Question 1

Under free trade, some jobs will be lost, but increased consumer spending power means there will be more jobs in other industries. However, these new jobs are:

Accepted Answer

A)  less real than the lost jobs. 
B)  more difficult to see than the lost jobs. 
C)  not likely to be good jobs. 
D)  not very patriotic. 
A)  less real than the lost jobs. 
B)  more difficult to see than the lost jobs. 
C)  not likely to be good jobs. 
D)  not very patriotic.

Question 2

Use the following to answer questions:
Figure: Bananas  
-(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy ______ fewer bananas and domestic producers grow ______ additional bananas.

Accepted Answer

A)  50,000; 10,000 
B)  75,000; 10,000 
C)  50,000; 20,000 
D)  75,000; 20,000 
A)  50,000; 10,000 
B)  75,000; 10,000 
C)  50,000; 20,000 
D)  75,000; 20,000

Question 3

Which statement is TRUE?

Accepted Answer

A)  Import restrictions may be the best policy if production in certain industries generates positive spillover effects to other industries. 
B)  It is usually easy to identify industries that generate positive spillover effects. 
C)  It would be more efficient to subsidize industries that generate positive spillover effects than to implement import restrictions. 
D)  Spillover effects from Silicon Valley were the biggest factor leading to increases in productivity in the 1990s. 
A)  Import restrictions may be the best policy if production in certain industries generates positive spillover effects to other industries. 
B)  It is usually easy to identify industries that generate positive spillover effects. 
C)  It would be more efficient to subsidize industries that generate positive spillover effects than to implement import restrictions. 
D)  Spillover effects from Silicon Valley were the biggest factor leading to increases in productivity in the 1990s.

Question 4

Restricting the importation of foreign automobiles will:

Accepted Answer

A)  raise the price of foreign automobiles but decrease the price of domestic automobiles. 
B)  raise the price of both foreign and domestic automobiles. 
C)  cause domestic producers to sell their automobiles at lower prices because of reduced competition. 
D)  lower the price of foreign automobiles but raise the price of domestic automobiles. 
A)  raise the price of foreign automobiles but decrease the price of domestic automobiles. 
B)  raise the price of both foreign and domestic automobiles. 
C)  cause domestic producers to sell their automobiles at lower prices because of reduced competition. 
D)  lower the price of foreign automobiles but raise the price of domestic automobiles.

Question 5

Use the following to answer questions:
Figure: Foreign Trade Market  
-If quotas on sugar were eliminated in the United States, domestic production of sugar would fall. Why is this a benefit in economic terms for the United States?
I. Resources are freed up that could be used more efficiently elsewhere.
II. It is beneficial because it allows foreign producers of sugar to earn income and thus those countries are better off.
III. U.S. consumers are able to enjoy increased consumer surplus because of the lower prices of imported sugar.

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 6

Use the following to answer questions:
Figure: Bananas  
-(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, approximately what percent of banana consumption comes from imports?

Accepted Answer

A)  8% 
B)  10% 
C)  90% 
D)  93% 
A)  8% 
B)  10% 
C)  90% 
D)  93%

Question 7

Which of the following statements is TRUE?
I. If the United States bans the importation of bananas, consumer surplus will decrease.
II. If the United States bans the importation of bananas, producer surplus will decrease.
III. If the United States bans the importation of bananas, it will produce bananas at a cost exceeding their world purchase price.

Accepted Answer

A)  I, II, and III 
B)  I and II only 
C)  I and III only 
D)  II and III only 
A)  I, II, and III 
B)  I and II only 
C)  I and III only 
D)  II and III only

Question 8

Use the following to answer questions:
Figure: A Tariff on Imports  
-(Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total cost of the tariff to the citizens in that country is:

Accepted Answer

A)  $350 million. 
B)  $400 million. 
C)  $550 million. 
D)  $700 million. 
A)  $350 million. 
B)  $400 million. 
C)  $550 million. 
D)  $700 million.

Question 9

The U.S. government's policies on foreign-made sugar:

Accepted Answer

A)  result in U.S. consumers paying more than double the world price of sugar. 
B)  result in U.S. consumers paying less than half the world price of sugar. 
C)  make it difficult for domestic sugar growers to compete with foreign-made sugar. 
D)  results in U.S. consumers buying inefficiently large quantities of sugar. 
A)  result in U.S. consumers paying more than double the world price of sugar. 
B)  result in U.S. consumers paying less than half the world price of sugar. 
C)  make it difficult for domestic sugar growers to compete with foreign-made sugar. 
D)  results in U.S. consumers buying inefficiently large quantities of sugar.

Question 10

Use the following to answer questions:
Figure: Foreign Trade with a Tariff  
-(Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff generates government revenue of:

Accepted Answer

A)  $100 million. 
B)  $140 million. 
C)  $180 million. 
D)  $200 million. 
A)  $100 million. 
B)  $140 million. 
C)  $180 million. 
D)  $200 million.

Question 11

Use the following to answer questions:
Figure: Foreign Trade Market  
-(Figure: Foreign Trade Market) Refer to the figure. What is the dollar value of the deadweight loss created by the loss of foreign trade?

Accepted Answer

A)  $10,000 
B)  $4,000 
C)  $36,000 
D)  $6,000 
A)  $10,000 
B)  $4,000 
C)  $36,000 
D)  $6,000

Question 12

Protectionism tends to create a society that pits one interest group against another and seeds social discord.

Accepted Answer

A) True 
 B)False

Question 13

Trade makes people better off through specialization.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions:
Figure: Trade  
-(Figure: Trade) Refer to the figure. If the world price for the good in this figure were higher than the domestic price, a move to free international trade means that the domestic economy would become:

Accepted Answer

A)  a net importer of the good. 
B)  a net exporter of the good. 
C)  neither a net importer nor a net exporter of the good. 
D)  either a net importer or a net exporter of the good but it is impossible to say which. 
A)  a net importer of the good. 
B)  a net exporter of the good. 
C)  neither a net importer nor a net exporter of the good. 
D)  either a net importer or a net exporter of the good but it is impossible to say which.

Question 15

The United States subsidizes mohair (goat fleece) purportedly for national security reasons.

Accepted Answer

A) True 
 B)False

Question 16

A tariff is:

Accepted Answer

A)  the restriction of trade through regulations on domestic producers. 
B)  a restriction on the quantity of goods that can be imported. 
C)  equal to exports minus imports. 
D)  a tax on imports. 
A)  the restriction of trade through regulations on domestic producers. 
B)  a restriction on the quantity of goods that can be imported. 
C)  equal to exports minus imports. 
D)  a tax on imports.

Question 17

If the U.S. government wanted to use strategic trade protectionism for U.S.-produced fertilizer it would:

Accepted Answer

A)  place high taxes on foreign-made fertilizer. 
B)  place a trade quota on foreign-made fertilizer. 
C)  subsidize U.S. producers of fertilizer. 
D)  place a tax or put a limit on the exports of U.S. fertilizer. 
A)  place high taxes on foreign-made fertilizer. 
B)  place a trade quota on foreign-made fertilizer. 
C)  subsidize U.S. producers of fertilizer. 
D)  place a tax or put a limit on the exports of U.S. fertilizer.

Question 18

The United States is not competitive with Brazil in sugar production partly because:

Accepted Answer

A)  the opportunity cost of land suitable for sugar production in the United States is relatively high. 
B)  the opportunity cost of land suitable to sugar production in Brazil is relatively high. 
C)  the United States does not focus upon sugar production. 
D)  Brazil does not focus upon sugar production. 
A)  the opportunity cost of land suitable for sugar production in the United States is relatively high. 
B)  the opportunity cost of land suitable to sugar production in Brazil is relatively high. 
C)  the United States does not focus upon sugar production. 
D)  Brazil does not focus upon sugar production.

Question 19

The tariff diagram illustrates that if the absolute value of the slopes of the demand and supply curves are equal, then the deadweight loss of any tariff always equals the wasted resources due to increased domestic production.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT an argument against international trade?

Accepted Answer

A)  It is wrong to trade with nations that use child labor. 
B)  International trade reduces the number of jobs in the United States. 
C)  International trade leads to lower prices for domestic consumers. 
D)  Certain key industries should remain at "home" for the interest of national security. 
A)  It is wrong to trade with nations that use child labor. 
B)  International trade reduces the number of jobs in the United States. 
C)  International trade leads to lower prices for domestic consumers. 
D)  Certain key industries should remain at "home" for the interest of national security.

Exam 9: International Trade

Under free trade, some jobs will be lost, but increased consumer spending power means there will be more jobs in other industries. However, these new jobs are:

Use the following to answer questions: Figure: Bananas -(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy ______ fewer bananas and domestic producers grow ______ additional bananas.

Which statement is TRUE?

Restricting the importation of foreign automobiles will:

Use the following to answer questions: Figure: Bananas -(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, approximately what percent of banana consumption comes from imports?

Use the following to answer questions: Figure: A Tariff on Imports -(Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total cost of the tariff to the citizens in that country is:

The U.S. government's policies on foreign-made sugar:

Use the following to answer questions: Figure: Foreign Trade with a Tariff -(Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff generates government revenue of:

Use the following to answer questions: Figure: Foreign Trade Market -(Figure: Foreign Trade Market) Refer to the figure. What is the dollar value of the deadweight loss created by the loss of foreign trade?

Protectionism tends to create a society that pits one interest group against another and seeds social discord.

Trade makes people better off through specialization.

Use the following to answer questions: Figure: Trade -(Figure: Trade) Refer to the figure. If the world price for the good in this figure were higher than the domestic price, a move to free international trade means that the domestic economy would become:

The United States subsidizes mohair (goat fleece) purportedly for national security reasons.

A tariff is:

If the U.S. government wanted to use strategic trade protectionism for U.S.-produced fertilizer it would:

The United States is not competitive with Brazil in sugar production partly because:

The tariff diagram illustrates that if the absolute value of the slopes of the demand and supply curves are equal, then the deadweight loss of any tariff always equals the wasted resources due to increased domestic production.

Which of the following is NOT an argument against international trade?

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

Use the following to answer questions: Figure: Bananas -(Figure: Bananas) Refer to the figure. If there is a $3 tariff on bananas, domestic consumers buy fewer bananas and domestic producers grow additional bananas.