  increase in producer surplus due to the import quota. 
A)  deadweight loss from the import quota. 
B)  importers' profit from the quota. 
C)  decrease in consumer surplus due to the import quota. 
D)  gain in total surplus due to the import quota. 
E)  increase in producer surplus due to the import quota.

Question 9

How can a domestic producer determine whether or not it has a comparative advantage in the production of a good or service?

Accepted Answer

A)  It cannot. 
B)  by comparing the price it receives to the prices of other domestic producers 
C)  by comparing the price it receives to the world price 
D)  by comparing the quantity it produces to the quantity produced in the world 
E)  by comparing the total domestic quantity to the total world quantity 
A)  It cannot. 
B)  by comparing the price it receives to the prices of other domestic producers 
C)  by comparing the price it receives to the world price 
D)  by comparing the quantity it produces to the quantity produced in the world 
E)  by comparing the total domestic quantity to the total world quantity

Question 10

Most t-shirts bought by Americans are made in Asia.U.S.consumers of t-shirts buy these t-shirts because

Accepted Answer

A)  they pay a higher price for t-shirts made in Asia than they would for similar shirts made in the United States. 
B)  they pay a lower price for t-shirts made in Asia than they would for similar shirts made in the United States. 
C)  they must buy some goods or services produced in Asia. 
D)  by so doing they are helping preserve U.S. jobs producing t-shirts. 
E)  they know that the United States has a comparative advantage in wearing t-shirts. 
A)  they pay a higher price for t-shirts made in Asia than they would for similar shirts made in the United States. 
B)  they pay a lower price for t-shirts made in Asia than they would for similar shirts made in the United States. 
C)  they must buy some goods or services produced in Asia. 
D)  by so doing they are helping preserve U.S. jobs producing t-shirts. 
E)  they know that the United States has a comparative advantage in wearing t-shirts.

Question 11

If the United States imposes a tariff on foreign chocolate,how are foreign producers of chocolate affected?

Accepted Answer

A)  Their supply increases because they have to pay the tariff. 
B)  They export less to the United States. 
C)  They earn more profit because their chocolate sells for a higher price. 
D)  Their supply is unaffected because the quota must be met by U.S. producers. 
E)  The tariff has no effect on foreign producers because U.S. consumers must pay the higher price. 
A)  Their supply increases because they have to pay the tariff. 
B)  They export less to the United States. 
C)  They earn more profit because their chocolate sells for a higher price. 
D)  Their supply is unaffected because the quota must be met by U.S. producers. 
E)  The tariff has no effect on foreign producers because U.S. consumers must pay the higher price.

Question 12

Of the following,who gains with a quota?

Accepted Answer

A)  domestic buyers of the good or service 
B)  the importer of the good or service 
C)  the foreign exporter of the good or service 
D)  the government of the importing nation 
E)  the government of the exporting nation 
A)  domestic buyers of the good or service 
B)  the importer of the good or service 
C)  the foreign exporter of the good or service 
D)  the government of the importing nation 
E)  the government of the exporting nation

Question 13

Since the mid-1970s,the average U.S.tariff rate is

Accepted Answer

A)  less than 5 percent. 
B)  between 6 percent and 15 percent. 
C)  between 16 percent and 25 percent. 
D)  between 26 percent and 35 percent. 
E)  larger than 36 percent. 
A)  less than 5 percent. 
B)  between 6 percent and 15 percent. 
C)  between 16 percent and 25 percent. 
D)  between 26 percent and 35 percent. 
E)  larger than 36 percent.

Question 14

$\begin{array}{c}
\begin{array}{c}
\text { Price } \
\text { (dollars per unit }\
\hline 2 \
4 \
6 \
8 \
10 \
12
\end{array}
\begin{array}{c}
\text { Quantity demanded }\
\text { (units per day) } \
\hline 20 \
19 \
18 \
17 \
16 \
15
\end{array}
\begin{array}{c}
\text { Quantity supplied }\
\text { (units per day) } \
\hline 14 \
16 \
18 \
20 \
22 \
24
\end{array}
\end{array}$

-The table above has the domestic demand and domestic supply schedules for a good.According to the table,the no-trade price of the good is

Accepted Answer

A)  $4. 
B)  $6. 
C)  $8. 
D)  $10. 
E)  $2. 
A)  $4. 
B)  $6. 
C)  $8. 
D)  $10. 
E)  $2.

Question 15

Who gains from exports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from exports?

Accepted Answer

Producers of the good being exported gai

Question 16

Which of the following methods of restricting trade doesNOT  create a deadweight loss?

Accepted Answer

A)  a tariff 
B)  a quota 
C)  a voluntary export restraint 
D)  Both answers A and B are correct. 
E)  None of the above answers is correct because all the methods create a deadweight loss 
A)  a tariff 
B)  a quota 
C)  a voluntary export restraint 
D)  Both answers A and B are correct. 
E)  None of the above answers is correct because all the methods create a deadweight loss

Question 17

$\begin{array}{c}
\begin{array}{c}
\text { Price } \
\text { (dollars per unit }\
\hline 40 \
50\
60\
70\
80\
90
\end{array}
\begin{array}{c}
\text { Quantity demanded }\
\text { (units per day) } \
\hline 22 \
21\
20\
19\
18\
17
\end{array}
\begin{array}{c}
\text { Quantity supplied }\
\text { (units per day) } \
\hline 14 \
15\
16\
17\
18\
19
\end{array}
\end{array}$
 
-The table above gives the domestic demand and supply schedules for a good.Suppose the world price of the good is $40 and the government imposes a $20 per unit tariff.How much will the government collect as tariff revenue?

Accepted Answer

A)  $160 
B)  $320 
C)  $80 
D)  $240 
E)  $360 
A)  $160 
B)  $320 
C)  $80 
D)  $240 
E)  $360

Question 18

Suevania opens its doors to trade with Barvania.Barvania has a comparative advantage in the production of machinery.Hence,once trade occurs Suevania's consumers will buy ________ machinery and pay ________ before.

Accepted Answer

A)  more; a higher price than 
B)  more; a lower price than 
C)  less; a higher price than 
D)  less; a lower price than 
E)  the same amount of; the same price as 
A)  more; a higher price than 
B)  more; a lower price than 
C)  less; a higher price than 
D)  less; a lower price than 
E)  the same amount of; the same price as

Question 19

A major reason why it is difficult to lower the barriers to free trade is

Accepted Answer

A)  that total benefits are less than total costs from free trade. 
B)  the uneven distribution of gains and losses from free trade. 
C)  the loss of jobs without any gain of jobs from free trade. 
D)  the inability to compensate losers from free trade. 
E)  that the barriers allow us to compete with cheap foreign labor. 
A)  that total benefits are less than total costs from free trade. 
B)  the uneven distribution of gains and losses from free trade. 
C)  the loss of jobs without any gain of jobs from free trade. 
D)  the inability to compensate losers from free trade. 
E)  that the barriers allow us to compete with cheap foreign labor.

Question 20

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million.
-Based on the figure above,international trade leads to

Accepted Answer

A)  a net gain in surplus of $12.5 billion. 
B)  a net loss of surplus of $12.5 billion. 
C)  a net gain in surplus of $27.5 billion. 
D)  a net loss of surplus of $15 billion. 
E)  no net gain or loss of surplus. 
A)  a net gain in surplus of $12.5 billion. 
B)  a net loss of surplus of $12.5 billion. 
C)  a net gain in surplus of $27.5 billion. 
D)  a net loss of surplus of $15 billion. 
E)  no net gain or loss of surplus.

The imposition of a tariff will typically government revenue and domestic production of the good.

When a nation exports a good or service in which it has a comparative advantage,employment in that industry

Suppose the United States subsidizes domestic chicken production and then sells surpluses on the world market at a price below the cost of production.In foreign countries,the argument that would made to restrict chicken trade with the United States would be the

When governments specify the maximum amount of a good that may be imported in a given period of time,they are establishing a

The world price of steel is $100 a ton.Before international trade,the price of steel in India is $60 a ton.If India begins trading internationally,the price of steel in India and steel mills in India the quantity they produce.

A quota is

Which of the following is an argument that is used for protection from free trade? i.the national security argument ii.the infant-industry argument iii.the dumping argument

-The above figure shows the U.S.market for 1 carat diamonds.Area A + area B + area C + area D is the

How can a domestic producer determine whether or not it has a comparative advantage in the production of a good or service?

Most t-shirts bought by Americans are made in Asia.U.S.consumers of t-shirts buy these t-shirts because

If the United States imposes a tariff on foreign chocolate,how are foreign producers of chocolate affected?

Of the following,who gains with a quota?

Since the mid-1970s,the average U.S.tariff rate is

Price (dollars per unit 2 4 6 8 10 12 Quantity demanded (units per day) 20 19 18 17 16 15 Quantity supplied (units per day) 14 16 18 20 22 24 -The table above has the domestic demand and domestic supply schedules for a good.According to the table,the no-trade price of the good is

Who gains from exports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from exports?

Which of the following methods of restricting trade doesNOT create a deadweight loss?

Suevania opens its doors to trade with Barvania.Barvania has a comparative advantage in the production of machinery.Hence,once trade occurs Suevania's consumers will buy machinery and pay before.

A major reason why it is difficult to lower the barriers to free trade is

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million. -Based on the figure above,international trade leads to

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 9: Global Markets in Action

The imposition of a tariff will typically ________ government revenue and ________ domestic production of the good.

When a nation exports a good or service in which it has a comparative advantage,employment in that industry

Suppose the United States subsidizes domestic chicken production and then sells surpluses on the world market at a price below the cost of production.In foreign countries,the argument that would made to restrict chicken trade with the United States would be the

When governments specify the maximum amount of a good that may be imported in a given period of time,they are establishing a

The world price of steel is $100 a ton.Before international trade,the price of steel in India is $60 a ton.If India begins trading internationally,the price of steel in India ________ and steel mills in India ________ the quantity they produce.

A quota is

Which of the following is an argument that is used for protection from free trade? i.the national security argument ii.the infant-industry argument iii.the dumping argument

-The above figure shows the U.S.market for 1 carat diamonds.Area A + area B + area C + area D is the

How can a domestic producer determine whether or not it has a comparative advantage in the production of a good or service?

Most t-shirts bought by Americans are made in Asia.U.S.consumers of t-shirts buy these t-shirts because

If the United States imposes a tariff on foreign chocolate,how are foreign producers of chocolate affected?

Of the following,who gains with a quota?

Since the mid-1970s,the average U.S.tariff rate is

Price (dollars per unit 2 4 6 8 10 12 Quantity demanded (units per day) 20 19 18 17 16 15 Quantity supplied (units per day) 14 16 18 20 22 24 -The table above has the domestic demand and domestic supply schedules for a good.According to the table,the no-trade price of the good is

Who gains from exports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from exports?

Which of the following methods of restricting trade doesNOT create a deadweight loss?

Suevania opens its doors to trade with Barvania.Barvania has a comparative advantage in the production of machinery.Hence,once trade occurs Suevania's consumers will buy ________ machinery and pay ________ before.

A major reason why it is difficult to lower the barriers to free trade is

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million. -Based on the figure above,international trade leads to

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

The imposition of a tariff will typically government revenue and domestic production of the good.

The world price of steel is $100 a ton.Before international trade,the price of steel in India is $60 a ton.If India begins trading internationally,the price of steel in India and steel mills in India the quantity they produce.

Suevania opens its doors to trade with Barvania.Barvania has a comparative advantage in the production of machinery.Hence,once trade occurs Suevania's consumers will buy machinery and pay before.