Question 1

Generally speaking,protection from foreign competition benefits:

Accepted Answer

A) both domestic producers and foreign producers. 
B) both domestic consumers and foreign consumers 
C) domestic consumers and foreign consumers. 
D) neither domestic producers nor foreign producers. 
E) domestic producers at the expense of domestic consumers. 
A) both domestic producers and foreign producers. 
B) both domestic consumers and foreign consumers 
C) domestic consumers and foreign consumers. 
D) neither domestic producers nor foreign producers. 
E) domestic producers at the expense of domestic consumers. E

Question 2

Every country imposes tariffs on at least some imports.

Accepted Answer

A) True 
 B)False  True

Question 3

A customs union is an organization of nations whose members:

Accepted Answer

A) have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers. 
B) have no trade barriers among themselves but impose common trade barriers on nonmembers. 
C) have no trade barriers among themselves but each member country chooses its own trade policies toward nonmember countries. 
D) retaliate each other by raising reciprocal tariffs. 
E) neither have trade barriers among themselves nor impose any restriction on the nonmember countries. 
A) have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers. 
B) have no trade barriers among themselves but impose common trade barriers on nonmembers. 
C) have no trade barriers among themselves but each member country chooses its own trade policies toward nonmember countries. 
D) retaliate each other by raising reciprocal tariffs. 
E) neither have trade barriers among themselves nor impose any restriction on the nonmember countries. B

Question 4

Which of the following tools of commercial policy yields a revenue to the government?

Accepted Answer

A) Quota 
B) Tariff 
C) Export subsidy 
D) Government procurement policy 
E) Health and safety standards 
A) Quota 
B) Tariff 
C) Export subsidy 
D) Government procurement policy 
E) Health and safety standards

Question 5

The European Economic Community was created in 1957 by:

Accepted Answer

A) France,the United Kingdom,Italy,Belgium,the Netherlands,and Luxembourg. 
B) France,West Germany,Italy,Belgium,the Netherlands,and Luxemburg. 
C) France,West Germany,Italy,Belgium,the Netherlands,and the United Kingdom. 
D) France,West Germany,Italy,the United Kingdom,Belgium,the Netherlands,and Luxembourg. 
E) France,West Germany,Italy,Belgium,the United Kingdom,and Luxembourg. 
A) France,the United Kingdom,Italy,Belgium,the Netherlands,and Luxembourg. 
B) France,West Germany,Italy,Belgium,the Netherlands,and Luxemburg. 
C) France,West Germany,Italy,Belgium,the Netherlands,and the United Kingdom. 
D) France,West Germany,Italy,the United Kingdom,Belgium,the Netherlands,and Luxembourg. 
E) France,West Germany,Italy,Belgium,the United Kingdom,and Luxembourg.

Question 6

A monopoly exists when there is only one producer in an industry,and no close substitutes for the product exist.

Accepted Answer

A) True 
 B)False

Question 7

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established,it is not at all clear that government should even offer protection to reduce short-run losses.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm,Cicare,is the only player in this market.The firm caters to the global market and earns a profit of $10 million.Flettner,a German firm has been considering entering this market for a while,but it is aware that its entry will cause each firm to lose about $4 million.Although a government subsidy allows Flettner to enter the helicopter market,the company is unable to reap profits in the long run.Which of the following could have led to this outcome?

Accepted Answer

A) Flettner experienced high production costs due to inadequate supply of inputs. 
B) New firms had entered the helicopter industry. 
C) The German government ran a balance of payment deficit. 
D) The Argentine government retaliated by subsidizing Cicare. 
E) There was very low investment in research and development in this industry. 
A) Flettner experienced high production costs due to inadequate supply of inputs. 
B) New firms had entered the helicopter industry. 
C) The German government ran a balance of payment deficit. 
D) The Argentine government retaliated by subsidizing Cicare. 
E) There was very low investment in research and development in this industry.

Question 9

Which of the following countries is forbidden to impose export tariff by its constitution?

Accepted Answer

A) The United States 
B) Brazil 
C) United Kingdom 
D) Japan 
E) Mexico 
A) The United States 
B) Brazil 
C) United Kingdom 
D) Japan 
E) Mexico

Question 10

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market. Figure 21.1   In the figure,
PS1U1B11S1U1B0: Price of the good in the international market.
PS1U1B12S1U1B0: Price of the good in the domestic market after the imposition of tariff by the government.
PS1U1B13S1U1B0: No-trade price of the good in the domestic market.
-Refer to Figure 21.1.If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:

Accepted Answer

A) the import of the good by the domestic country increases by Q5 - Q4 units. 
B) the import of the good by the domestic country declines. 
C) the quantity of the good exported by the domestic country declines. 
D) the domestic country is in equilibrium. 
E) the quantity of the good exported by the domestic country increases. 
A) the import of the good by the domestic country increases by Q5 - Q4 units. 
B) the import of the good by the domestic country declines. 
C) the quantity of the good exported by the domestic country declines. 
D) the domestic country is in equilibrium. 
E) the quantity of the good exported by the domestic country increases.

Question 11

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 21.2   
-In Figure 21.2,if the world price per bushel of wheat is $25,how much wheat will be imported?

Accepted Answer

A) 450 bushels 
B) 350 bushels 
C) 200 bushels 
D) 150 bushels 
E) 300 bushels 
A) 450 bushels 
B) 350 bushels 
C) 200 bushels 
D) 150 bushels 
E) 300 bushels

Question 12

One danger associated with calls for fairness based on reciprocity is that,calls for fair trade may be invoked in cases where,foreign restrictions on U.S.imports do not actually exist.

Accepted Answer

A) True 
 B)False

Question 13

By restricting the amount of a good that may be imported,quotas:

Accepted Answer

A) increase the price,thus causing domestic producers to sell less than they would with free trade. 
B) lower the price,thus allowing domestic producers to sell more than they would with free trade. 
C) increase the price and allow domestic producers to sell more at a higher price than they would with free trade. 
D) lower the price,thus causing domestic producers to realize lower total revenue from the quota item. 
E) simply replace foreign production with domestic production. 
A) increase the price,thus causing domestic producers to sell less than they would with free trade. 
B) lower the price,thus allowing domestic producers to sell more than they would with free trade. 
C) increase the price and allow domestic producers to sell more at a higher price than they would with free trade. 
D) lower the price,thus causing domestic producers to realize lower total revenue from the quota item. 
E) simply replace foreign production with domestic production.

Question 14

If international trade is restricted by the government:

Accepted Answer

A) domestic consumers are benefited. 
B) domestic producers are adversely affected. 
C) consumers in the importing country are required to pay higher prices for the goods. 
D) consumers can access to better quality product at lower prices. 
E) the resources are allocated to their highest paid uses. 
A) domestic consumers are benefited. 
B) domestic producers are adversely affected. 
C) consumers in the importing country are required to pay higher prices for the goods. 
D) consumers can access to better quality product at lower prices. 
E) the resources are allocated to their highest paid uses.

Question 15

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 21.2   
-According to Figure 21.2,if the world price per bushel of wheat is $25,how much is the domestic demand?

Accepted Answer

A) 400 bushels 
B) 450 bushels 
C) 200 bushels 
D) 300 bushels 
E) 150 bushels 
A) 400 bushels 
B) 450 bushels 
C) 200 bushels 
D) 300 bushels 
E) 150 bushels

Question 16

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market. Figure 21.1   In the figure,
PS1U1B11S1U1B0: Price of the good in the international market.
PS1U1B12S1U1B0: Price of the good in the domestic market after the imposition of tariff by the government.
PS1U1B13S1U1B0: No-trade price of the good in the domestic market.
-According to Figure 21.1,if the international price of the good is P1,which of the following statements is true?

Accepted Answer

A) The domestic market is in equilibrium. 
B) There is an excess supply in the domestic market by the amount Q4 - Q2. 
C) The country will export Q3 - Q1 units of the good. 
D) There is an excess demand of Q4 - Q2 units in the domestic market. 
E) The country needs to import Q5 - Q1 units of the good to satisfy domestic demand. 
A) The domestic market is in equilibrium. 
B) There is an excess supply in the domestic market by the amount Q4 - Q2. 
C) The country will export Q3 - Q1 units of the good. 
D) There is an excess demand of Q4 - Q2 units in the domestic market. 
E) The country needs to import Q5 - Q1 units of the good to satisfy domestic demand.

Question 17

According to economists,which of the following acts was partially responsible for the Great Depression of the 1930s?

Accepted Answer

A) The Robinson-Patman Act 
B) The National Recovery Act 
C) The Smoot-Hawley Tariff Act 
D) The Sarbanes-Oxley Act 
E) The Sherman Antitrust Act 
A) The Robinson-Patman Act 
B) The National Recovery Act 
C) The Smoot-Hawley Tariff Act 
D) The Sarbanes-Oxley Act 
E) The Sherman Antitrust Act

Question 18

Protection from foreign competition benefits domestic producers in the protected industry at the expense of domestic consumers.

Accepted Answer

A) True 
 B)False

Question 19

Since individual consumers do not know how much of the price they pay for a commodity is due to protection,consumers rarely lobby their political representatives to eliminate protection and reduce prices.

Accepted Answer

A) True 
 B)False

Question 20

Proponents of strategic trade policy contend that:

Accepted Answer

A) government should tax domestic firms to generate greater revenues. 
B) government should encourage imports to prevent monopoly in the domestic market. 
C) government should provide subsidies to domestic firms with decreasing costs. 
D) government should discourage domestic firms with decreasing costs from continuing production. 
E) government should tax domestic import competing firms. 
A) government should tax domestic firms to generate greater revenues. 
B) government should encourage imports to prevent monopoly in the domestic market. 
C) government should provide subsidies to domestic firms with decreasing costs. 
D) government should discourage domestic firms with decreasing costs from continuing production. 
E) government should tax domestic import competing firms.

Generally speaking,protection from foreign competition benefits:

Every country imposes tariffs on at least some imports.

A customs union is an organization of nations whose members:

Which of the following tools of commercial policy yields a revenue to the government?

The European Economic Community was created in 1957 by:

A monopoly exists when there is only one producer in an industry,and no close substitutes for the product exist.

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established,it is not at all clear that government should even offer protection to reduce short-run losses.

Which of the following countries is forbidden to impose export tariff by its constitution?

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 21.2 -In Figure 21.2,if the world price per bushel of wheat is $25,how much wheat will be imported?

One danger associated with calls for fairness based on reciprocity is that,calls for fair trade may be invoked in cases where,foreign restrictions on U.S.imports do not actually exist.

By restricting the amount of a good that may be imported,quotas:

If international trade is restricted by the government:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 21.2 -According to Figure 21.2,if the world price per bushel of wheat is $25,how much is the domestic demand?

According to economists,which of the following acts was partially responsible for the Great Depression of the 1930s?

Protection from foreign competition benefits domestic producers in the protected industry at the expense of domestic consumers.

Since individual consumers do not know how much of the price they pay for a commodity is due to protection,consumers rarely lobby their political representatives to eliminate protection and reduce prices.

Proponents of strategic trade policy contend that:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

Filters

Exam 21: International Trade Restrictions

Generally speaking,protection from foreign competition benefits:

Every country imposes tariffs on at least some imports.

A customs union is an organization of nations whose members:

Which of the following tools of commercial policy yields a revenue to the government?

The European Economic Community was created in 1957 by:

A monopoly exists when there is only one producer in an industry,and no close substitutes for the product exist.

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established,it is not at all clear that government should even offer protection to reduce short-run losses.

Which of the following countries is forbidden to impose export tariff by its constitution?

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 21.2 -In Figure 21.2,if the world price per bushel of wheat is $25,how much wheat will be imported?

One danger associated with calls for fairness based on reciprocity is that,calls for fair trade may be invoked in cases where,foreign restrictions on U.S.imports do not actually exist.

By restricting the amount of a good that may be imported,quotas:

If international trade is restricted by the government:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 21.2 -According to Figure 21.2,if the world price per bushel of wheat is $25,how much is the domestic demand?

According to economists,which of the following acts was partially responsible for the Great Depression of the 1930s?

Protection from foreign competition benefits domestic producers in the protected industry at the expense of domestic consumers.

Since individual consumers do not know how much of the price they pay for a commodity is due to protection,consumers rarely lobby their political representatives to eliminate protection and reduce prices.

Proponents of strategic trade policy contend that:

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

Filters