Econ chpt. 9

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible? Select one: a. More Danish-produced chips are sold in Denmark. b. More foreign-produced chips are sold in Denmark. c. Danish consumers of chips become better off. d. Total surplus in the Danish chip market increases.

Denmark is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Denmark imposes a $5 tariff on chips. Which of the following outcomes is possible? Select one: a. More Danish-produced chips are sold in Denmark. Correct b. More foreign-produced chips are sold in Denmark. c. Danish consumers of chips become better off. d. Total surplus in the Danish chip market increases.

Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs? Select one: a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic furniture producers will gain producer surplus. c. Domestic furniture producers will have a higher rate of technological advance. d. Domestic furniture producers will have more market power.

a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic furniture producers will gain producer surplus. c. Domestic furniture producers will have a higher rate of technological advance. Correct d. Domestic furniture producers will have more market power.

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine, Select one: a. England has a comparative advantage over other countries and England will export wine. b. England has a comparative advantage over other countries and England will import wine. c. other countries have a comparative advantage over England and England will export wine. d. other countries have a comparative advantage over England and England will import wine.

a. England has a comparative advantage over other countries and England will export wine. b. England has a comparative advantage over other countries and England will import wine. c. other countries have a comparative advantage over England and England will export wine. d. other countries have a comparative advantage over England and England will import wine. Correct

Assume, for Mexico, that the domestic price of beets without international trade is higher than the world price of beets. This suggests that, in the production of beets, Select one: a. Mexico has a comparative advantage over other countries and Mexico will export beets. b. Mexico has a comparative advantage over other countries and Mexico will import beets. c. other countries have a comparative advantage over Mexico and Mexico will export beets. d. other countries have a comparative advantage over Mexico and Mexico will import beets.

a. Mexico has a comparative advantage over other countries and Mexico will export beets. b. Mexico has a comparative advantage over other countries and Mexico will import beets. c. other countries have a comparative advantage over Mexico and Mexico will export beets. d. other countries have a comparative advantage over Mexico and Mexico will import beets. Correct

When the nation of Mooseland first permitted trade with other nations, domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million. We can conclude that Select one: a. Mooseland became an exporter of sugar. b. the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. c. consumer surplus in Mooseland increased by $7 million. d. the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

a. Mooseland became an exporter of sugar. b. the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. c. consumer surplus in Mooseland increased by $7 million. Correct d. the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Assume, for Vietnam, that the domestic price of textiles without international trade is higher than the world price of textiles. This suggests that, in the production of textiles, Select one: a. Vietnam has a comparative advantage over other countries and Vietnam will import textiles. b. Vietnam has a comparative advantage over other countries and Vietnam will export textiles. c. other countries have a comparative advantage over Vietnam and Vietnam will import textiles. d. other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

a. Vietnam has a comparative advantage over other countries and Vietnam will import textiles. b. Vietnam has a comparative advantage over other countries and Vietnam will export textiles. c. other countries have a comparative advantage over Vietnam and Vietnam will import textiles. Correct d. other countries have a comparative advantage over Vietnam and Vietnam will export textiles.

Assume the nation of Teeveeland does not trade with the rest of the world. By comparing the world price of televisions to the price of televisions in Teeveeland, we can determine whether Select one: a. consumer surplus exceeds producer surplus in Teeveeland. b. Teeveeland has an absolute advantage in producing televisions. c. Teeveeland has a comparative advantage in producing televisions. d. All of the above are correct.

a. consumer surplus exceeds producer surplus in Teeveeland. b. Teeveeland has an absolute advantage in producing televisions. c. Teeveeland has a comparative advantage in producing televisions. Correct d. All of the above are correct.

A tariff on a product makes Select one: a. domestic sellers better off and domestic buyers worse off. b. domestic sellers worse off and domestic buyers worse off. c. domestic sellers better off and domestic buyers better off. d. domestic sellers worse off and domestic buyers better off.

a. domestic sellers better off and domestic buyers worse off. Correct b. domestic sellers worse off and domestic buyers worse off. c. domestic sellers better off and domestic buyers better off. d. domestic sellers worse off and domestic buyers better off.

Countries that restrict foreign trade are likely to Select one: a. forgo the additional surplus that trade allows, but will probably enjoy economies of scale. b. forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. c. forgo the additional surplus that trade allows, but will have a lower rate of unemployment. d. have more firms with domestic market power.

a. forgo the additional surplus that trade allows, but will probably enjoy economies of scale. b. forgo the additional surplus that trade allows, but will be compensated by a higher rate of technological change. c. forgo the additional surplus that trade allows, but will have a lower rate of unemployment. d. have more firms with domestic market power. Correct

The North American Free Trade Agreement Select one: a. is an example of the unilateral approach to free trade. b. eliminated tariffs on imports to North America from the rest of the world. c. reduced trade restrictions among Canada, Mexico and the United States. d. All of the above are correct.

a. is an example of the unilateral approach to free trade. b. eliminated tariffs on imports to North America from the rest of the world. c. reduced trade restrictions among Canada, Mexico and the United States. Correct d. All of the above are correct.

When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an exporter of a particular good, Select one: a. producer surplus increases and total surplus increases in the market for that good. b. producer surplus increases and total surplus decreases in the market for that good. c. producer surplus decreases and total surplus increases in the market for that good. d. producer surplus decreases and total surplus decreases in the market for that good.

a. producer surplus increases and total surplus increases in the market for that good. Correct b. producer surplus increases and total surplus decreases in the market for that good. c. producer surplus decreases and total surplus increases in the market for that good. d. producer surplus decreases and total surplus decreases in the market for that good.

A major difference between tariffs and import quotas is that Select one: a. tariffs create deadweight losses, but import quotas do not. b. tariffs help domestic consumers, and import quotas help domestic producers. c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. d. All of the above are correct.

a. tariffs create deadweight losses, but import quotas do not. b. tariffs help domestic consumers, and import quotas help domestic producers. c. tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import. Correct d. All of the above are correct.

Domestic producers of a good become worse off, and domestic consumers of a good become better off, when a country begins allowing international trade in that good and Select one: a. the country becomes an importer of the good as a result. b. the world price exceeds the domestic price of the good that prevailed before international trade was allowed. c. the country in question has a comparative advantage, relative to other countries, in producing the good. d. total surplus does not change as a result.

a. the country becomes an importer of the good as a result. Correct b. the world price exceeds the domestic price of the good that prevailed before international trade was allowed. c. the country in question has a comparative advantage, relative to other countries, in producing the good. d. total surplus does not change as a result.

If a country is an exporter of a good, then it must be the case that Select one: a. the world price is less than its domestic price. b. consumer surplus is higher than a no trade situation. c. the world price is greater than its domestic price. d. they used an infant-industry argument to protect its producers.

a. the world price is less than its domestic price. b. consumer surplus is higher than a no trade situation. c. the world price is greater than its domestic price. Correct d. they used an infant-industry argument to protect its producers.

Suppose that the U.S. has a comparative advantage in the production of spreadsheet software. As a result of opening up the market to international trade, Select one: a. ​U.S. citizens benefit from lower software prices, increasing consumer surplus in the market. b. ​U.S. software producers are harmed, since the price that these producers receive will decline as the price falls to the world price. c. ​total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers. d. ​U.S. producers benefit from higher software prices, increasing producer surplus in the market.

a. ​U.S. citizens benefit from lower software prices, increasing consumer surplus in the market. b. ​U.S. software producers are harmed, since the price that these producers receive will decline as the price falls to the world price. c. ​total surplus in this market will remain unchanged, as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers. d. ​U.S. producers benefit from higher software prices, increasing producer surplus in the market. Correct