Exam 7: Global Markets in Action

Who benefits from a tariff on a good?

Reducing a tariff will ________ the domestic production of the good and ________ the total domestic consumption of the good.

A tariff

Suppose that elimination of tariffs on agricultural products means that 1,000 farm workers lose jobs that pay an average of $20,000 per year. At the same time, because of the importation of relatively cheaper foreign vegetables, 150 million consumers save $2 per year on their grocery bills. a) What is the total income lost by farm workers because of the free trade? b) What is the total dollar amount saved by all consumers combined? c) Which is greater, the lost income or the consumer savings? Do the benefits of free trade out-weigh the costs in this simple example? d) Which group is most likely to become politically involved over the issue of removing the tariffs, the farm workers or the consumers? Why?

An import quota restricts ________ and is designed to protect domestic ________.

Import quotas are less damaging to an economy than are tariffs.

During the Great Depression in the 1930s, the average tariff level in the United States peaked at about

When the United States exports a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus.

The figure shows the market for shirts in the United States, where D is the U.S demand curve and S is the U.S. supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt. -In the figure above, the deadweight loss from the tariff is ________.

A difference between a quota and a tariff is that

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. This fact means that

A U.S. tariff imposed on items that can be produced more cheaply abroad

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

Of the groups listed below, which is most likely to lobby for protection?

A tariff is

Japan was accused of dumping in the steel industry within the United States when it

________ occurs when a foreign firm sells its exports at a lower price than it costs to produce the goods.

The United States has a comparative advantage in producing airplanes if

The figure shows the market for shirts in the United States, where D is the U.S demand curve and S is the U.S. supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt. -In the figure above, the tariff ________ U.S. imports of shirts by ________ million shirts per year.

If the United States imposes a tariff on imported cars, the