Question 1

Suppose the country of Mooland imposes a tariff on imported beef from the country of Aqualand. As a result of the tariff, the

Accepted Answer

A)  price of beef in Mooland falls. 
B)  quantity of beef exported by Mooland increases. 
C)  quantity of beef imported by Mooland decreases. 
D)  quantity of beef imported by Mooland increases. 
A)  price of beef in Mooland falls. 
B)  quantity of beef exported by Mooland increases. 
C)  quantity of beef imported by Mooland decreases. 
D)  quantity of beef imported by Mooland increases.

Question 2

A tariff is a

Accepted Answer

A)  tax on an exported good or service. 
B)  tax on an imported good or service. 
C)  subsidy on an exported good. 
D)  subsidy on an imported good. 
A)  tax on an exported good or service. 
B)  tax on an imported good or service. 
C)  subsidy on an exported good. 
D)  subsidy on an imported good.

Question 3

-The above figure shows the domestic supply of and domestic demand for an imported good. The world price is $15 per unit.
a) At the world price of $15 per unit, what is the domestic consumption and domestic production?
b) At the world price of $15 per unit, what is the quantity imported?
c) If the government imposes a tariff of $5 per unit, what is the domestic consumption and domestic production?
d) With the $5 per unit tariff, what is the quantity imported?
e) How much revenue does the government collect with a tariff of $5 per unit?

Accepted Answer

a) Domestic consumption is 8 million uni

Question 4

A tariff hurts

Accepted Answer

A)  the government by decreasing its revenue. 
B)  domestic producers who can't compete with cheaper imports. 
C)  consumers who pay more for the imported good. 
D)  All of the above answers are correct. 
A)  the government by decreasing its revenue. 
B)  domestic producers who can't compete with cheaper imports. 
C)  consumers who pay more for the imported good. 
D)  All of the above answers are correct.

Question 5

An import quota on sugar

Accepted Answer

A)  increases the imports of sugar and lowers its price. 
B)  increases the imports of sugar and raises its price. 
C)  increases the demand for sugar and raises its price. 
D)  decreases the imports of sugar and raises its price. 
A)  increases the imports of sugar and lowers its price. 
B)  increases the imports of sugar and raises its price. 
C)  increases the demand for sugar and raises its price. 
D)  decreases the imports of sugar and raises its price.

Question 6

During the first 6 months of 2008, the United States imported more than 1.6 billion pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. What would be a potential consequence of such a trade restriction?

Accepted Answer

A)  The U.S. price of coffee would increase. 
B)  U.S. consumers would drink more coffee. 
C)  The quantity of coffee imported into the United States would increase. 
D)  U.S. consumer surplus from coffee would increase. 
A)  The U.S. price of coffee would increase. 
B)  U.S. consumers would drink more coffee. 
C)  The quantity of coffee imported into the United States would increase. 
D)  U.S. consumer surplus from coffee would increase.

Question 7

Trade barriers are politically popular because

Accepted Answer

A)  they are a way to avoid trade wars and still protect domestic producers. 
B)  people recognize their use as a negotiating tool in international relations. 
C)  their benefits are widespread, while their costs are highly concentrated. 
D)  their benefits are concentrated, while their costs are widespread. 
A)  they are a way to avoid trade wars and still protect domestic producers. 
B)  people recognize their use as a negotiating tool in international relations. 
C)  their benefits are widespread, while their costs are highly concentrated. 
D)  their benefits are concentrated, while their costs are widespread.

Question 8

The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, international trade ________ consumer surplus in the United States by ________.

Accepted Answer

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

Question 9

Trade war occurs when, after a tariff is imposed, other countries retaliate with their own tariff.

Accepted Answer

A) True 
 B)False

Question 10

Currently Belize, a country in Central America, has a small coffee industry but does not export any coffee. Suppose the government of Belize, in order to protect the new coffee industry to enable it to grow into a mature industry that can compete in world markets, places a tariff on the importation of coffee. What is the argument that has been used to support the tariff on coffee?

Accepted Answer

A)  the infant-industry argument 
B)  the dumping argument 
C)  protection of Belize coffee workers 
D)  to prevent rich countries from exploiting developing countries 
A)  the infant-industry argument 
B)  the dumping argument 
C)  protection of Belize coffee workers 
D)  to prevent rich countries from exploiting developing countries

Question 11

A tariff is imposed on a good. This will ________ the domestic producer surplus, ________ the domestic consumer surplus, and ________ total surplus in the home country.

Accepted Answer

A)  increase; decrease; decrease 
B)  increase; decrease; increase 
C)  increase; remain unchanged; increase 
D)  increase; increase; increase 
A)  increase; decrease; decrease 
B)  increase; decrease; increase 
C)  increase; remain unchanged; increase 
D)  increase; increase; increase

Question 12

Who benefits from an import quota on a good?

Accepted Answer

A)  domestic consumers of the good 
B)  foreign governments 
C)  domestic producers of the good 
D)  foreign producers of the good 
A)  domestic consumers of the good 
B)  foreign governments 
C)  domestic producers of the good 
D)  foreign producers of the good

Question 13

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will ________, producer surplus will ________, and total surplus will ________.

Accepted Answer

A)  increase; decrease; increase 
B)  increase; decrease; decrease 
C)  decrease; decrease; decrease 
D)  decrease; increase; increase 
A)  increase; decrease; increase 
B)  increase; decrease; decrease 
C)  decrease; decrease; decrease 
D)  decrease; increase; increase

Question 14

The activities in which U.S. workers are relatively more productive

Accepted Answer

A)  pay higher wages. 
B)  are those in which the United States has a comparative advantage. 
C)  are at risk of disappearing from the United States when NAFTA is completed. 
D)  Both answers A and B are correct. 
A)  pay higher wages. 
B)  are those in which the United States has a comparative advantage. 
C)  are at risk of disappearing from the United States when NAFTA is completed. 
D)  Both answers A and B are correct.

Question 15

Voluntary export restraints (VERs)

Accepted Answer

A)  do not protect domestic producers. 
B)  raise revenue for the governments involved. 
C)  raise the prices paid by domestic consumers. 
D)  Both answers B and C are correct. 
A)  do not protect domestic producers. 
B)  raise revenue for the governments involved. 
C)  raise the prices paid by domestic consumers. 
D)  Both answers B and C are correct.

Question 16

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect. Absolute adv

Question 17

How does a tariff affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

Accepted Answer

A tariff raises the price of the good. A

Question 18

A tariff on imported peanuts ________ the quantity of peanuts imported and ________ the domestic price of peanuts.

Accepted Answer

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

Question 19

Increasing a tariff will ________ the domestic quantity consumed of the good, while ________ the domestic production of the good.

Accepted Answer

A)  increase; increasing 
B)  increase; decreasing 
C)  decrease; increasing 
D)  decrease; decreasing 
A)  increase; increasing 
B)  increase; decreasing 
C)  decrease; increasing 
D)  decrease; decreasing

Question 20

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

Accepted Answer

A)  country B has an absolute advantage in the production of product X. 
B)  country B has a comparative advantage in the production of product X. 
C)  country A has an absolute advantage in the production of product X. 
D)  country A has a comparative advantage in the production of product X. 
A)  country B has an absolute advantage in the production of product X. 
B)  country B has a comparative advantage in the production of product X. 
C)  country A has an absolute advantage in the production of product X. 
D)  country A has a comparative advantage in the production of product X.

Suppose the country of Mooland imposes a tariff on imported beef from the country of Aqualand. As a result of the tariff, the

A tariff is a

A tariff hurts

An import quota on sugar

During the first 6 months of 2008, the United States imported more than 1.6 billion pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. What would be a potential consequence of such a trade restriction?

Trade barriers are politically popular because

Trade war occurs when, after a tariff is imposed, other countries retaliate with their own tariff.

A tariff is imposed on a good. This will the domestic producer surplus, the domestic consumer surplus, and total surplus in the home country.

Who benefits from an import quota on a good?

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will , producer surplus will , and total surplus will .

The activities in which U.S. workers are relatively more productive

Voluntary export restraints (VERs)

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

How does a tariff affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

A tariff on imported peanuts the quantity of peanuts imported and the domestic price of peanuts.

Increasing a tariff will the domestic quantity consumed of the good, while the domestic production of the good.

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

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

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 7: Global Markets in Action

Suppose the country of Mooland imposes a tariff on imported beef from the country of Aqualand. As a result of the tariff, the

A tariff is a

A tariff hurts

An import quota on sugar

During the first 6 months of 2008, the United States imported more than 1.6 billion pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. What would be a potential consequence of such a trade restriction?

Trade barriers are politically popular because

Trade war occurs when, after a tariff is imposed, other countries retaliate with their own tariff.

A tariff is imposed on a good. This will ________ the domestic producer surplus, ________ the domestic consumer surplus, and ________ total surplus in the home country.

Who benefits from an import quota on a good?

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will ________, producer surplus will ________, and total surplus will ________.

The activities in which U.S. workers are relatively more productive

Voluntary export restraints (VERs)

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

How does a tariff affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

A tariff on imported peanuts ________ the quantity of peanuts imported and ________ the domestic price of peanuts.

Increasing a tariff will ________ the domestic quantity consumed of the good, while ________ the domestic production of the good.

Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that

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

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

A tariff is imposed on a good. This will the domestic producer surplus, the domestic consumer surplus, and total surplus in the home country.

A country opens up to trade and becomes an importer of a sugar. In the sugar market, consumer surplus will , producer surplus will , and total surplus will .

A tariff on imported peanuts the quantity of peanuts imported and the domestic price of peanuts.

Increasing a tariff will the domestic quantity consumed of the good, while the domestic production of the good.