Question 1

How does a quota affect the domestic price of the import,the domestic consumption,the domestic production,and the quantity imported?

Accepted Answer

The answer of How does a quota affect the domestic...

Question 2

If a nation can produce a good or service at the lowest opportunity cost,then it

Accepted Answer

A)  can sell the product at a lower price than other nations. 
B)  does not want to export the good because the low cost means it makes only a low profit. 
C)  is best for the nation to not trade the good internationally. 
D)  will definitely import the good because it can beat other countries' prices. 
E)  might export or import the good, depending on whether or not it has a comparative advantage in the production of the good.

Question 3

Who gains from international trade?

Accepted Answer

A)  only the exporting nation 
B)  only the importing nation 
C)  both the importing and the exporting nations 
D)  neither the importing nor the exporting nations 
E)  The gains depends on which nation gets to keep the total revenue from the sale

Question 4

If the United States imposes a tariff on foreign chocolate,how are foreign producers of chocolate affected?

Accepted Answer

A)  Their supply increases because they have to pay the tariff. 
B)  They export less to the United States. 
C)  They earn more profit because their chocolate sells for a higher price. 
D)  Their supply is unaffected because the quota must be met by U.S. producers. 
E)  The tariff has no effect on foreign producers because U.S. consumers must pay the higher price.

Question 5

-The above figure shows the U.S.market for flip-flops.With international trade,U.S.consumers buy ________ flip-flops and U.S.producers produce ________ flip-flops.

Accepted Answer

A)  500,000; 500,000 
B)  300,000; 700,000 
C)  500,000; 300,000 
D)  700,000; 300,000 
E)  700,000; 500,000

Question 6

Who gains from imports? How do they gain? Who loses? How do they lose? Does the overall economy gain or lose from imports?

Accepted Answer

The answer of Who gains from imports? How do they...

Question 7

Imposing a tariff on a good leads to a ________ in the price of the product and ________ in imports.

Accepted Answer

A)  rise; an increase 
B)  rise; a decrease 
C)  fall; an increase 
D)  fall; a decrease 
E)  rise; no change

Question 8

-The above figure shows the U.S.market for wheat.With no international trade,consumer surplus is equal to ________ and producer surplus is equal to ________.

Accepted Answer

A)  area A; area B + area C + area E + area F 
B)  area A + area B + area C; area E + area F 
C)  area E + area F; area A 
D)  area B + area C + area D; area E + area F 
E)  area A + area B + area C + area D; area E + area F

Question 9

When a country imports a good,the ________ in consumer surplus is ________ the ________ in producer surplus.

Accepted Answer

A)  decrease; larger than; increase 
B)  decrease; smaller than; increase 
C)  increase; smaller than; decrease 
D)  increase; equal to; decrease 
E)  increase; larger than; decrease

Question 10

-The above figure shows the U.S.market for 1 carat diamonds.Area C is the

Accepted Answer

A)  decrease in consumer surplus due to the import quota. 
B)  importers' profit from the quota. 
C)  deadweight loss from the import quota. 
D)  increase in producer surplus due to the import quota. 
E)  gain in total surplus due to the import quota.

Question 11

Briefly define a tariff and a quota.Do any of these methods restrict trade without harming domestic consumers?

Accepted Answer

The answer of Briefly define a tariff and a quota.Do...

Question 12

If the world price of a good is below the no-trade domestic price,a country

Accepted Answer

A)  will benefit from exporting the good. 
B)  will benefit from importing the good. 
C)  cannot benefit from trade. 
D)  has a comparative advantage in the production of that good. 
E)  will not engage in trade for that good.

Question 13

A nation will import a good if its no-trade,domestic

Accepted Answer

A)  price is equal to the world price. 
B)  price is less than the world price. 
C)  price is greater than the world price. 
D)  quantity is less than the world quantity. 
E)  quantity is greater than the world quantity.

Question 14

-The above figure shows the U.S.market for chocolate.With no international trade,producer surplus is equal to

Accepted Answer

A)  area A + area B + area C + area D. 
B)  area B + area C + area D + area E. 
C)  area B + area C + area D. 
D)  area C + area D. 
E)  area E.

Question 15

Which of the following is true?
i.Comparative advantage drives international trade.
ii.Compared to a no-trade situation,in a market with imports,producer surplus is larger.
iii.Tariffs lower the domestic price of imported goods.

Accepted Answer

A)  Only i 
B)  Only ii 
C)  Only iii 
D)  i and ii 
E)  i and iii

Question 16

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million.
-Based on the figure above,as a result of international trade,consumer surplus

Accepted Answer

A)  increases by $15 billion. 
B)  decreases by $15 billion. 
C)  increases by $27.5 billion. 
D)  decreases by $12.5 billion. 
E)  remains unchanged.

Question 17

-Merck,an American pharmaceutical company,produces a vaccination that is used against chicken pox.The table shows the domestic demand for,and supply of,this medication,measured in thousands of doses per day.The world price of this medicine is $24 per dose.
a.With no trade,what is the U.S.price and quantity of the vaccine?
b.At the world price,how many doses are demanded in the United States?
c.At the world price,how many doses are produced in the United States?
d.At the world price,how many doses are exported?

Accepted Answer

The answer of 
-Merck,an American pharmaceutical company,produces a vaccination that...

Question 18

-The above figure shows the U.S.market for chocolate.With international trade,________ is the transfer of surplus from producers to consumers.

Accepted Answer

A)  area B +area C + area D 
B)  area B 
C)  area C + area D 
D)  area A 
E)  area E

Question 19

How do exports affect sellers' producer surplus?

Accepted Answer

The answer of How do exports affect sellers' producer surplus?...

Question 20

-The figure above shows the U.S.demand and the U.S.supply curves of canned peaches.
a.In the absence of trade,what is price of canned peaches in the United States?
b.In the absence of trade,what is the level of production in the United States?
c.If the world price of canned peaches is $1 a can and the United States engages in trade,does the United States import or export canned peaches?
d.If the world price of canned peaches is $1 a can and the United States engages in trade,what is the quantity produced in the United States and what is the quantity consumed? What is the quantity imported or exported?
e.If the world price of canned peaches is $2 a can and the United States engages in trade,does the United States import or export canned peaches?
f.If the world price of canned peaches is $2 a can and the United States engages in trade,what is the quantity produced in the United States and what is the quantity consumed? What is the quantity imported or exported?

Accepted Answer

The answer of 
-The figure above shows the U.S.demand and...

Exam 9: Global Markets in Action