Question 1

A voluntary export restraint

Accepted Answer

A)  is like a tariff. 
B)  is a very common form of trade barrier. 
C)  is like a quota on foreign exports. 
D)  Both answers B and C are correct. 
A)  is like a tariff. 
B)  is a very common form of trade barrier. 
C)  is like a quota on foreign exports. 
D)  Both answers B and C are correct.

Question 2

When a foreign firm sells its exports at a lower price than its cost of production, the firm is

Accepted Answer

A)  imposing an economies of scale cost. 
B)  dumping. 
C)  avoiding a tariff. 
D)  competing in an infant industry. 
A)  imposing an economies of scale cost. 
B)  dumping. 
C)  avoiding a tariff. 
D)  competing in an infant industry.

Question 3

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. How is the gain from trade distributed?

Accepted Answer

A)  European rice consumers gain from trade. 
B)  There is no gain from trade. 
C)  European rice producers gain from trade. 
D)  American rice consumers gain from trade. 
A)  European rice consumers gain from trade. 
B)  There is no gain from trade. 
C)  European rice producers gain from trade. 
D)  American rice consumers gain from trade.

Question 4

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 5

The United States decides to follow its comparative advantage and specialize in the production of airplanes. 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 6

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. Based on this, we know definitively that

Accepted Answer

A)  Africa, Asia, and Latin America have comparative advantage in coffee production. 
B)  the U.S. has absolute advantage in coffee production. 
C)  Africa, Asia, and Latin America have absolute advantage in coffee production. 
D)  the U.S. has comparative advantage in coffee production. 
A)  Africa, Asia, and Latin America have comparative advantage in coffee production. 
B)  the U.S. has absolute advantage in coffee production. 
C)  Africa, Asia, and Latin America have absolute advantage in coffee production. 
D)  the U.S. has comparative advantage in coffee production.

Question 7

The infant-industry argument is the only perfectly valid argument for protection.

Accepted Answer

A) True 
 B)False

Question 8

A tariff is imposed on a good. The tariff will ________ quantity supplied, ________ quantity demanded, and ________ the price of the good in the home country.

Accepted Answer

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

Question 9

A tariff ________ the quantity of the good imported and ________ the domestic price of the imported good.

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 10

In 2012 the U.S. government claimed that Chinese producers of solar panels were dumping panels in the United States, which means that the producers were accused of

Accepted Answer

A)  avoiding the U.S. tariff on solar panels. 
B)  selling the panels in the United States at a price lower than their cost of production. 
C)  selling the panels in the United States at a higher price than they were selling the panels in China. 
D)  None of the above answers are correct. 
A)  avoiding the U.S. tariff on solar panels. 
B)  selling the panels in the United States at a price lower than their cost of production. 
C)  selling the panels in the United States at a higher price than they were selling the panels in China. 
D)  None of the above answers are correct.

Question 11

In 2013 the United States reduced the tariff on ethanol. The winners from the tariff reduction are

Accepted Answer

A)  U.S. producers and the U.S. government. 
B)  U.S. producers only. 
C)  U.S. consumers only. 
D)  U.S. consumers, U.S. producers, and the U.S. government. 
A)  U.S. producers and the U.S. government. 
B)  U.S. producers only. 
C)  U.S. consumers only. 
D)  U.S. consumers, U.S. producers, and the U.S. government.

Question 12

Over the past 80 years, the United States has reduced its average tariff rate so today it is less than 5 percent.

Accepted Answer

A) True 
 B)False

Question 13

Tariffs ________ the domestic price of the good and import quotas ________ the domestic price of the good.

Accepted Answer

A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise 
A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise

Question 14

When the principle of comparative advantage is used to guide trade, then a country will specialize by producing only

Accepted Answer

A)  goods with the highest opportunity cost. 
B)  goods with the lowest opportunity costs. 
C)  goods for which production takes fewer worker-hour than another country. 
D)  goods for which production costs are more than average total costs. 
A)  goods with the highest opportunity cost. 
B)  goods with the lowest opportunity costs. 
C)  goods for which production takes fewer worker-hour than another country. 
D)  goods for which production costs are more than average total costs.

Question 15

Which of the following is a reason why only limited attempts are made to compensate those who lose from free international trade?

Accepted Answer

A)  Free trade advocates consistently lobby to eliminate compensation. 
B)  It would be difficult to determine the extent to which someone's sufferings were because of free trade and not due to reasons under their own control. 
C)  No one loses in the from free trade in the long run. 
D)  None of the above answers are correct. 
A)  Free trade advocates consistently lobby to eliminate compensation. 
B)  It would be difficult to determine the extent to which someone's sufferings were because of free trade and not due to reasons under their own control. 
C)  No one loses in the from free trade in the long run. 
D)  None of the above answers are correct.

Question 16

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, the U.S. government's revenue from the tariff is ________.

Accepted Answer

A)  $64 million 
B)  $32 million 
C)  $128 million 
D)  $48 million 
A)  $64 million 
B)  $32 million 
C)  $128 million 
D)  $48 million

Question 17

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Because of this, we know that

Accepted Answer

A)  Brazilian coffee workers "gain" from this trade. 
B)  Brazilian producers "lose" from this trade. 
C)  Brazilian consumers "gain" from this trade. 
D)  Brazilian car manufacturers "lose" from this trade. 
A)  Brazilian coffee workers "gain" from this trade. 
B)  Brazilian producers "lose" from this trade. 
C)  Brazilian consumers "gain" from this trade. 
D)  Brazilian car manufacturers "lose" from this trade.

Question 18

Which of the following statements is TRUE?

Accepted Answer

A)  International trade raises wages in developing countries. 
B)  International trade with rich industrial countries forces people in the developing countries to work for lower wages. 
C)  International trade leads to job losses in both import competing industries and exporting industries. 
D)  Unlike other types of international trade, offshoring does not bring any gains from trade. 
A)  International trade raises wages in developing countries. 
B)  International trade with rich industrial countries forces people in the developing countries to work for lower wages. 
C)  International trade leads to job losses in both import competing industries and exporting industries. 
D)  Unlike other types of international trade, offshoring does not bring any gains from trade.

Question 19

Import quotas

Accepted Answer

A)  encourage freer trade. 
B)  are a tax on an imported good. 
C)  set the number of units of a good that can be imported. 
D)  set the minimum percentage of the value of a good that can consist of imported components. 
A)  encourage freer trade. 
B)  are a tax on an imported good. 
C)  set the number of units of a good that can be imported. 
D)  set the minimum percentage of the value of a good that can consist of imported components.

Question 20

The winners from a tariff on imports are

Accepted Answer

A)  producers and government. 
B)  producers. 
C)  consumers. 
D)  consumers, producers, and government. 
A)  producers and government. 
B)  producers. 
C)  consumers. 
D)  consumers, producers, and government.

A voluntary export restraint

When a foreign firm sells its exports at a lower price than its cost of production, the firm is

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. How is the gain from trade distributed?

Voluntary export restraints (VERs)

The United States decides to follow its comparative advantage and specialize in the production of airplanes. 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. Based on this, we know definitively that

The infant-industry argument is the only perfectly valid argument for protection.

A tariff is imposed on a good. The tariff will quantity supplied, quantity demanded, and the price of the good in the home country.

A tariff the quantity of the good imported and the domestic price of the imported good.

In 2012 the U.S. government claimed that Chinese producers of solar panels were dumping panels in the United States, which means that the producers were accused of

In 2013 the United States reduced the tariff on ethanol. The winners from the tariff reduction are

Over the past 80 years, the United States has reduced its average tariff rate so today it is less than 5 percent.

Tariffs the domestic price of the good and import quotas the domestic price of the good.

When the principle of comparative advantage is used to guide trade, then a country will specialize by producing only

Which of the following is a reason why only limited attempts are made to compensate those who lose from free international trade?

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Because of this, we know that

Which of the following statements is TRUE?

Import quotas

The winners from a tariff on imports are

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

A voluntary export restraint

When a foreign firm sells its exports at a lower price than its cost of production, the firm is

During 2005-2006 Europe imported more than $70 million worth of U.S. long-grain rice. How is the gain from trade distributed?

Voluntary export restraints (VERs)

The United States decides to follow its comparative advantage and specialize in the production of airplanes. 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. Based on this, we know definitively that

The infant-industry argument is the only perfectly valid argument for protection.

A tariff is imposed on a good. The tariff will ________ quantity supplied, ________ quantity demanded, and ________ the price of the good in the home country.

A tariff ________ the quantity of the good imported and ________ the domestic price of the imported good.

In 2012 the U.S. government claimed that Chinese producers of solar panels were dumping panels in the United States, which means that the producers were accused of

In 2013 the United States reduced the tariff on ethanol. The winners from the tariff reduction are

Over the past 80 years, the United States has reduced its average tariff rate so today it is less than 5 percent.

Tariffs ________ the domestic price of the good and import quotas ________ the domestic price of the good.

When the principle of comparative advantage is used to guide trade, then a country will specialize by producing only

Which of the following is a reason why only limited attempts are made to compensate those who lose from free international trade?

Between August 2007 and July 2008, Brazil exported more than 3.5 billion pounds of coffee to the rest of the world. Because of this, we know that

Which of the following statements is TRUE?

Import quotas

The winners from a tariff on imports are

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

A tariff is imposed on a good. The tariff will quantity supplied, quantity demanded, and the price of the good in the home country.

A tariff the quantity of the good imported and the domestic price of the imported good.

Tariffs the domestic price of the good and import quotas the domestic price of the good.