Question 1

If the government eliminated tariffs:

Accepted Answer

A)  the gains in consumer surplus would outweigh the losses in producer surplus. 
B)  the gains in producer surplus would outweigh the losses in consumer surplus. 
C)  the gains in consumer surplus would equal the losses in producer surplus. 
D)  the gains in producer surplus would equal the gains in consumer surplus. 
A)  the gains in consumer surplus would outweigh the losses in producer surplus. 
B)  the gains in producer surplus would outweigh the losses in consumer surplus. 
C)  the gains in consumer surplus would equal the losses in producer surplus. 
D)  the gains in producer surplus would equal the gains in consumer surplus.

Question 2

The flu pandemic of 1918 provides an example of:

Accepted Answer

A)  a situation for which it makes sense to protect a domestic industry from international competition. 
B)  how trade restrictions lead to deaths and suffering. 
C)  how child labor affects trade flows between countries. 
D)  strategic trade protectionism. 
A)  a situation for which it makes sense to protect a domestic industry from international competition. 
B)  how trade restrictions lead to deaths and suffering. 
C)  how child labor affects trade flows between countries. 
D)  strategic trade protectionism.

Question 3

Use the following to answer questions:
Figure: Foreign Trade  
-(Figure: Foreign Trade) Refer to the figure. What quantity would be traded in the absence of any international trade?

Accepted Answer

A)  600 
B)  1,400 
C)  1,000 
D)  800 
A)  600 
B)  1,400 
C)  1,000 
D)  800

Question 4

Trade restrictions based on national security concerns:

Accepted Answer

A)  might be beneficial in certain cases, like vaccinations. 
B)  have never been granted in the United States. 
C)  have no merit and are always unwise. 
D)  give little incentive for industry lobbyists to declare their product vital for national security purposes. 
A)  might be beneficial in certain cases, like vaccinations. 
B)  have never been granted in the United States. 
C)  have no merit and are always unwise. 
D)  give little incentive for industry lobbyists to declare their product vital for national security purposes.

Question 5

Use the following to answer questions:
Figure: International Trade 3  
-(Figure: International Trade 3) Refer to the figure. If the government in this diagram eliminates all imports with a tariff, the value of the wasted resources will be:

Accepted Answer

A)  $4.50. 
B)  $81. 
C)  $27. 
D)  $36. 
A)  $4.50. 
B)  $81. 
C)  $27. 
D)  $36.

Question 6

The U.S. price of sugar is higher than the world price of sugar due primarily to a:

Accepted Answer

A)  subsidy. 
B)  quota. 
C)  local content requirement. 
D)  tariff. 
A)  subsidy. 
B)  quota. 
C)  local content requirement. 
D)  tariff.

Question 7

Dividing the total tariff revenue in the trade diagram introduced in this chapter by the size of the tariff yields:

Accepted Answer

A)  imports with free trade. 
B)  imports with tariff. 
C)  the size of increase in domestic production. 
D)  the size of decrease in domestic consumption. 
A)  imports with free trade. 
B)  imports with tariff. 
C)  the size of increase in domestic production. 
D)  the size of decrease in domestic consumption.

Question 8

Which of the following is NOT true regarding job destruction due to trade?

Accepted Answer

A)  Trade does not destroy jobs; it simply moves jobs to different industries. 
B)  Short-run worker transition may be hard, but in the long run the result is increased wages. 
C)  Trade results in the United States over the past 100 years include decreased employment and lower living standards. 
D)  Trade encourages workers to transition to industries that are low-cost producers of goods. 
A)  Trade does not destroy jobs; it simply moves jobs to different industries. 
B)  Short-run worker transition may be hard, but in the long run the result is increased wages. 
C)  Trade results in the United States over the past 100 years include decreased employment and lower living standards. 
D)  Trade encourages workers to transition to industries that are low-cost producers of goods.

Question 9

In the case of sugar, moving from a situation of no trade to free trade causes both domestic consumption and production to increase.

Accepted Answer

A) True 
 B)False

Question 10

Trade moves jobs from import-competing industries to export industries.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following arguments is valid in the economics of international trade?

Accepted Answer

A)  Trade restrictions are good ways to raise a country's employment. 
B)  Protectionism increases the well-being of domestic consumers. 
C)  Trade restrictions help to reduce child labor in poor countries. 
D)  Trade can result in a net job gain in the whole country. 
A)  Trade restrictions are good ways to raise a country's employment. 
B)  Protectionism increases the well-being of domestic consumers. 
C)  Trade restrictions help to reduce child labor in poor countries. 
D)  Trade can result in a net job gain in the whole country.

Question 12

Use the following to answer questions:
Figure: International Trade 2  
-(Figure: International Trade 2) Refer to the figure. What is the size of the tariff in this figure?

Accepted Answer

A)  $8 
B)  $3 
C)  $5 
D)  $1 
A)  $8 
B)  $3 
C)  $5 
D)  $1

Question 13

What is the difference between a tariff and a trade quota?

Accepted Answer

A)  A tariff is a tax on imported goods, and a trade quota is a quantity restriction on imported goods. 
B)  A tariff is a cash payment to domestic exporters, and a trade quota restricts the quantity of domestically produced goods foreigners can buy. 
C)  A tariff is a lump-sum tax on imported goods, and a trade quota is a sales tax on imported goods. 
D)  A tariff is a quantity trade restriction on imported goods, and a trade quota is a quantity tax on imported goods. 
A)  A tariff is a tax on imported goods, and a trade quota is a quantity restriction on imported goods. 
B)  A tariff is a cash payment to domestic exporters, and a trade quota restricts the quantity of domestically produced goods foreigners can buy. 
C)  A tariff is a lump-sum tax on imported goods, and a trade quota is a sales tax on imported goods. 
D)  A tariff is a quantity trade restriction on imported goods, and a trade quota is a quantity tax on imported goods.

Question 14

The key industries argument for trade restrictions relies on the notion that:

Accepted Answer

A)  economies of scale are easier to achieve in exporting industries. 
B)  products with inelastic supply are the major source for job creation. 
C)  some industries deserve protection because they provide positive spillover effects to the rest of the economy. 
D)  war may disrupt trade flows. 
A)  economies of scale are easier to achieve in exporting industries. 
B)  products with inelastic supply are the major source for job creation. 
C)  some industries deserve protection because they provide positive spillover effects to the rest of the economy. 
D)  war may disrupt trade flows.

Question 15

As a result of tariffs:

Accepted Answer

A)  the opportunity cost of domestic production falls. 
B)  domestic producers waste resources producing goods for which they are not low-cost producers. 
C)  foreign producers gain additional profits at the expense of domestic consumers. 
D)  both domestic producers and consumers are protected from international competition. 
A)  the opportunity cost of domestic production falls. 
B)  domestic producers waste resources producing goods for which they are not low-cost producers. 
C)  foreign producers gain additional profits at the expense of domestic consumers. 
D)  both domestic producers and consumers are protected from international competition.

Question 16

History has shown that one of the most effective tools against child labor is:

Accepted Answer

A)  regulations. 
B)  laws. 
C)  economic growth. 
D)  quotas. 
A)  regulations. 
B)  laws. 
C)  economic growth. 
D)  quotas.

Question 17

If the world price of cotton is less than the price that would occur domestically without trade, then a country will:

Accepted Answer

A)  decrease its demand for cotton, and increase its demand for cotton substitutes. 
B)  increase its demand for cotton, and decrease its demand for cotton substitutes. 
C)  import cotton. 
D)  export cotton. 
A)  decrease its demand for cotton, and increase its demand for cotton substitutes. 
B)  increase its demand for cotton, and decrease its demand for cotton substitutes. 
C)  import cotton. 
D)  export cotton.

Question 18

All of the following reduce child labor, EXCEPT:

Accepted Answer

A)  greater wealth. 
B)  trade restrictions. 
C)  openness to trade. 
D)  a lower opportunity cost of education. 
A)  greater wealth. 
B)  trade restrictions. 
C)  openness to trade. 
D)  a lower opportunity cost of education.

Question 19

Consider the following statements:
I. Relative to a no-trade situation, if the United States exported wheat, the U.S. domestic wheat price would rise and domestic production of wheat would expand.
II. Relative to a no-trade situation, international trade causes the prices of all goods to rise.

Accepted Answer

A)  I is true; II is false. 
B)  I is false; II is true. 
C)  Both I and II are true. 
D)  Both I and II are false. 
A)  I is true; II is false. 
B)  I is false; II is true. 
C)  Both I and II are true. 
D)  Both I and II are false.

Question 20

There is strong evidence to support the idea that protectionism increases domestic job growth.

Accepted Answer

A) True 
 B)False

Exam 9: International Trade

If the government eliminated tariffs:

The flu pandemic of 1918 provides an example of:

Use the following to answer questions: Figure: Foreign Trade -(Figure: Foreign Trade) Refer to the figure. What quantity would be traded in the absence of any international trade?

Trade restrictions based on national security concerns:

Use the following to answer questions: Figure: International Trade 3 -(Figure: International Trade 3) Refer to the figure. If the government in this diagram eliminates all imports with a tariff, the value of the wasted resources will be:

The U.S. price of sugar is higher than the world price of sugar due primarily to a:

Dividing the total tariff revenue in the trade diagram introduced in this chapter by the size of the tariff yields:

Which of the following is NOT true regarding job destruction due to trade?

In the case of sugar, moving from a situation of no trade to free trade causes both domestic consumption and production to increase.

Trade moves jobs from import-competing industries to export industries.

Which of the following arguments is valid in the economics of international trade?

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. What is the size of the tariff in this figure?

What is the difference between a tariff and a trade quota?

The key industries argument for trade restrictions relies on the notion that:

As a result of tariffs:

History has shown that one of the most effective tools against child labor is:

If the world price of cotton is less than the price that would occur domestically without trade, then a country will:

All of the following reduce child labor, EXCEPT:

Consider the following statements: I. Relative to a no-trade situation, if the United States exported wheat, the U.S. domestic wheat price would rise and domestic production of wheat would expand. II. Relative to a no-trade situation, international trade causes the prices of all goods to rise.

There is strong evidence to support the idea that protectionism increases domestic job growth.

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