Question 1

Removing tariffs and quotas will ensure that goods are sold by the low-cost producers and increase the sum of consumer and producer surplus.

Accepted Answer

A) True 
 B)False

Question 2

Although domestic consumers gain more from free trade than domestic producers lose, the matter may not be that simple. Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods?

Accepted Answer

A)  because foreign producers will be even worse off 
B)  because domestic prices are higher under free trade than under protectionism 
C)  because domestic producers also consume at least some imported goods that cost less 
D)  because the gains from free trade are random. It is impossible to say who will get them 
A)  because foreign producers will be even worse off 
B)  because domestic prices are higher under free trade than under protectionism 
C)  because domestic producers also consume at least some imported goods that cost less 
D)  because the gains from free trade are random. It is impossible to say who will get them

Question 3

As a result of tariffs, domestic producers tend to:

Accepted Answer

A)  gain more than domestic consumers lose. 
B)  spend less money on lobbying. 
C)  have a greater incentive to lower their production costs. 
D)  lose more than the government gains. 
A)  gain more than domestic consumers lose. 
B)  spend less money on lobbying. 
C)  have a greater incentive to lower their production costs. 
D)  lose more than the government gains.

Question 4

Sugar production is highly protected in the United States. Sugar importers must pay such high tariffs that it is hardly profitable for them to sell any sugar in the United States. Who are the winners and losers from such protectionism? Is the resulting market economically efficient? Why? If not, why would the government continue import restrictions that promote economic inefficiency?

Accepted Answer

The winners from tariffs such as those i

Question 5

Use the following to answer questions:
Figure: Costs of Tariffs  
-(Figure: Costs of Tariffs) Refer to the figure. In the figure representing the market for leather, domestic suppliers are the high-cost producers of leather. However, import restrictions push the domestic price up to $100. Which area represents the deadweight loss that results?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 6

In most cases, trade restrictions will:

Accepted Answer

A)  save jobs without any other costs. 
B)  save some jobs and destroy other jobs. 
C)  benefit both producers and consumers. 
D)  benefit only the government. 
A)  save jobs without any other costs. 
B)  save some jobs and destroy other jobs. 
C)  benefit both producers and consumers. 
D)  benefit only the government.

Question 7

Use the following to answer questions:
Figure: Foreign Trade 2  
-(Figure: Foreign Trade 2) Refer to the figure. What is the dollar value of the producer surplus gained as a result of prohibiting trade in this market?

Accepted Answer

A)  $15,000 
B)  $30,000 
C)  $12,500 
D)  $22,500 
A)  $15,000 
B)  $30,000 
C)  $12,500 
D)  $22,500

Question 8

Use the following to answer questions:
Figure: World Imports  
-(Figure: World Imports) Refer to the figure. An imposition of extreme trade restrictions that eliminated all trade in that market, would generate wasted resources of:

Accepted Answer

A)  $70. 
B)  $530. 
C)  $90. 
D)  $160. 
A)  $70. 
B)  $530. 
C)  $90. 
D)  $160.

Question 9

A tariff is a:

Accepted Answer

A)  tax on imports. 
B)  subsidy on exports. 
C)  restriction on the quantity of domestic goods consumed by foreigners. 
D)  restriction on the quantity of imports from foreign producers. 
A)  tax on imports. 
B)  subsidy on exports. 
C)  restriction on the quantity of domestic goods consumed by foreigners. 
D)  restriction on the quantity of imports from foreign producers.

Question 10

The prevalence of child labor tends to increase as countries get richer.

Accepted Answer

A) True 
 B)False

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 lost consumer surplus as a result of prohibiting trade in this market?

Accepted Answer

A)  $26,000 
B)  $28,000 
C)  $32,000 
D)  $36,000 
A)  $26,000 
B)  $28,000 
C)  $32,000 
D)  $36,000

Question 12

Use the following to answer questions:
Figure: Foreign Trade 2  
-(Figure: Foreign Trade 2) Refer to the figure. What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Accepted Answer

A)  $30,000 
B)  $5,000 
C)  $2,500 
D)  $22,500 
A)  $30,000 
B)  $5,000 
C)  $2,500 
D)  $22,500

Question 13

Use the following to answer questions:
Figure: International Trade 2  
-(Figure: International Trade 2) Refer to the figure. How much revenue does the tariff in this figure generate for the government?

Accepted Answer

A)  $30 
B)  $24 
C)  $6 
D)  $54 
A)  $30 
B)  $24 
C)  $6 
D)  $54

Question 14

A tariff benefits domestic producers but hurts domestic consumers.

Accepted Answer

A) True 
 B)False

Question 15

If Tyler and Alex are trading partners, do their gains from trade depend on whether Tyler and Alex live in the same country?

Accepted Answer

A)  It is better if Tyler and Alex are both Americans. 
B)  It is better if one of them is American and one is not. 
C)  It is better if neither of them is American. 
D)  It doesn't matter in which country Tyler and Alex live. 
A)  It is better if Tyler and Alex are both Americans. 
B)  It is better if one of them is American and one is not. 
C)  It is better if neither of them is American. 
D)  It doesn't matter in which country Tyler and Alex live.

Question 16

With free trade, the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 17

Economic growth requires job destruction, since the destroyed jobs free up resources for more productive activities.

Accepted Answer

A) True 
 B)False

Question 18

According to the text, in a typical month in the United States:

Accepted Answer

A)  almost 1.0 million jobs are lost because of unfair international trade. 
B)  several hundred thousand jobs are lost and several hundred thousand jobs are gained. 
C)  the unemployment rate averages 8.7%. 
D)  All of these observations are correct. 
A)  almost 1.0 million jobs are lost because of unfair international trade. 
B)  several hundred thousand jobs are lost and several hundred thousand jobs are gained. 
C)  the unemployment rate averages 8.7%. 
D)  All of these observations are correct.

Question 19

Which of the following results from a tariff on imported goods?
I. domestic production increases
II. domestic consumption increases
III. government revenues increase

Accepted Answer

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

Question 20

Use the following to answer questions:
Figure: Costs of Tariffs  
-(Figure: Costs of Tariffs) Refer to the figure. From left to right, the first triangle, rectangle, and second triangle in the diagram for analyzing a tariff represent:

Accepted Answer

A)  unexploited gains from trade due to decreased domestic consumption, wasted resources from increased domestic production, and tariff revenues, respectively. 
B)  tariff revenues, wasted resources from increased domestic production, and unexploited gains from trade due to decreased domestic consumption, respectively. 
C)  wasted resources from increased domestic production, unexploited gains from trade due to decreased domestic consumption, and tariff revenues, respectively. 
D)  wasted resources from increased domestic production, tariff revenues, and unexploited gains from trade due to decreased domestic consumption, respectively. 
A)  unexploited gains from trade due to decreased domestic consumption, wasted resources from increased domestic production, and tariff revenues, respectively. 
B)  tariff revenues, wasted resources from increased domestic production, and unexploited gains from trade due to decreased domestic consumption, respectively. 
C)  wasted resources from increased domestic production, unexploited gains from trade due to decreased domestic consumption, and tariff revenues, respectively. 
D)  wasted resources from increased domestic production, tariff revenues, and unexploited gains from trade due to decreased domestic consumption, respectively.

Exam 9: International Trade

Removing tariffs and quotas will ensure that goods are sold by the low-cost producers and increase the sum of consumer and producer surplus.

Although domestic consumers gain more from free trade than domestic producers lose, the matter may not be that simple. Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods?

As a result of tariffs, domestic producers tend to:

In most cases, trade restrictions will:

Use the following to answer questions: Figure: Foreign Trade 2 -(Figure: Foreign Trade 2) Refer to the figure. What is the dollar value of the producer surplus gained as a result of prohibiting trade in this market?

Use the following to answer questions: Figure: World Imports -(Figure: World Imports) Refer to the figure. An imposition of extreme trade restrictions that eliminated all trade in that market, would generate wasted resources of:

A tariff is a:

The prevalence of child labor tends to increase as countries get richer.

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 lost consumer surplus as a result of prohibiting trade in this market?

Use the following to answer questions: Figure: Foreign Trade 2 -(Figure: Foreign Trade 2) Refer to the figure. What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. How much revenue does the tariff in this figure generate for the government?

A tariff benefits domestic producers but hurts domestic consumers.

If Tyler and Alex are trading partners, do their gains from trade depend on whether Tyler and Alex live in the same country?

With free trade, the domestic price of a good must be equal to the world price of a good.

Economic growth requires job destruction, since the destroyed jobs free up resources for more productive activities.

According to the text, in a typical month in the United States:

Which of the following results from a tariff on imported goods? I. domestic production increases II. domestic consumption increases III. government revenues increase

Use the following to answer questions: Figure: Costs of Tariffs -(Figure: Costs of Tariffs) Refer to the figure. From left to right, the first triangle, rectangle, and second triangle in the diagram for analyzing a tariff represent:

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