Question 1

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

Accepted Answer

Governments use tariffs and nontariff ba

Question 2

Dumping occurs when a foreign firm sells its exports at a lower price than it costs to produce them.

Accepted Answer

A) True 
 B)False

Question 3

What is dumping?

Accepted Answer

Dumping is the situation in wh

Question 4

The idea of dynamic (i.e. changing)comparative advantage is the basis for which of the following arguments for protection from foreign competition?

Accepted Answer

A)  the cheap foreign labor argument 
B)  the infant-industry argument 
C)  the dumping argument 
D)  the saves jobs argument 
A)  the cheap foreign labor argument 
B)  the infant-industry argument 
C)  the dumping argument 
D)  the saves jobs argument

Question 5

The reason that average labor costs are higher in the United States than in Haiti is that

Accepted Answer

A)  workers are more productive in the United States. 
B)  U.S. workers have a comparative advantage. 
C)  Haitian workers have a comparative advantage. 
D)  Haitian workers do not have union representation. 
A)  workers are more productive in the United States. 
B)  U.S. workers have a comparative advantage. 
C)  Haitian workers have a comparative advantage. 
D)  Haitian workers do not have union representation.

Question 6

The fundamental force that drives international trade is

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  law of diminishing returns. 
D)  law of increasing costs. 
A)  absolute advantage. 
B)  comparative advantage. 
C)  law of diminishing returns. 
D)  law of increasing costs.

Question 7

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)  If the United States instead imposed a quota on coffee imports, government tax revenue would increase by more than with a tariff. 
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)  If the United States instead imposed a quota on coffee imports, government tax revenue would increase by more than with a tariff.

Question 8

A tariff is

Accepted Answer

A)  a licensing regulation that limits imports. 
B)  a tax on an exported good. 
C)  a tax on an imported good. 
D)  an agreement to restrict the volume of exports. 
A)  a licensing regulation that limits imports. 
B)  a tax on an exported good. 
C)  a tax on an imported good. 
D)  an agreement to restrict the volume of exports.

Question 9

The most efficient way to encourage the growth of an infant-industry is through a

Accepted Answer

A)  voluntary export restraint. 
B)  tariff. 
C)  subsidy. 
D)  an import quota. 
A)  voluntary export restraint. 
B)  tariff. 
C)  subsidy. 
D)  an import quota.

Question 10

Prior to international trade, if country A has a lower price of good X than does country B, then we know definitely that

Accepted Answer

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

Question 11

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. Colombia will immediately eliminate tariffs on wheat, barley, peanuts, and many other products in which Columbia does not have a comparative advantage. This policy means that the price of peanuts in Columbia will become

Accepted Answer

A)  equal to the free trade price. 
B)  lower than the free trade price. 
C)  higher than the price when a tariff was in place. 
D)  higher than the free trade price. 
A)  equal to the free trade price. 
B)  lower than the free trade price. 
C)  higher than the price when a tariff was in place. 
D)  higher than the free trade price.

Question 12

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

Accepted Answer

A)  consumers will lose and Japanese producers will gain. 
B)  tariff revenue will equal the loss inflicted on American consumers. 
C)  consumers will lose and American producers will gain. 
D)  car manufacturers will gain revenue equal to the revenue lost by Japanese car manufacturers. 
A)  consumers will lose and Japanese producers will gain. 
B)  tariff revenue will equal the loss inflicted on American consumers. 
C)  consumers will lose and American producers will gain. 
D)  car manufacturers will gain revenue equal to the revenue lost by Japanese car manufacturers.

Question 13

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 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

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, with international trade U.S. companies buy ________ helicopters per year.

Accepted Answer

A)  240 
B)  480 
C)  720 
D)  360 
A)  240 
B)  480 
C)  720 
D)  360

Question 16

Who benefits from imports?

Accepted Answer

A)  domestic consumers 
B)  domestic producers 
C)  foreign consumers 
D)  domestic workers in the industry 
A)  domestic consumers 
B)  domestic producers 
C)  foreign consumers 
D)  domestic workers in the industry

Question 17

Rent seeking is one reason why countries choose to

Accepted Answer

A)  restrict trade. 
B)  export and import the same goods. 
C)  work for freer trade. 
D)  follow the theory of comparative advantage. 
A)  restrict trade. 
B)  export and import the same goods. 
C)  work for freer trade. 
D)  follow the theory of comparative advantage.

Question 18

The United States imposes a tariff on foreign limes. How does the tariff affect the U.S. price of a lime and the production of limes in the United States?

Accepted Answer

The tariff raises the price of

Question 19

-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 unit

Question 20

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

Accepted Answer

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

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

Dumping occurs when a foreign firm sells its exports at a lower price than it costs to produce them.

What is dumping?

The idea of dynamic (i.e. changing)comparative advantage is the basis for which of the following arguments for protection from foreign competition?

The reason that average labor costs are higher in the United States than in Haiti is that

The fundamental force that drives international trade is

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?

A tariff is

The most efficient way to encourage the growth of an infant-industry is through a

Prior to international trade, if country A has a lower price of good X than does country B, then we know definitely that

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

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

Comparative advantage implies that a country will

Who benefits from imports?

Rent seeking is one reason why countries choose to

The United States imposes a tariff on foreign limes. How does the tariff affect the U.S. price of a lime and the production of limes in the United States?

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

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

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

Dumping occurs when a foreign firm sells its exports at a lower price than it costs to produce them.

What is dumping?

The idea of dynamic (i.e. changing)comparative advantage is the basis for which of the following arguments for protection from foreign competition?

The reason that average labor costs are higher in the United States than in Haiti is that

The fundamental force that drives international trade is

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?

A tariff is

The most efficient way to encourage the growth of an infant-industry is through a

Prior to international trade, if country A has a lower price of good X than does country B, then we know definitely that

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

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

Comparative advantage implies that a country will

Who benefits from imports?

Rent seeking is one reason why countries choose to

The United States imposes a tariff on foreign limes. How does the tariff affect the U.S. price of a lime and the production of limes in the United States?

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

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

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

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