Question 1

When a nation exports a good,its ________ surplus increases,and when it imports a good,its ________ surplus increases.

Accepted Answer

A)  consumer; producer 
B)  consumer; consumer 
C)  producer; producer 
D)  producer; consumer 
E)  total; consumer 
A)  consumer; producer 
B)  consumer; consumer 
C)  producer; producer 
D)  producer; consumer 
E)  total; consumer

Question 2

When a nation exports a good or service in which it has a comparative advantage,production of the good or service

Accepted Answer

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

Question 3

Economists argue for free trade in import markets because

Accepted Answer

A)  all consumers and producers benefit from importing goods. 
B)  the gains to the U.S. producers outweigh the losses to the U.S. consumers. 
C)  the gains to the U.S. consumers outweigh the losses to the U.S. producers. 
D)  no one is made worse off by importing goods. 
E)  importing goods decreases total surplus. 
A)  all consumers and producers benefit from importing goods. 
B)  the gains to the U.S. producers outweigh the losses to the U.S. consumers. 
C)  the gains to the U.S. consumers outweigh the losses to the U.S. producers. 
D)  no one is made worse off by importing goods. 
E)  importing goods decreases total surplus.

Question 4

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per television set) }
\end{array} & \begin{array} { c } 
\text { Quantity supplied } \
\text { (millions of sets per year) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (millions of sets per year) }
\end{array} \
\hline 400 & 1 & 10 \
600 & 2 & 8 \
800 & 3 & 6 \
1,000 & 4 & 4 \
1,200 & 5 & 2 \
\hline
\end{array}$$
-The United States imports television sets from Japan.The table above contains the U.S.demand and U.S.supply schedules for television sets.The world price of a television set is $600 per set.
a.With no trade,what is the domestic price and quantity of television sets?
b.At the world price,what is the quantity of sets demanded in the United States?
c.At the world price,how many sets are produced in the United States?
d.At the world price,how many sets are imported into the United States?
e.What is the opportunity cost of producing the 4-millionth television set in the United States? In Japan?

Accepted Answer

a.In the absence of trade,the price is $

Question 5

Because the United States has ________ advantage compared to China in producing airplanes,China can buy airplanes from the United States at a ________ opportunity cost than that at which China can produce them.

Accepted Answer

A)  comparative; lower 
B)  comparative; higher 
C)  absolute; lower 
D)  absolute; higher 
E)  None of the above because China will produce airplanes and sell them to the United States. 
A)  comparative; lower 
B)  comparative; higher 
C)  absolute; lower 
D)  absolute; higher 
E)  None of the above because China will produce airplanes and sell them to the United States.

Question 6

Which of the following is correct?
i.U.S.total surplus decreases when the United States exports a good.
ii.U.S.total surplus decreases when the United States imports a good.
iii.U.S.total surplus increases when the United States imports a good and when it exports a good.

Accepted Answer

A)  i only 
B)  iii only 
C)  i and ii 
D)  ii only 
E)  None of the above because the U.S. total surplus does not change as a result of trade 
A)  i only 
B)  iii only 
C)  i and ii 
D)  ii only 
E)  None of the above because the U.S. total surplus does not change as a result of trade

Question 7

When a tariff supporter argues that foreign producers are selling their products for prices below the costs of production,which of the following is being used?

Accepted Answer

A)  Save domestic jobs argument 
B)  National security argument 
C)  Dumping argument 
D)  Infant-industry argument 
E)  Diversity and stability argument 
A)  Save domestic jobs argument 
B)  National security argument 
C)  Dumping argument 
D)  Infant-industry argument 
E)  Diversity and stability argument

Question 8

-The above figure shows the U.S.market for flip-flops.With international trade,the equilibrium price in the United States is ________ and the United States ________ flip-flops.

Accepted Answer

A)  $12; imports 
B)  $12; does not trade 
C)  $12; exports 
D)  $14; imports 
E)  $14; does not trade 
A)  $12; imports 
B)  $12; does not trade 
C)  $12; exports 
D)  $14; imports 
E)  $14; does not trade

Question 9

-The figure above shows the U.S.demand and U.S.supply curves for cherries.At a world price of $2 per pound once international trade occurs,the production of cherries in the United States will equal

Accepted Answer

A)  200,000 pounds. 
B)  400,000 pounds. 
C)  600,000 pounds. 
D)  800,000 pounds. 
E)  0 pounds. 
A)  200,000 pounds. 
B)  400,000 pounds. 
C)  600,000 pounds. 
D)  800,000 pounds. 
E)  0 pounds.

Question 10

-The above figure shows the U.S.market for 1 carat diamonds.With free trade,U.S.production of diamonds is equal to ________ diamonds.When the quota illustrated in the figure is in place,U.S.production is equal to ________ diamonds.

Accepted Answer

A)  100,000; 300,000 
B)  100,000; 500,000 
C)  300,000; 100,000 
D)  300,000; 500,000 
E)  900,000; 700,000 
A)  100,000; 300,000 
B)  100,000; 500,000 
C)  300,000; 100,000 
D)  300,000; 500,000 
E)  900,000; 700,000

Question 11

The figure above shows the U.S. market for T-shirts, where SUS is the domestic supply curve and DUS is the domestic demand curve. The world price of a T-shirt is $5. The U.S. government imposes a $2 per unit tariff on imported T-shirts.
-The figure above shows that the deadweight loss from the tariff is

Accepted Answer

A)  $20 million per year. 
B)  $30 million per year. 
C)  $15 million per year. 
D)  $55 million per year. 
E)  zero. 
A)  $20 million per year. 
B)  $30 million per year. 
C)  $15 million per year. 
D)  $55 million per year. 
E)  zero.

Question 12

Relative to free trade,domestic producers of a good are ________ off with a tariff because of the ________ .

Accepted Answer

A)  better; higher price and greater quantity sold 
B)  better; higher price and smaller quantity sold 
C)  better; lower price and greater quantity sold 
D)  worse; lower price and smaller quantity sold 
E)  worse; higher price and greater quantity sold 
A)  better; higher price and greater quantity sold 
B)  better; higher price and smaller quantity sold 
C)  better; lower price and greater quantity sold 
D)  worse; lower price and smaller quantity sold 
E)  worse; higher price and greater quantity sold

Question 13

-The above figure shows the U.S.market for wheat.With international trade,U.S.consumers buy ________ tons of wheat and U.S.producers produce ________ tons of wheat.

Accepted Answer

A)  700,000; 300,000 
B)  500,000; 500,000 
C)  300,000; 500,000 
D)  300,000; 700,000 
E)  500,000; 700,000 
A)  700,000; 300,000 
B)  500,000; 500,000 
C)  300,000; 500,000 
D)  300,000; 700,000 
E)  500,000; 700,000

Question 14

Dumping is defined as the situation in which

Accepted Answer

A)  domestic producers sell a product at prices below the cost of production. 
B)  foreign producers sell a product at a price below the cost of production. 
C)  foreign producers sell a product at a price above a fair level. 
D)  domestic producers cut production to drive up domestic prices. 
E)  domestic producers are protected by tariffs. 
A)  domestic producers sell a product at prices below the cost of production. 
B)  foreign producers sell a product at a price below the cost of production. 
C)  foreign producers sell a product at a price above a fair level. 
D)  domestic producers cut production to drive up domestic prices. 
E)  domestic producers are protected by tariffs.

Question 15

As a result of importing a good,domestic producers ________ the quantity produced and the price of the good ________.

Accepted Answer

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

Question 16

A specified maximum amount of the good that may be imported in a given period of time is a

Accepted Answer

A)  forcible limit. 
B)  quota. 
C)  tariff. 
D)  sanction. 
E)  dumping limit. 
A)  forcible limit. 
B)  quota. 
C)  tariff. 
D)  sanction. 
E)  dumping limit.

Question 17

-Based on the figure above,international trade leads to

Accepted Answer

A)  a net gain of surplus of $60 million. 
B)  a net loss of surplus of $60 million. 
C)  a net gain of surplus of $90 million. 
D)  a net loss of surplus of $90 million. 
E)  no net gain or loss of surplus. 
A)  a net gain of surplus of $60 million. 
B)  a net loss of surplus of $60 million. 
C)  a net gain of surplus of $90 million. 
D)  a net loss of surplus of $90 million. 
E)  no net gain or loss of surplus.

Question 18

-The above figure shows the U.S.market for replacement cell phone batteries.Suppose the U.S.government imposes the tariff illustrated in the figure.The tariff is equal to ________ and the price U.S.consumers pay ________ compared to the price paid when there was free trade.

Accepted Answer

A)  $2; decreases 
B)  $14; decreases 
C)  $2; increases 
D)  $12; increases 
E)  $14; increases 
A)  $2; decreases 
B)  $14; decreases 
C)  $2; increases 
D)  $12; increases 
E)  $14; increases

Question 19

A nation will export a good if its

Accepted Answer

A)  no-trade, domestic price is equal to the world price. 
B)  no-trade, domestic price is less than the world price 
C)  no-trade, domestic price is greater than the world price. 
D)  no-trade, domestic quantity is less than the world quantity. 
E)  no-trade, domestic quantity is greater than the world quantity. 
A)  no-trade, domestic price is equal to the world price. 
B)  no-trade, domestic price is less than the world price 
C)  no-trade, domestic price is greater than the world price. 
D)  no-trade, domestic quantity is less than the world quantity. 
E)  no-trade, domestic quantity is greater than the world quantity.

Question 20

-The above figure shows the U.S.market for flip-flops.With no international trade,the price in the United States for flip-flops is ________.With international trade,the price in the United States for flip-flops is ________.

Accepted Answer

A)  $12; $14 
B)  $500; $300 
C)  $14; $12 
D)  $700; $300 
E)  $500; $700 
A)  $12; $14 
B)  $500; $300 
C)  $14; $12 
D)  $700; $300 
E)  $500; $700

When a nation exports a good,its surplus increases,and when it imports a good,its surplus increases.

When a nation exports a good or service in which it has a comparative advantage,production of the good or service

Economists argue for free trade in import markets because

Because the United States has advantage compared to China in producing airplanes,China can buy airplanes from the United States at a opportunity cost than that at which China can produce them.

Which of the following is correct? i.U.S.total surplus decreases when the United States exports a good. ii.U.S.total surplus decreases when the United States imports a good. iii.U.S.total surplus increases when the United States imports a good and when it exports a good.

When a tariff supporter argues that foreign producers are selling their products for prices below the costs of production,which of the following is being used?

-The above figure shows the U.S.market for flip-flops.With international trade,the equilibrium price in the United States is and the United States flip-flops.

-The figure above shows the U.S.demand and U.S.supply curves for cherries.At a world price of $2 per pound once international trade occurs,the production of cherries in the United States will equal

-The above figure shows the U.S.market for 1 carat diamonds.With free trade,U.S.production of diamonds is equal to diamonds.When the quota illustrated in the figure is in place,U.S.production is equal to diamonds.

Relative to free trade,domestic producers of a good are off with a tariff because of the .

-The above figure shows the U.S.market for wheat.With international trade,U.S.consumers buy tons of wheat and U.S.producers produce tons of wheat.

Dumping is defined as the situation in which

As a result of importing a good,domestic producers the quantity produced and the price of the good .

A specified maximum amount of the good that may be imported in a given period of time is a

-Based on the figure above,international trade leads to

-The above figure shows the U.S.market for replacement cell phone batteries.Suppose the U.S.government imposes the tariff illustrated in the figure.The tariff is equal to and the price U.S.consumers pay compared to the price paid when there was free trade.

A nation will export a good if its

-The above figure shows the U.S.market for flip-flops.With no international trade,the price in the United States for flip-flops is .With international trade,the price in the United States for flip-flops is .

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

When a nation exports a good,its ________ surplus increases,and when it imports a good,its ________ surplus increases.

When a nation exports a good or service in which it has a comparative advantage,production of the good or service

Economists argue for free trade in import markets because

Because the United States has ________ advantage compared to China in producing airplanes,China can buy airplanes from the United States at a ________ opportunity cost than that at which China can produce them.

Which of the following is correct? i.U.S.total surplus decreases when the United States exports a good. ii.U.S.total surplus decreases when the United States imports a good. iii.U.S.total surplus increases when the United States imports a good and when it exports a good.

When a tariff supporter argues that foreign producers are selling their products for prices below the costs of production,which of the following is being used?

-The above figure shows the U.S.market for flip-flops.With international trade,the equilibrium price in the United States is ________ and the United States ________ flip-flops.

-The figure above shows the U.S.demand and U.S.supply curves for cherries.At a world price of $2 per pound once international trade occurs,the production of cherries in the United States will equal

-The above figure shows the U.S.market for 1 carat diamonds.With free trade,U.S.production of diamonds is equal to ________ diamonds.When the quota illustrated in the figure is in place,U.S.production is equal to ________ diamonds.

Relative to free trade,domestic producers of a good are ________ off with a tariff because of the ________ .

-The above figure shows the U.S.market for wheat.With international trade,U.S.consumers buy ________ tons of wheat and U.S.producers produce ________ tons of wheat.

Dumping is defined as the situation in which

As a result of importing a good,domestic producers ________ the quantity produced and the price of the good ________.

A specified maximum amount of the good that may be imported in a given period of time is a

-Based on the figure above,international trade leads to

-The above figure shows the U.S.market for replacement cell phone batteries.Suppose the U.S.government imposes the tariff illustrated in the figure.The tariff is equal to ________ and the price U.S.consumers pay ________ compared to the price paid when there was free trade.

A nation will export a good if its

-The above figure shows the U.S.market for flip-flops.With no international trade,the price in the United States for flip-flops is ________.With international trade,the price in the United States for flip-flops is ________.

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

When a nation exports a good,its surplus increases,and when it imports a good,its surplus increases.

Because the United States has advantage compared to China in producing airplanes,China can buy airplanes from the United States at a opportunity cost than that at which China can produce them.

-The above figure shows the U.S.market for flip-flops.With international trade,the equilibrium price in the United States is and the United States flip-flops.

-The above figure shows the U.S.market for 1 carat diamonds.With free trade,U.S.production of diamonds is equal to diamonds.When the quota illustrated in the figure is in place,U.S.production is equal to diamonds.

Relative to free trade,domestic producers of a good are off with a tariff because of the .

-The above figure shows the U.S.market for wheat.With international trade,U.S.consumers buy tons of wheat and U.S.producers produce tons of wheat.

As a result of importing a good,domestic producers the quantity produced and the price of the good .

-The above figure shows the U.S.market for replacement cell phone batteries.Suppose the U.S.government imposes the tariff illustrated in the figure.The tariff is equal to and the price U.S.consumers pay compared to the price paid when there was free trade.

-The above figure shows the U.S.market for flip-flops.With no international trade,the price in the United States for flip-flops is .With international trade,the price in the United States for flip-flops is .