Question 1

When a firms "dumps" some of its products in another country, it

Accepted Answer

A)  creates an environmental hazard in the receiving country. 
B)  sells its goods abroad at a price lower than it costs to produce the goods. 
C)  increases the total level of employment in the receiving country. 
D)  is specializing according to comparative advantage. 
A)  creates an environmental hazard in the receiving country. 
B)  sells its goods abroad at a price lower than it costs to produce the goods. 
C)  increases the total level of employment in the receiving country. 
D)  is specializing according to comparative advantage.

Question 2

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Accepted Answer

A)  pay U.S. taxes. 
B)  receive subsidies. 
C)  are more productive. 
D)  belong to unions. 
A)  pay U.S. taxes. 
B)  receive subsidies. 
C)  are more productive. 
D)  belong to unions.

Question 3

Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade then in this market then

Accepted Answer

A)  imports will increase, the price will fall, and the quantity supplied will fall. 
B)  exports will increase, the price will be unchanged, and the quantity supplied will increase. 
C)  imports will increase, the price will decrease, and the supply curve will shift to the left. 
D)  the quantity demanded will decrease, the quantity supplied will decrease, and the price will decrease. 
A)  imports will increase, the price will fall, and the quantity supplied will fall. 
B)  exports will increase, the price will be unchanged, and the quantity supplied will increase. 
C)  imports will increase, the price will decrease, and the supply curve will shift to the left. 
D)  the quantity demanded will decrease, the quantity supplied will decrease, and the price will decrease.

Question 4

A country opens up to trade and exports computer chips. In the computer chip market, surplus has been redistributed from

Accepted Answer

A)  consumers to producers. 
B)  producers to consumers. 
C)  producers to government. 
D)  government to consumers. 
A)  consumers to producers. 
B)  producers to consumers. 
C)  producers to government. 
D)  government to consumers.

Question 5

When the United States imposes an import quota on a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus.

Accepted Answer

A)  increase; smaller than; increase 
B)  decrease; larger than; decrease 
C)  decrease; larger than; increase 
D)  decrease; equal to; increase 
A)  increase; smaller than; increase 
B)  decrease; larger than; decrease 
C)  decrease; larger than; increase 
D)  decrease; equal to; increase

Question 6

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. In 2006, the European Union threatened to restrict imports of long-grain rice because traces of genetically modified rice were found mixed in to commercial supplies. What would NOT be an effect in the European rice market if U.S. imports were banned?

Accepted Answer

A)  There would be an increase in long-grain rice consumption. 
B)  There would be an increase European in rice production. 
C)  The price of long-grain rice would increase. 
D)  The quantity of long-grain rice imports would decrease. 
A)  There would be an increase in long-grain rice consumption. 
B)  There would be an increase European in rice production. 
C)  The price of long-grain rice would increase. 
D)  The quantity of long-grain rice imports would decrease.

Question 7

The United States imports cars from Japan. If the United States imposes a tariff on cars imported from Japan

Accepted Answer

A)  U.S. consumers lose and Japanese producers gain. 
B)  U.S. tariff revenue equals the loss of U.S. consumer surplus. 
C)  U.S. consumers lose and U.S. producers gain. 
D)  U.S. car manufacturers gain revenue equal to the revenue lost by Japanese car manufacturers. 
A)  U.S. consumers lose and Japanese producers gain. 
B)  U.S. tariff revenue equals the loss of U.S. consumer surplus. 
C)  U.S. consumers lose and U.S. producers gain. 
D)  U.S. car manufacturers gain revenue equal to the revenue lost by Japanese car manufacturers.

Question 8

During the first 6 months of 2008, the European Union (EU) initiated an anti-dumping case against China for imports of taper candles. What is dumping?

Accepted Answer

A)  when China sells its candles to the EU at a lower price than China's cost of production 
B)  when China does not pay the tariff on the candles 
C)  when China sells its candles to the EU at a lower price than other producers 
D)  when China tries to sell more candles to the EU than is allowed by the import quota 
A)  when China sells its candles to the EU at a lower price than China's cost of production 
B)  when China does not pay the tariff on the candles 
C)  when China sells its candles to the EU at a lower price than other producers 
D)  when China tries to sell more candles to the EU than is allowed by the import quota

Question 9

If the United States imposes a tariff on imported steel, the tariff will

Accepted Answer

A)  raise the U.S. price of imported steel. 
B)  decrease the U.S. production of steel. 
C)  increase the total U.S. consumption of steel. 
D)  decrease employment in the U.S. steel industry. 
A)  raise the U.S. price of imported steel. 
B)  decrease the U.S. production of steel. 
C)  increase the total U.S. consumption of steel. 
D)  decrease employment in the U.S. steel industry.

Question 10

When a rich nation buys a product made in a poor nation, in the poor nation the demand for labor ________ and the wage rate ________.

Accepted Answer

A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls 
A)  increases; rises 
B)  increases; falls 
C)  decreases; rises 
D)  decreases; falls

Question 11

The United States has a comparative advantage in producing cotton if the U.S. price of cotton before international trade is ________ the world price.

Accepted Answer

A)  less than 
B)  equal to 
C)  greater than 
D)  not comparable to 
A)  less than 
B)  equal to 
C)  greater than 
D)  not comparable to

Question 12

A major purpose of tariffs is to

Accepted Answer

A)  encourage imports. 
B)  encourage exports. 
C)  discourage imports. 
D)  discourage exports. 
A)  encourage imports. 
B)  encourage exports. 
C)  discourage imports. 
D)  discourage exports.

Question 13

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

Accepted Answer

A)  increase; smaller than; increase 
B)  decrease; larger than; decrease 
C)  decrease; larger than; increase 
D)  decrease; equal to; increase 
A)  increase; smaller than; increase 
B)  decrease; larger than; decrease 
C)  decrease; larger than; increase 
D)  decrease; equal to; increase

Question 14

Comparative advantage implies that a country will

Accepted Answer

A)  import those goods in which the country has a comparative advantage. 
B)  export those goods in which the country has a comparative advantage. 
C)  find it difficult to conclude free trade agreements with other nations. 
D)  export goods produced by domestic industries with low wages relative to its trading partners. 
A)  import those goods in which the country has a comparative advantage. 
B)  export those goods in which the country has a comparative advantage. 
C)  find it difficult to conclude free trade agreements with other nations. 
D)  export goods produced by domestic industries with low wages relative to its trading partners.

Question 15

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

Accepted Answer

There are several reasons advanced to re

Question 16

An import quota specifies the

Accepted Answer

A)  price that can be charged for any imported good. 
B)  amount of taxes that must be paid on any imported good. 
C)  maximum amount of a good that may be imported during a specified period. 
D)  minimum amount of a good that may be imported during a specified period. 
A)  price that can be charged for any imported good. 
B)  amount of taxes that must be paid on any imported good. 
C)  maximum amount of a good that may be imported during a specified period. 
D)  minimum amount of a good that may be imported during a specified period.

Question 17

When NAFTA was approved, Congress attempted to soften the losses suffered by some industries by

Accepted Answer

A)  creating new jobs to hire workers who lost their jobs because of NAFTA. 
B)  setting aside funds to support and retrain workers who lost their jobs because of NAFTA. 
C)  reducing tariffs. 
D)  imposing quotas. 
A)  creating new jobs to hire workers who lost their jobs because of NAFTA. 
B)  setting aside funds to support and retrain workers who lost their jobs because of NAFTA. 
C)  reducing tariffs. 
D)  imposing quotas.

Question 18

The United States has a comparative advantage and specialize in the production of airplanes. Compared to the situation with no trade, which of the following will occur?

Accepted Answer

A)  More airplanes will be produced in the United States. 
B)  There will be no change in the price of airplanes in the United States. 
C)  The world price of airplanes will increase. 
D)  The quantity of airplanes demanded in the United States will increase. 
A)  More airplanes will be produced in the United States. 
B)  There will be no change in the price of airplanes in the United States. 
C)  The world price of airplanes will increase. 
D)  The quantity of airplanes demanded in the United States will increase.

Question 19

During the first 6 months of 2008, the United States imported from Africa, Asia, and Latin America more than 1.6 billion pounds of coffee and did not export any coffee. How is the gain from imports distributed between consumers and domestic producers?

Accepted Answer

A)  U.S. producer surplus shrinks. 
B)  U.S. consumer surplus increases. 
C)  Total U.S. surplus increases. 
D)  All the above answers are correct. 
A)  U.S. producer surplus shrinks. 
B)  U.S. consumer surplus increases. 
C)  Total U.S. surplus increases. 
D)  All the above answers are correct.

Question 20

Compared to the situation before international trade, after the United States exports a good production in the United States ________ and consumption in the United States ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

When a firms "dumps" some of its products in another country, it

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade then in this market then

A country opens up to trade and exports computer chips. In the computer chip market, surplus has been redistributed from

When the United States imposes an import quota on a good, the amount of the in U.S. consumer surplus is the amount of the in U.S. producer surplus.

The United States imports cars from Japan. If the United States imposes a tariff on cars imported from Japan

During the first 6 months of 2008, the European Union (EU) initiated an anti-dumping case against China for imports of taper candles. What is dumping?

If the United States imposes a tariff on imported steel, the tariff will

When a rich nation buys a product made in a poor nation, in the poor nation the demand for labor and the wage rate .

The United States has a comparative advantage in producing cotton if the U.S. price of cotton before international trade is ________ the world price.

A major purpose of tariffs is to

When the United States imposes a tariff on a good, the amount of the in U.S. consumer surplus is the amount of the in U.S. producer surplus.

Comparative advantage implies that a country will

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

An import quota specifies the

When NAFTA was approved, Congress attempted to soften the losses suffered by some industries by

The United States has a comparative advantage and specialize in the production of airplanes. Compared to the situation with no trade, which of the following will occur?

During the first 6 months of 2008, the United States imported from Africa, Asia, and Latin America more than 1.6 billion pounds of coffee and did not export any coffee. How is the gain from imports distributed between consumers and domestic producers?

Compared to the situation before international trade, after the United States exports a good production in the United States and consumption in the United States .

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

When a firms "dumps" some of its products in another country, it

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Consider a market that is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade then in this market then

A country opens up to trade and exports computer chips. In the computer chip market, surplus has been redistributed from

When the United States imposes an import quota on a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus.

The United States imports cars from Japan. If the United States imposes a tariff on cars imported from Japan

During the first 6 months of 2008, the European Union (EU) initiated an anti-dumping case against China for imports of taper candles. What is dumping?

If the United States imposes a tariff on imported steel, the tariff will

When a rich nation buys a product made in a poor nation, in the poor nation the demand for labor ________ and the wage rate ________.

The United States has a comparative advantage in producing cotton if the U.S. price of cotton before international trade is ________ the world price.

A major purpose of tariffs is to

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

Comparative advantage implies that a country will

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

An import quota specifies the

When NAFTA was approved, Congress attempted to soften the losses suffered by some industries by

The United States has a comparative advantage and specialize in the production of airplanes. Compared to the situation with no trade, which of the following will occur?

During the first 6 months of 2008, the United States imported from Africa, Asia, and Latin America more than 1.6 billion pounds of coffee and did not export any coffee. How is the gain from imports distributed between consumers and domestic producers?

Compared to the situation before international trade, after the United States exports a good production in the United States ________ and consumption in the United States ________.

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

When the United States imposes an import quota on a good, the amount of the in U.S. consumer surplus is the amount of the in U.S. producer surplus.

When a rich nation buys a product made in a poor nation, in the poor nation the demand for labor and the wage rate .

When the United States imposes a tariff on a good, the amount of the in U.S. consumer surplus is the amount of the in U.S. producer surplus.

Compared to the situation before international trade, after the United States exports a good production in the United States and consumption in the United States .