Exam 19: International Trade

Economic benefits to tariffs and import quotas include: more jobs in the protected industry,lower prices to consumers,and increased gains from trade.

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

Economic policies of protectionism include: I.reduced trade barriers. II.tariffs. III.quotas.

During the recent financial crisis many workers lost their jobs.Amy,for example,lost her job as a pharmaceutical salesperson.After five months of unemployment she spent $6,000 on a class that taught her the skills she would need to sell medical devices.Today Amy makes 25%more than she did in pharmaceutical sales and enjoys her new job much more than her old job.Which of the following concepts best illustrates this scenario?

An increase in import trade tends to ______ domestic prices.

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?

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.

Who does protectionism hurt?

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?

A tariff results in a higher: I.consumer surplus. II.producer surplus. III.government revenue.

Suppose that a tariff increases domestic production of a good from 25 million units to 75 million units and raises the domestic price by $1.50.Assuming a linear domestic supply curve and a perfectly elastic world supply curve,what is the value of the resources wasted by increased domestic production?

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

Briefly describe a few activities that a typical student might do on any given day that reflect the effects of globalization.

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.

Why does economic growth require job destruction?

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

Without trade restrictions the price of tennis shoes is $30,and with trade restrictions the price of tennis shoes is $45.The difference in the two prices reflects:

Consider the following two statements and select the best answer. I.The national security argument might be a valid argument for trade protection. II.Industries with spillover effects should be protected from foreign competition.

A tariff benefits domestic producers but hurts domestic consumers.