Question 1

When considering rent seeking, which of the following is TRUE?

Accepted Answer

A)  The anti-free trade group generally will lobby more than the pro-free trade group. 
B)  The pro-free trade group generally will lobby more than the anti-free trade group. 
C)  Usually only the anti-free trade group is concerned about what is best for society at large. 
D)  Only the pro-free trade group is concerned about the government's revenue from tariffs. 
A)  The anti-free trade group generally will lobby more than the pro-free trade group. 
B)  The pro-free trade group generally will lobby more than the anti-free trade group. 
C)  Usually only the anti-free trade group is concerned about what is best for society at large. 
D)  Only the pro-free trade group is concerned about the government's revenue from tariffs.

Question 2

Which of the following statements concerning tariffs is NOT true?

Accepted Answer

A)  A tariff results in a loss for domestic consumers of the good. 
B)  A tariff creates revenue for the government. 
C)  A tariff decreases international trade. 
D)  A tariff leaves the price of imports unchanged. 
A)  A tariff results in a loss for domestic consumers of the good. 
B)  A tariff creates revenue for the government. 
C)  A tariff decreases international trade. 
D)  A tariff leaves the price of imports unchanged.

Question 3

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic 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, with the tariff the United States imports ________ million shirts per year.

Accepted Answer

A)  24 
B)  8 
C)  32 
D)  16 
A)  24 
B)  8 
C)  32 
D)  16

Question 4

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 5

Which of the following statements is TRUE?

Accepted Answer

A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant
Industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true. 
A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant
Industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true.

Question 6

Usually the imposition of trade barriers affecting a particular good benefits ________ people domestically, each of whom gains a ________.

Accepted Answer

A)  a few; little 
B)  a few; lot 
C)  many; little 
D)  many; lot 
A)  a few; little 
B)  a few; lot 
C)  many; little 
D)  many; lot

Question 7

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand. As a result of the tariffs, 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 8

Less developed countries, compared to industrialized ones, are more likely to have higher tariff rates.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  workers in the import industry 
B)  workers in the export industry 
C)  consumers in the import industry 
D)  producers in the export industry 
A)  workers in the import industry 
B)  workers in the export industry 
C)  consumers in the import industry 
D)  producers in the export industry

Question 10

Two arguments used to promote trade barriers are the infant-industry argument, and the dumping argument. Explain each of these arguments and evaluate whether each one has any flaws.

Accepted Answer

The infant-industry argument is that it

Question 11

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 12

The (false)idea that an industry should be protected because of learning-by-doing until it is large enough to compete successfully in world markets is the ________ argument for protection.

Accepted Answer

A)  cheap foreign labor 
B)  infant industry 
C)  dumping 
D)  comparative advantage 
A)  cheap foreign labor 
B)  infant industry 
C)  dumping 
D)  comparative advantage

Question 13

Which of the following is a valid reason for protecting an industry?

Accepted Answer

A)  The industry is unable to compete with low-wage foreign competitors. 
B)  Protection penalizes lax environmental standards. 
C)  Protection keeps richer nations from exploiting the workers of poorer countries. 
D)  None of the above reasons is a valid reason for protection. 
A)  The industry is unable to compete with low-wage foreign competitors. 
B)  Protection penalizes lax environmental standards. 
C)  Protection keeps richer nations from exploiting the workers of poorer countries. 
D)  None of the above reasons is a valid reason for protection.

Question 14

The effect of an import quota is to

Accepted Answer

A)  increase the supply of the good and lower its price. 
B)  increase the supply of the good and increase its price. 
C)  increase the demand for the good and increase its price. 
D)  decrease the supply of the good and raise its price. 
A)  increase the supply of the good and lower its price. 
B)  increase the supply of the good and increase its price. 
C)  increase the demand for the good and increase its price. 
D)  decrease the supply of the good and raise its price.

Question 15

The U.S.-Colombia Trade Promotion Agreement was signed on November 22, 2006, in Washington, D.C. This comprehensive trade agreement eliminated tariffs and other barriers to goods and services. Currently, no U.S. agricultural exports enjoy tariff-free access to the Colombian market. If the United States has a comparative advantage in agricultural, which of the following is TRUE?

Accepted Answer

A)  Columbian agricultural producers were better off before free trade. 
B)  Columbian agricultural consumers were better off before free trade. 
C)  Columbia was better off before the international trade. 
D)  Columbia must have comparative disadvantage in all production. 
A)  Columbian agricultural producers were better off before free trade. 
B)  Columbian agricultural consumers were better off before free trade. 
C)  Columbia was better off before the international trade. 
D)  Columbia must have comparative disadvantage in all production.

Question 16

An import quota specifies the

Accepted Answer

A)  highest price that can be charged for an imported good. 
B)  per unit tax that must be paid on an imported good. 
C)  maximum quantity of a good that may be imported during a specified time period. 
D)  minimum quantity of a good that must be exported during a specified time period. 
A)  highest price that can be charged for an imported good. 
B)  per unit tax that must be paid on an imported good. 
C)  maximum quantity of a good that may be imported during a specified time period. 
D)  minimum quantity of a good that must be exported during a specified time period.

Question 17

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. producers are harmed and U.S. consumers are harmed. 
B)  U.S. producers are harmed and U.S. consumers are helped. 
C)  U.S. producers are helped and U.S. consumers are harmed. 
A)  U.S. producers are harmed and U.S. consumers are harmed. 
B)  U.S. producers are harmed and U.S. consumers are helped. 
C)  U.S. producers are helped and U.S. consumers are harmed.

Question 18

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 19

A difference between a quota and a tariff is that

Accepted Answer

A)  a tariff generates a higher price than does a quota. 
B)  a tariff generates a greater reduction in exports than does a quota. 
C)  a quota increases profits of domestic producers more than does a tariff. 
D)  the government collects revenues from a tariff but does not collect revenues from a quota. 
A)  a tariff generates a higher price than does a quota. 
B)  a tariff generates a greater reduction in exports than does a quota. 
C)  a quota increases profits of domestic producers more than does a tariff. 
D)  the government collects revenues from a tariff but does not collect revenues from a quota.

Question 20

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

When considering rent seeking, which of the following is TRUE?

Which of the following statements concerning tariffs is NOT true?

Who benefits from an import quota on a good?

Which of the following statements is TRUE?

Usually the imposition of trade barriers affecting a particular good benefits people domestically, each of whom gains a .

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

Less developed countries, compared to industrialized ones, are more likely to have higher tariff rates.

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

Two arguments used to promote trade barriers are the infant-industry argument, and the dumping argument. Explain each of these arguments and evaluate whether each one has any flaws.

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?

The (false)idea that an industry should be protected because of learning-by-doing until it is large enough to compete successfully in world markets is the ________ argument for protection.

Which of the following is a valid reason for protecting an industry?

The effect of an import quota is to

An import quota specifies the

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?

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 difference between a quota and a tariff is that

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

What Is Economics?

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Filters

Exam 15: International Trade Policy

When considering rent seeking, which of the following is TRUE?

Which of the following statements concerning tariffs is NOT true?

Who benefits from an import quota on a good?

Which of the following statements is TRUE?

Usually the imposition of trade barriers affecting a particular good benefits ________ people domestically, each of whom gains a ________.

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

Less developed countries, compared to industrialized ones, are more likely to have higher tariff rates.

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

Two arguments used to promote trade barriers are the infant-industry argument, and the dumping argument. Explain each of these arguments and evaluate whether each one has any flaws.

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?

The (false)idea that an industry should be protected because of learning-by-doing until it is large enough to compete successfully in world markets is the ________ argument for protection.

Which of the following is a valid reason for protecting an industry?

The effect of an import quota is to

An import quota specifies the

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?

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 difference between a quota and a tariff is that

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

What Is Economics?

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Filters

Usually the imposition of trade barriers affecting a particular good benefits people domestically, each of whom gains a .