Question 1

A tariff is a tax that is imposed by the ________ country when an ________ good crosses its international boundary.

Accepted Answer

A) exporting; imported 
B) importing; exported 
C) exporting; exported 
D) importing; imported 
E) importing or exporting; imported or exported 
A) exporting; imported 
B) importing; exported 
C) exporting; exported 
D) importing; imported 
E) importing or exporting; imported or exported

Question 2

Which of the following statements is true?

Accepted Answer

A) International trade raises wages in developing countries. 
B) International trade with rich industrial countries forces people in the developing countries to work for lower wages. 
C) International trade leads to job losses in both import competing industries and exporting industries. 
D) Unlike other types of international trade, offshore outsourcing does not bring any gains from trade. 
E) International trade encourages lax environmental standards. 
A) International trade raises wages in developing countries. 
B) International trade with rich industrial countries forces people in the developing countries to work for lower wages. 
C) International trade leads to job losses in both import competing industries and exporting industries. 
D) Unlike other types of international trade, offshore outsourcing does not bring any gains from trade. 
E) International trade encourages lax environmental standards.

Question 3

Choose the statement that is incorrect.

Accepted Answer

A) Free trade destroys some jobs. 
B) Imports create jobs for retailers that sell imported goods and for firms that service those goods. 
C) Imports create income in the rest of the world, some of which is spent on Canadian-made goods and services. 
D) Free trade brings about a global rationalization of labour. 
E) Protection saves jobs at a low cost. 
A) Free trade destroys some jobs. 
B) Imports create jobs for retailers that sell imported goods and for firms that service those goods. 
C) Imports create income in the rest of the world, some of which is spent on Canadian-made goods and services. 
D) Free trade brings about a global rationalization of labour. 
E) Protection saves jobs at a low cost.

Question 4

Among the following, the domestic government gains the most revenue when it

Accepted Answer

A) imposes an import quota. 
B) eliminates an import quota. 
C) encourages freer trade. 
D) imposes a tariff. 
E) increases the demand for a domestically-produced good. 
A) imposes an import quota. 
B) eliminates an import quota. 
C) encourages freer trade. 
D) imposes a tariff. 
E) increases the demand for a domestically-produced good.

Question 5

Table 7.3.1
Canada's Market for Widgets
  
-Table 7.3.1 shows the Canadian supply of and demand for widgets.Widgets are available on the world market for $7.Canadian widget producers convince the government to protect the domestic industry from cheap imports.If the Canadian government sets an import quota of 8 million widgets, the resulting price of a widget in Canada will be ________, and domestic production will be ________.

Accepted Answer

A) $6; 40 million 
B) $7; 36 million 
C) $8; 32 million 
D) $9; 28 million 
E) $10; 32 million 
A) $6; 40 million 
B) $7; 36 million 
C) $8; 32 million 
D) $9; 28 million 
E) $10; 32 million

Question 6

Refer to the figure below to answer the following questions.
   
Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ consumer surplus in Canada by ________.

Accepted Answer

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

Question 7

If a country imposes a tariff on an imported good, the tariff ________ the price in the importing country and ________ the quantity of imports.

Accepted Answer

A) raises; increases 
B) raises; does not change 
C) lowers; does not change 
D) lowers; increases 
E) raises; decreases 
A) raises; increases 
B) raises; does not change 
C) lowers; does not change 
D) lowers; increases 
E) raises; decreases

Question 8

Refer to the figure below to answer the following questions.
   
Figure 7.3.1
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Canada imposes a tariff on imported shirts of $4 per shirt.
-Refer to Figure 7.3.1.The Canadian government's revenue from the tariff is ________.

Accepted Answer

A) $64 million 
B) $32 million 
C) $128 million 
D) $48 million 
E) $480 million 
A) $64 million 
B) $32 million 
C) $128 million 
D) $48 million 
E) $480 million

Question 9

A country moves from a situation of no trade to a situation where it imports a good.Which of the following does not occur in the market for this good in the importing country?

Accepted Answer

A) Deadweight loss decreases. 
B) Consumer surplus increases. 
C) Producer surplus decreases. 
D) Workers in the domestic industry lose. 
E) Total surplus increases. 
A) Deadweight loss decreases. 
B) Consumer surplus increases. 
C) Producer surplus decreases. 
D) Workers in the domestic industry lose. 
E) Total surplus increases.

Question 10

A key difference between tariffs and import quotas is that

Accepted Answer

A) consumers are hurt with import quotas but not with tariffs. 
B) consumers are hurt with tariffs but not with import quotas. 
C) the government receives revenue with a tariff, but the importer makes a profit with an import quota. 
D) the government receives revenue with an import quota, but the importer makes a profit with a tariff. 
E) producer surplus increases with a tariff and decreases with an import quota. 
A) consumers are hurt with import quotas but not with tariffs. 
B) consumers are hurt with tariffs but not with import quotas. 
C) the government receives revenue with a tariff, but the importer makes a profit with an import quota. 
D) the government receives revenue with an import quota, but the importer makes a profit with a tariff. 
E) producer surplus increases with a tariff and decreases with an import quota.

Question 11

The fundamental force that drives international trade is

Accepted Answer

A) comparative advantage. 
B) absolute advantage. 
C) a countries' desire to increase their trade surplus. 
D) cheap labour in countries like China and India. 
E) unemployment of factors of production. 
A) comparative advantage. 
B) absolute advantage. 
C) a countries' desire to increase their trade surplus. 
D) cheap labour in countries like China and India. 
E) unemployment of factors of production.

Question 12

Who benefits from imports?

Accepted Answer

A) domestic consumers 
B) domestic producers 
C) foreign consumers 
D) domestic workers in the industry 
E) everyone benefits 
A) domestic consumers 
B) domestic producers 
C) foreign consumers 
D) domestic workers in the industry 
E) everyone benefits

Question 13

Table 7.2.1
  
-Table 7.2.1 shows a country's demand and supply schedules.Based on Table 7.2.1, at what world price would the country import?

Accepted Answer

A) at exactly $8 a unit 
B) any price above $8 a unit 
C) a price of $10 a unit 
D) a price of $20 a unit 
E) a price below $8 a unit 
A) at exactly $8 a unit 
B) any price above $8 a unit 
C) a price of $10 a unit 
D) a price of $20 a unit 
E) a price below $8 a unit

Question 14

Canada exports athletic coaching services and imports computer tech support.The price of computer tech support in Canada is ________ with international trade than without international trade.As a result of trade in computer tech support, the Canadian producer surplus from computer tech support ________.

Accepted Answer

A) higher; increases 
B) lower; decreases 
C) lower; does not change 
D) higher; decreases 
E) lower; increases 
A) higher; increases 
B) lower; decreases 
C) lower; does not change 
D) higher; decreases 
E) lower; increases

Question 15

Which of the following statements about Canada's international trade in 2013 is correct?

Accepted Answer

A) The value of Canada's imports exceeded the value of Canada's exports. 
B) The value of Canada's exports was about 45 percent of the value of total expenditure in Canada. 
C) Canada imported only goods. 
D) Canada was the world's second largest trader. 
E) Canada exported only goods. 
A) The value of Canada's imports exceeded the value of Canada's exports. 
B) The value of Canada's exports was about 45 percent of the value of total expenditure in Canada. 
C) Canada imported only goods. 
D) Canada was the world's second largest trader. 
E) Canada exported only goods.

Question 16

Refer to the figure below to answer the following question.
   
Figure 7.3.2
-Refer to Figure 7.3.2.The supply of peanuts in Canada is made up of Canadian grown peanuts and imported peanuts.Initially, Canada engages in free trade in the peanut market.Then Canada puts a quota on peanut imports.The graph shows the Canadian market for peanuts when the Canadian government puts a quota on peanut imports.The Canadian consumer surplus that is redistributed to Canadian producers is ________ and the quota creates a deadweight loss equal to ________.

Accepted Answer

A) area B + C + D + E; zero 
B) area B + C + F; area D 
C) area B; area D + E 
D) area B; area C + E 
E) area B + C + D; area E + F 
A) area B + C + D + E; zero 
B) area B + C + F; area D 
C) area B; area D + E 
D) area B; area C + E 
E) area B + C + D; area E + F

Question 17

Dumping occurs when a foreign firm

Accepted Answer

A) pollutes international waters. 
B) disposes of waste material internationally. 
C) sells inferior output to foreigners. 
D) sells its exports at a lower price than its cost of production. 
E) sells its output at a lower price in a foreign country than in the country where it produces the good. 
A) pollutes international waters. 
B) disposes of waste material internationally. 
C) sells inferior output to foreigners. 
D) sells its exports at a lower price than its cost of production. 
E) sells its output at a lower price in a foreign country than in the country where it produces the good.

Question 18

Refer to the figure below to answer the following questions.
   
Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, Canada ________ helicopters per year.

Accepted Answer

A) exports 480 
B) exports 720 
C) imports 480 
D) imports 240 
E) exports 240 
A) exports 480 
B) exports 720 
C) imports 480 
D) imports 240 
E) exports 240

Question 19

A market is open to international trade.At the world price, the quantity demanded is 150 units and the quantity supplied is 200 units.This country will

Accepted Answer

A) import 50 units. 
B) export 200 units. 
C) import 150 units. 
D) import 200 units. 
E) export 50 units. 
A) import 50 units. 
B) export 200 units. 
C) import 150 units. 
D) import 200 units. 
E) export 50 units.

Question 20

________ occurs when a foreign firm sells its exports at a lower price than its cost of production.

Accepted Answer

A) Comparative advantage 
B) Learning-by-doing 
C) A tariff 
D) An infant industry 
E) Dumping 
A) Comparative advantage 
B) Learning-by-doing 
C) A tariff 
D) An infant industry 
E) Dumping

A tariff is a tax that is imposed by the country when an good crosses its international boundary.

Which of the following statements is true?

Choose the statement that is incorrect.

Among the following, the domestic government gains the most revenue when it

If a country imposes a tariff on an imported good, the tariff the price in the importing country and the quantity of imports.

A country moves from a situation of no trade to a situation where it imports a good.Which of the following does not occur in the market for this good in the importing country?

A key difference between tariffs and import quotas is that

The fundamental force that drives international trade is

Who benefits from imports?

Table 7.2.1 -Table 7.2.1 shows a country's demand and supply schedules.Based on Table 7.2.1, at what world price would the country import?

Canada exports athletic coaching services and imports computer tech support.The price of computer tech support in Canada is with international trade than without international trade.As a result of trade in computer tech support, the Canadian producer surplus from computer tech support .

Which of the following statements about Canada's international trade in 2013 is correct?

Dumping occurs when a foreign firm

A market is open to international trade.At the world price, the quantity demanded is 150 units and the quantity supplied is 200 units.This country will

________ occurs when a foreign firm sells its exports at a lower price than its cost of production.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 7: Global Markets in Action

A tariff is a tax that is imposed by the ________ country when an ________ good crosses its international boundary.

Which of the following statements is true?

Choose the statement that is incorrect.

Among the following, the domestic government gains the most revenue when it

If a country imposes a tariff on an imported good, the tariff ________ the price in the importing country and ________ the quantity of imports.

A country moves from a situation of no trade to a situation where it imports a good.Which of the following does not occur in the market for this good in the importing country?

A key difference between tariffs and import quotas is that

The fundamental force that drives international trade is

Who benefits from imports?

Table 7.2.1 -Table 7.2.1 shows a country's demand and supply schedules.Based on Table 7.2.1, at what world price would the country import?

Which of the following statements about Canada's international trade in 2013 is correct?

Dumping occurs when a foreign firm

A market is open to international trade.At the world price, the quantity demanded is 150 units and the quantity supplied is 200 units.This country will

________ occurs when a foreign firm sells its exports at a lower price than its cost of production.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

A tariff is a tax that is imposed by the country when an good crosses its international boundary.

If a country imposes a tariff on an imported good, the tariff the price in the importing country and the quantity of imports.