Chapter 9

Which of the following are examples of goods that have been subject to voluntary export restraints? A) Japanese cars and Chinese solar panels B) Belgian chocolates and French wines C) French wines and cheeses D) Japanese sushi and German cars E) Taiwanese electronics and Canadian barley

A) Japanese cars and Chinese solar panels

An export subsidy is: A) A payment to a firm or individual that ships a good abroad B) a fee that is charged to a country that ships goods to the US C) a payment made to a foreign government in return for preferential trade treatment D) illegal in the US but fairly common in the rest of the world E) a limit on the quantity of a good or service that can be sold abroad

A) a payment to a firm or individual that ships a good abroad

If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will _______ domestic price, _______ producer surplus, ________ consumer surplus, and ________ overall domestic national welfare A) decrease; decrease; increase; increase B) increase; increase; increase; increase C) decrease; decrease; decrease; decrease D) increase; increase; decrease; decrease E) increase; increase; decrease; increase

A) decrease; decrease; increase; increase

An export tariff will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

A) increase; decrease; increase; have an ambiguous effect on

If an import-competing firm is imperfectly competitive, then under free trade an export tariff will _______ domestic market price, _______ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare A) increase; have no effect on; decrease; increase; decrease B) decrease; decrease; increase; decrease; have no effect on C) increase; have no effect on; increase; decrease; increase D) decrease; increase; decrease; increase; decrease E) have no effect on; have no effect on; decrease; increase; decrease

A) increase; have no effect on; decrease; increase; decrease

Suppose an import-competing firm is imperfectly competitive. Replacement of an export tariff with an import quota will _______ market price, _______ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare A) increase; increase; decrease; decrease; decrease B) have no effect on; have no effect on; have no effect on; decrease; decrease C) increase; have no effect on; decrease; decrease; increase D) increase; increase; increase; decrease; have an ambiguous effect on E) decrease; decrease; increase; decrease; increase

A) increase; increase; decrease; decrease; decrease

If an import-competing firm is imperfectly competitive, then under free trade an import quota will _______ domestic market price, _______ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare A) increase; increase; decrease; have no effect on; decrease B) decrease; decrease; increase; decrease; have no effect on C) increase; have no effect on; decrease; increase; decrease D) decrease; increase; decrease; increase; decrease E) have no effect on; have no effect on; decrease; increase; decrease

A) increase; increase; decrease; have no effect on; decrease

An import quota is similar to a _________ in its effect on imports, except that an import quota _________. A) tariff; does not generate revenue B) tariff; generates revenue C) subsidy; does not generate revenue D) subsidy; generates revenue E) tariff; does not result in an efficiency loss

A) tariff; does not generate revenue

An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

B) increase; decrease; decrease; decrease

Throughout the post-World War II era, the importance of tariffs as a trade barrier has: A) increased B) decreased C) remained the same D) fluctuated wildly E) demonstrated a classic random walk with a mean-reversion tendency

B) decreased

An important difference between tariffs and quotas is that tariffs: A) raise the price of the good B) generate tax revenue for the government C) stimulate international trade D) help domestic producers E) are paid by foreign producers

B) generate tax revenue for the government

The European Union's Common Agricultural Policy (CAP) is, in effect A) a tariff imposed on agricultural exports B) a tariff imposed on agricultural imports C) a subsidy that reduces the cost of agricultural exports D) a subsidy that increases the cost of agricultural exports E) a quota that limits production of agricultural goods by EU nations

C) a subsidy that reduces the cost of agricultural exports

An export subsidy differs from a tariff in each of the following ways EXCEPT: A) a tariff generates revenue B) a tariff is applied to imports C) a tariff results in an efficiency loss D) a tariff is a tax E) a tariff discourages imports

C) a tariff results in an efficiency loss

In the exporting country, an export subsidy will A) help consumers and raise the overall economic welfare of the exporting country B) hurt consumers but raise the overall economic welfare of the exporting country C) hurt consumers and lower the overall economic welfare of the exporting country D) help consumers but lower economic welfare of the exporting country E) help consumers and have no effect on the economic welfare of the exporting country

C) hurt consumers and lower the overall economic welfare of the exporting country

An import quota will _______ producer surplus, _________ consumer surplus, _______ government revenue, and ________ overall domestic national welfare. A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

C) increase; decrease; have no effect on; have an ambiguous effect on

A voluntary export restraint will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare A) increase; decrease; increase; have an ambiguous effect on B) increase; decrease; decrease; decrease C) increase; decrease; have no effect on; have an ambiguous effect on D) increase; decrease; have no effect on; decrease E) increase; increase; decrease; have an ambiguous effect on

D) increase; decrease; have no effect on; decrease

The U.S. sugar quota A) generates government revenue. B) results in net welfare benefits to the U.S. economy. C) results in benefits to sugar producers that exceed the cost to consumers. D) results in costs to consumers that exceed the benefits to sugar producers. E) does not result in an efficiency loss.

D) results in costs to consumers that exceed the benefits to sugar producers