Question 1

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

Accepted Answer

A) domestic consumers;domestic producers 
B) domestic consumers;government 
C) domestic producers;domestic consumers 
D) foreign producers;domestic producers 
E) foreign producers;domestic consumers 
A) domestic consumers;domestic producers 
B) domestic consumers;government 
C) domestic producers;domestic consumers 
D) foreign producers;domestic producers 
E) foreign producers;domestic consumers C

Question 2

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2   In Figure 20.2, if the world price of wheat is $25 and a $10 tariff is imposed:

Accepted Answer

A) imports will decrease from 300 to 200 bushels of wheat. 
B) imports will increase from 200 to 400 bushels of wheat. 
C) imports will remain unchanged. 
D) domestic production will decrease from 200 to 150 bushels of wheat. 
E) domestic production will remain unchanged. 
A) imports will decrease from 300 to 200 bushels of wheat. 
B) imports will increase from 200 to 400 bushels of wheat. 
C) imports will remain unchanged. 
D) domestic production will decrease from 200 to 150 bushels of wheat. 
E) domestic production will remain unchanged. A

Question 3

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2   According to Figure 20.2, if the world price per bushel of wheat is $25, how much is the domestic demand?

Accepted Answer

A) 400 bushels 
B) 450 bushels 
C) 200 bushels 
D) 300 bushels 
E) 150 bushels 
A) 400 bushels 
B) 450 bushels 
C) 200 bushels 
D) 300 bushels 
E) 150 bushels B

Question 4

International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone.

Accepted Answer

A) True 
 B)False

Question 5

Subsidies are payments made by the government of a country to:

Accepted Answer

A) foreign firms to encourage imports. 
B) foreign firms to encourage domestic exports. 
C) domestic firms to encourage exports. 
D) domestic firms to encourage imports. 
E) domestic firms to ensure domestic consumption of their goods. 
A) foreign firms to encourage imports. 
B) foreign firms to encourage domestic exports. 
C) domestic firms to encourage exports. 
D) domestic firms to encourage imports. 
E) domestic firms to ensure domestic consumption of their goods.

Question 6

Employers and workers in the protected industry know that the consequences of protection are principally:

Accepted Answer

A) lower prices for their output, lower profits for owners, and lower wages for workers. 
B) higher prices for their output, lower profits for owners, and lower wages for workers. 
C) higher prices for their output, lower profits for owners, and higher wages for workers. 
D) lower prices for their output, higher profits for owners, and higher wages for workers. 
E) higher prices for their output, higher profits for owners, and higher wages for workers. 
A) lower prices for their output, lower profits for owners, and lower wages for workers. 
B) higher prices for their output, lower profits for owners, and lower wages for workers. 
C) higher prices for their output, lower profits for owners, and higher wages for workers. 
D) lower prices for their output, higher profits for owners, and higher wages for workers. 
E) higher prices for their output, higher profits for owners, and higher wages for workers.

Question 7

The most successful free trade agreements achieve all of the following goals, except:

Accepted Answer

A) benefiting exporters by increasing exports to member countries. 
B) ensuring that production occurs on the basis of comparative advantage. 
C) benefiting consumers by making a wider variety of goods available at a lower price. 
D) stimulating trade creation to allow the benefits of trade to be realized. 
E) protecting domestic industries from foreign competition. 
A) benefiting exporters by increasing exports to member countries. 
B) ensuring that production occurs on the basis of comparative advantage. 
C) benefiting consumers by making a wider variety of goods available at a lower price. 
D) stimulating trade creation to allow the benefits of trade to be realized. 
E) protecting domestic industries from foreign competition.

Question 8

Which of the following countries is forbidden to impose export tariff by its constitution?

Accepted Answer

A) The United States 
B) Brazil 
C) United Kingdom 
D) Japan 
E) Mexico 
A) The United States 
B) Brazil 
C) United Kingdom 
D) Japan 
E) Mexico

Question 9

A limit on the dollar worth of oranges imported into the United States is an example of a quantity quota.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true of a tariff?

Accepted Answer

A) It is a tax levied by the government on domestic production of goods and services. 
B) It is a quantitative restriction on imports imposed by the government. 
C) It is a monetary benefit received by exporters from the government. 
D) It is a monetary benefit received by importers from the government. 
E) It is a tax on import and export levied by the government. 
A) It is a tax levied by the government on domestic production of goods and services. 
B) It is a quantitative restriction on imports imposed by the government. 
C) It is a monetary benefit received by exporters from the government. 
D) It is a monetary benefit received by importers from the government. 
E) It is a tax on import and export levied by the government.

Question 11

Protection is rarely withdrawn from infant industries because such firms are necessary to ensure creation of domestic jobs.

Accepted Answer

A) True 
 B)False

Question 12

A monopoly exists when there is only one producer in an industry, and no close substitutes for the product exist.

Accepted Answer

A) True 
 B)False

Question 13

Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30, 000.What will be the effect of such subsidy?

Accepted Answer

A) They discourage domestic agricultural production. 
B) They allow U.S.farmers to sell their products for lower prices in foreign markets. 
C) They give foreign producers an unfair cost advantage. 
D) They increase the amount of agricultural imports into the United States. 
E) The price of the primary products decline in the U.S.market. 
A) They discourage domestic agricultural production. 
B) They allow U.S.farmers to sell their products for lower prices in foreign markets. 
C) They give foreign producers an unfair cost advantage. 
D) They increase the amount of agricultural imports into the United States. 
E) The price of the primary products decline in the U.S.market.

Question 14

One of the negative impacts of export subsidy is that:

Accepted Answer

A) the price of the domestic good increases in the world market. 
B) the domestic supply of the goods increases more than proportionately than increase in demand. 
C) the domestic cost of production of the exportable increase. 
D) it results in a general deflation and hence the domestic producers incur losses. 
E) the domestic consumers are harmed as the subsidies are financed by taxing them. 
A) the price of the domestic good increases in the world market. 
B) the domestic supply of the goods increases more than proportionately than increase in demand. 
C) the domestic cost of production of the exportable increase. 
D) it results in a general deflation and hence the domestic producers incur losses. 
E) the domestic consumers are harmed as the subsidies are financed by taxing them.

Question 15

When the world price of the traded good is lower than the domestic no-trade equilibrium price, free trade causes domestic production to fall and domestic consumption to rise.

Accepted Answer

A) True 
 B)False

Question 16

The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 20.3   In Figure 20.3, if the world price per gallon is $8, then without quotas:

Accepted Answer

A) 50 gallons of corn syrup will be imported. 
B) 35 gallons of corn syrup will be imported. 
C) 30 gallons of corn syrup will be imported. 
D) 20 gallons of corn syrup will be imported. 
E) 45 gallons of corn syrup will be imported. 
A) 50 gallons of corn syrup will be imported. 
B) 35 gallons of corn syrup will be imported. 
C) 30 gallons of corn syrup will be imported. 
D) 20 gallons of corn syrup will be imported. 
E) 45 gallons of corn syrup will be imported.

Question 17

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2   In Figure 20.2, if the world price of wheat is $35 and a $15 tariff is imposed:

Accepted Answer

A) domestic consumption will decrease from 400 to 350 bushels of wheat. 
B) the government will collect $200 in revenue from the tariff. 
C) domestic consumption will increase from 150 to 200 bushels of wheat. 
D) imports will be eliminated. 
E) domestic consumption will increase from 150 to 300 bushels of wheat. 
A) domestic consumption will decrease from 400 to 350 bushels of wheat. 
B) the government will collect $200 in revenue from the tariff. 
C) domestic consumption will increase from 150 to 200 bushels of wheat. 
D) imports will be eliminated. 
E) domestic consumption will increase from 150 to 300 bushels of wheat.

Question 18

The figure below shows the demand (D)and supply (S)curves of a good produced domestically in an economy as well as traded in the international market. Figure 20.1   In the figure,
P1: Price of the good in the international market.
P2: Price of the good in the domestic market after the imposition of tariff by the government.
P3: No-trade price of the good in the domestic market.
Refer to Figure 20.1.If the government imposes a tariff such that the price of the good in the domestic market is P2 when the international price is P1:

Accepted Answer

A) the import of the good by the domestic country increases by Q5 - Q4 units. 
B) the import of the good by the domestic country declines. 
C) the quantity of the good exported by the domestic country declines. 
D) the domestic country is in equilibrium. 
E) the quantity of the good exported by the domestic country increases. 
A) the import of the good by the domestic country increases by Q5 - Q4 units. 
B) the import of the good by the domestic country declines. 
C) the quantity of the good exported by the domestic country declines. 
D) the domestic country is in equilibrium. 
E) the quantity of the good exported by the domestic country increases.

Question 19

Domestic firms often claim that foreign firms have an unfair advantage because foreign workers are willing to work for very low wages.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following isa tool of commercial policy?

Accepted Answer

A) Corporate income tax 
B) Payroll tax 
C) Excise duty 
D) Tariff 
E) Octroi duty 
A) Corporate income tax 
B) Payroll tax 
C) Excise duty 
D) Tariff 
E) Octroi duty

Exam 37: International Trade Restrictions

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2 In Figure 20.2, if the world price of wheat is $25 and a $10 tariff is imposed:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2 According to Figure 20.2, if the world price per bushel of wheat is $25, how much is the domestic demand?

International trade on the basis of comparative advantage maximizes world output and allows consumers to access better-quality products at lower prices than would be available in the domestic market alone.

Subsidies are payments made by the government of a country to:

Employers and workers in the protected industry know that the consequences of protection are principally:

The most successful free trade agreements achieve all of the following goals, except:

Which of the following countries is forbidden to impose export tariff by its constitution?

A limit on the dollar worth of oranges imported into the United States is an example of a quantity quota.

Which of the following is true of a tariff?

Protection is rarely withdrawn from infant industries because such firms are necessary to ensure creation of domestic jobs.

A monopoly exists when there is only one producer in an industry, and no close substitutes for the product exist.

Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30, 000.What will be the effect of such subsidy?

One of the negative impacts of export subsidy is that:

When the world price of the traded good is lower than the domestic no-trade equilibrium price, free trade causes domestic production to fall and domestic consumption to rise.

The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 20.3 In Figure 20.3, if the world price per gallon is $8, then without quotas:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2 In Figure 20.2, if the world price of wheat is $35 and a $15 tariff is imposed:

Domestic firms often claim that foreign firms have an unfair advantage because foreign workers are willing to work for very low wages.

Which of the following isa tool of commercial policy?

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

When restrictions alter the pattern of international trade, the _ benefit and the _ suffer(s).