Chapter 7-IE
Why didn't U.S. tire producers support the recently enacted tariff on imported Chinese tires? a. Many of them manufacture tires in China. b. They were already earning monopoly profits. c. Since the union supported the tariff, they naturally had to oppose it. d.They wanted the government to impose an import quota rather than an import tariff
A
Who captured the quota rents of the 1980s U.S.Japanese voluntary export agreement for automobiles? a.Japanese auto producers b.U.S. consumers of Japanese automobiles c.U.S. auto producers d.the U.S. government
A
How did the WTO react to the U.S. imposition of steel tariffs in 2002? a.It said that even though the tariffs were high, it was okay because of the escape clause. b.It suspended the United States temporarily, stripping it of all its rights in the organization. c.It made the United States promise to repeal the tariff as soon as possible. d.It allowed other nations to impose tariffs on U.S. exports to retaliate.
D
In general, a tariff reduces the national welfare of the small importing nation because: a.there is a fall in producer surplus. b.there is a rise in consumer surplus. c.the gain in consumer surplus is smaller than the loss in producer surplus. d.the gain in producer surplus is smaller than the loss in consumer surplus.
D
Normally the WTO does not allow discriminatory treatment in trade of member nations, but it makes an exception for nations: a.that have a large trade surplus. b.using environmentally harmful production techniques. c.that cannot control drugs and other illegal activities. d.engaging in regional free-trade agreements.
D
An import quota is different from a voluntary export restraint because: a.the former is imposed by the exporting country and the latter by the home country. b.the former is imposed by the home country and the latter by the exporting country. c.the latter is specified by domestic importers. d.the former results in less gain for the country.
B
Consumer surplus is: a.the difference between the price of a product and consumers' valuation of the last unit of the product purchased. b.the difference between the price of a product and what consumers were willing to pay for the product. c.the difference between the discounted price of a product and its retail price. d.the difference between the price paid by consumers and the price required of producers.
B
Foreign supply curves facing a large country differ from those facing a small country. Large countries face _____________ foreign supply curves, and small countries face ______________ foreign supply curves. a.perfectly price elastic; upward-sloping b.upward-sloping; perfectly price elastic c.downward-sloping; perfectly price elastic d.upward-sloping; downward-sloping
B
GATT is the acronym (or abbreviation) for: a.the General Agreement on Taxes and Tariffs. b.the General Agreement on Tariffs and Trade. c.the General Agreement on Trade and Taxes. d.the General Agreement on Trade.
B
GATT maintained a provision that nations could enact temporary emergency tariffs or quotas if imports threatened the existence of domestic producers. The WTO has not struck that provision. Economists call this: a.the tariff bill. b.the escape clause. c.justifiable means. d.domestic job security provision.
B
How many units will a country import if S = 1P represents its home supply curve, D = 100 - 1P represents its home demand curve, and the world price is $25? a.25 b.50 c.75 d.100
B
If S = 1P represents a country's home supply curve and D = 100 - 1P represents its home demand curve, then the equilibrium price and quantity in autarky are: a.$100 and 0 units b.$50 and 50 units. c.$0 and 100 units d.All the answer choices are incorrect.
B
If there is free trade in a small economy, the nation will be able to import unlimited quantities of the product at: a.the domestic price. b.the world price. c.the price measured in euros. d.the price determined after all tariffs are assessed.
B
In 2009, the European Union agreed to grant tariff-free access to its former colonies and to reduce tariffs on imports by 35% over seven years on _________, which finally ended a 15-year feud between the European Union and the United States and Latin American producers. a.pineapples b.bananas c.avocados d.oranges
B
One interpretation of producer surplus is that it equals: a.the profits of a firm. b.the return to the fixed factors of production in an industry. c.consumer surplus. d.the difference between the price of a product and its average cost of production.
B
Rent-seeking activities are: a.landowners' efforts to receive higher returns for their land. b.bribery and lobbying activities to obtain quota licenses. c.foreign suppliers' efforts to reduce quotas. d.domestic consumers' efforts to reduce tariffs.
B
Suppose that Norway is a small country and currently produces 100,000 board feet of lumber at $600 per 1,000 board feet. Then it begins to trade at the world price of $500 per 1,000 board feet. As a result of trade,Norway's production falls to 50,000 board feet and its consumption increases to 200,000 board feet. What is the Norway's total welfare gain once it begins to trade? a.$5,000 b.$7,500 c.$15,000 d.$17,500
B
Suppose that Norway is a small country and currently produces 100,000board feet of lumber at $600 per 1,000 board feet. Then it begins to trade at the world price of $500 per 1,000 board feet. As a result of trade,Norway's production falls to 50,000 board feet and its consumption increases to 200,000 board feet. What is Norway's total gain in consumer surplus once it begins to trade? a.$10,000 b.$15,000 c.$100,000 d.$150,000
B
Suppose that consumer demand is given by this equation: P = 10 - Q. What is the value of consumer surplus when P = 5? a.$5 b.$12.50 c.$25 d.$50
B
Suppose a nation agrees to limit its own exports by imposing quotas on its own firms in order to keep revenue high, keep from breaking WTO rules, and pacify protectionist interests in the import nation. Which of the following terms describes this practice? a.lost profit opportunities b.reverse import restrictions c.voluntary export restraint agreement d.deadweight welfare loss
C
Suppose that Norway is a small country and currently produces 100,000 board feet of lumber at $600 per 1,000 board feet. Then it begins to trade at the world price of $500 per 1,000 board feet. As a result of trade,Norway's production falls to 50,000 board feet and its consumption increases to 200,000 board feet. How many board feet of lumber does Norway now import? a.250,000 board feet b.200,000 board feet c.150,000 board feet d.100,000 board feet
C
Suppose that the U.S. government imposes a 20% tariff to protect U.S. clothing manufacturers adversely affected by the expiration of the Multifibre Agreement. Compared with a free-trade situation, the price of clothing will ______, and U.S. clothing production will ________. a. fall; fall b.fall; rise c.rise; rise d.rise; fall
C
Suppose that the U.S. government imposes a 20% tariff to protect U.S. clothing manufacturers adversely affected by the expiration of the Multifibre Agreement. Compared with a free-trade situation, what will happen to the price of clothing in the United States and to U.S. production of clothing? a.The price of clothing will fall, and U.S. clothing production will fall. b.The price of clothing will fall, and U.S. clothing production will rise. c.The price of clothing will rise, and U.S. clothing production will rise. d.The price of clothing will rise, and U.S. clothing production will fall.
C
Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves. If the world price is $1, which of the following is the increase in the country's surplus when it trades compared with autarky? a.$6.00 b.$4.50 c.$2.50 d.$0.50
C
Which organization acts as a forum for countries to come to agreement on trade policies and resolve trade policy disputes? a.the International Trade Organization b.the United Nations c.the World Trade Organization d.the United Nations Conference on Trade and Development
C
Who collects quota rents when the government gives quota licenses to domestic firms? a.domestic consumers b.foreign suppliers c.domestic producers d.the government
C
When a large nation imposes a tariff on a smaller nation and causes its terms of trade to deteriorate, the tariff is sometimes referred to as: a.a beggar-thy-neighbor tariff. b.a hate-thy-neighbor tariff. c.a love-thy-neighbor tariff. d.an aid-thy-neighbor tariff.
A
In 2002 the United States relied on GATT's ________ to impose tariffs on imported steel. a.escape clause b.antidumping clause c.countervailing duty clause d.most favored nation clause
A
Most favored nation status requires: a.a WTO member that reduces a tariff on imports from one WTO trading partner to apply the lower tariff to imports from all other WTO members. b.a WTO member that reduces a tariff on imports from one WTO trading partner to apply the lower tariff to imports from all other countries. c.a WTO member that increases a tariff on imports from one WTO trading partner to raise the tariff on imports from all other WTO members. d.a WTO member that increases a tariff on imports from one WTO trading partner to raise the tariff on imports from all other countries.
A
One difference between the tariffs on steel imports levied in 2002 and the tariffs on Chinese tire imports levied in 2009 was that: a.U.S. steel producers supported the steel tariff, while U.S. tire producers did not support the tire tariff. b.U.S. tire producers supported the tire tariff, while U.S. steel producers did not support the steel tariff. c.U.S. steel workers supported the steel tariff, while U.S. tire workers did not support the tire tariff. d.U.S. tire workers supported the tire tariff, while U.S. steel workers producers did not support the steel tariff.
A
What is the term used to describe when one country retaliates to a tariff on its exports with tariffs on its imports? a.a tariff war b.a tariff tiff c.a tariff conflict d.a tariff fight
A
According to the GATT, a tariff applied under the safeguard provision must: a.be temporary. b.be permanent. c.apply to all imports. d.be no higher than 10%.
A
If rent-seeking occurs, then a country's welfare losses from quotas will: a.increase. b.decrease. c.not change. d.first increase, then decrease.
A
In the 1980s,the United States negotiated a voluntary export agreement with Japan in which each Japanese auto producer voluntarily agreed to reduce the number of its automobiles exported to the United States. This voluntary export agreement caused each Japanese auto producer to: a.raise the prices of its automobile exports to the United States. b.lower the prices of its automobile exports to the United States. c.not change the prices of its automobile exports to the United States. d.increase the number of automobiles exported to the United States.
A
One way to fairly distribute quotas, while getting revenue for the government, is to: a.auction quotas in a public sale to the highest bidder. b.conduct a lottery for quotas for the lucky winner. c.allow Congress to apportion quotas among their constituents. d.restrict quotas on the basis of handicap, gender, and other protected status.
A
Quota rents are: a.the difference between the domestic price and world price following imposition of a quota. b.the extra return to land that occurs following imposition of a quota. c.the difference between imports with no quota and imports with the quota. d.the extra payment to labor that occurs following imposition of a quota.
A
What happened to the price of U.S. clothing and U.S. clothing production as a result of the expiration of the Multifibre Agreement in 2005? a.The price of clothing in the United States fell, and U.S. clothing production fell. b.The price of clothing in the United States fell, and U.S. clothing production rose. c.The price of clothing in the United States rose, and U.S. clothing production fell. d.The price of clothing in the United States rose, and U.S. clothing production rose.
A
Suppose that the U.S. government imposes quotas rather than tariffs to replace the protection to U.S. producers after the expiration of the Multifibre Agreement. As U.S. demand for clothing increases over time, U.S. clothing consumers will find that: a.the price of clothing in the United States will fall. b.the price of clothing in the United States will rise. c.the price of clothing in the United States will not change. d.U.S. clothing production will fall.
B
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60-per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What will happen to the Finnish price of steel if Finnish demand increases and a 300,000 ton quota remains unchanged? a.It will not change. b.It will increase. c.It will decrease. d.It will first increase, then decrease.
B
The expiration of the Multifibre Agreement in 2005 caused welfare gains for the average U.S. household of approximately: a.$100. b.$100 annually. c.$1,000. d.$1,000 annually.
B
What is the main difference between a quota and a voluntary export restraint? a.There are no differences between a quota and a voluntary export restraint. b.The importing country administers a quota, and the exporting country administers a voluntary export restraint. c.A quota affects a country's imports, while a voluntary export restraint affects its exports. d.A quota has deadweight losses, while a voluntary export restraint has no deadweight losses.
B
What is the major difference between a tariff and a quota that has equivalent effects upon domestic production? a.A quota does not lead to an increase in domestic prices, while a tariff does. b.The government collects tariff revenue with a tariff; other domestic groups (e.g., domestic producers, importers) may collect the equivalent of this tariff revenue with a quota. c.The government collects area c with a tariff; exporters collect area c with a quota, thus leading to further deadweight losses for the quota imposing country. d.The government collects area c with a tariff; importers collect area c with a quota, offsetting consumption deadweight losses and leading to lower deadweight losses for the quota-imposing country.
B
Which of the following is NOT an effect of an import quota imposed by a small nation? a.It raises producer prices. b.It generates revenue for the nation. c.It causes more production by domestic industries. d.It causes a reduction in imports of the product.
B
Which statements BEST describe the result of a small country imposing a quota on imported sugar? I. The domestic price of sugar will fall. II. Domestic sugar consumption will fall. III. Domestic sugar production will fall. a.I b.II c.I and II d.I and III
B
One estimate of the deadweight losses of the 2002 U.S tariffs on imported steel is: a.$185 trillion. b.$185 billion. c.$185 million. d.$185,000.
C
Compared with a tariff, welfare losses will _______ when voluntary export restraints are used to reduce imports. a.decrease b.not change c.increase d.first increase, then decrease
C
Downgrading is: a.the slope of the import demand curve. b.the fall in tariffs. c.a decline in average quality when protection is eliminated. d.the result of deadweight loss.
C
If a quota license is awarded to a domestic firm without an auction, it may generate bribes or lobbying spending to earn this revenue. Economists call this a(n) ____ activity. a.efficient b.unnecessary c.wasteful rent-seeking d.profit-maximizing
C
In the 1980s, the United States used _________ to restrict imports of Japanese automobiles. a.quotas b.tariffs c.voluntary export restraints d.antidumping duties
C
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60-per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What will happen to Finnish welfare losses if Finnish demand for steel increases and the quota remains unchanged? a.They will decrease. b.They will not change. c.They will increase. d.They will first increase, then decrease.
C
Suppose that: (1) the United States has a comparative advantage in producing chemicals; (2) Costa Rica has a comparative advantage in producing sugar, and (3) the United States imposes a quota on its imports of Costa Rican sugar. Now suppose that the United States eliminates its import quotas on Costa Rican sugar. Which of the following is MOST likely to occur for the United States? a.Consumer surplus for American consumers of sugar products will fall. b.Producer surplus for American sugar producers will rise. c.Consumer surplus for American consumers of sugar products will rise. d.Tariff revenues for the U.S. government will rise.
C
A country that becomes a member of the World Trade Organization agrees to bind its tariffs. "Binding" means that the country agrees not to increase existing tariffs and that it will not introduce new tariffs. However, GATT allows three exceptions to binding. Which of the following is NOT an exception to binding? a.antidumping duties against dumped imports b.countervailing duties against subsidized imports c.safeguard or escape clause tariffs d.tariff reductions negotiated in free-trade areas
D
A tariff levied on a good produced in a small nation with an inelastic supply that maximizes the gain to a large nation is called a(n): a.retaliatory tariff. b.prime tariff. c.inelastic tariff. d.optimal tariff.
D
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60-per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. Suppose that Finland decides to use an import quota to achieve the same effects on domestic steel production as the tariff. How large a quota must it use? a.€60 b.100,000 tons c.200,000 tons d.300,000 tons
D
Who collects quota rents when the government auctions quota licenses? a.domestic consumers b.foreign suppliers c.domestic producers d.the government
D
Why does the United States maintain high sugar quotas? a.to fight the obesity problem in America b.to punish sugar production in Communist nations c.to support sugar producers in low-income countries d.to avoid payouts to domestic sugar producers
D
If a large country imposes a tariff: a.its economic welfare may increase. b.its economic welfare must always fall. c.its economic welfare will increase if its deadweight losses exceed gains from its terms-of-trade effect. d.the tariff will have the same impact as an identical tariff imposed by a small country.
A
If a large country imposes a tariff: a.the terms-of-trade effect may offset deadweight losses on its economy. b.the terms-of-trade effect can never offset deadweight losses on its economy. c.there will be no terms-of-trade effect. d.the country will always be worse off.
A
A small country in international trade faces: a.a perfectly elastic world supply curve. b.a perfectly inelastic world supply curve. c.a perfectly elastic world demand curve. d.a perfectly inelastic world demand curve.
A
GATT/WTO allows nations to impose tariffs in response to unfair trade practices such as: a.dumping. b.transportation costs. c.environmental degradation. d.import subsidies.
A
If S = 1P represents a country's home supply curve and D = 100 - 1P represents its home demand curve, then the equation representing its import demand curve is: a.100 - 2P. b.50 - 1P. c.100 - 1P. d.50 - 2P.
A
Producer surplus is: a.the difference between the price of a product and marginal cost of producing the product. b.the difference between the price of a product and what consumers were willing to pay for the product. c.the difference between the discounted price of a product and its retail price. d.the difference between the price of a product and its average cost of production.
A
Section 421 of the amended Trade Act of 1974 allows tariffs to be applied against: a.rising imports from China that cause "market disruption" in a U.S. industry. b.any imports that cause market disruption in a U.S. industry. c.subsidized Chinese imports. d.any imports from Canada or Mexico that violate NAFTA provisions.
A
Suppose that the United States is a large country. In fall 2009, the United States imposed tariffs on tires imported from China. The deadweight losses of these tariffs were larger than the terms-of-trade gains to the U.S. economy. Who was better off and who was worse off as a result of these tariffs? a. U.S. tire producers were better off and U.S. consumers, and Chinese tire producers were worse off. b. U.S. tire producers, U.S. consumers, and Chinese tire producers were all worse off. c. U.S. tire producers and Chinese tire producers were better off, and U.S. consumers were worse off. d. U.S. tire producers and U.S. consumers were better off, and Chinese tire producers were worse off.
A
Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves. Which of the following is the equilibrium price in autarky? a.$2 b.$4 c.$6 d.$8
A
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What will happen to the Finnish price of steel if Finnish demand increases and the tariff remains at €60-per-ton? a.It will not change. b.It will increase. c.It will decrease. d.It will first increase, then decrease
A
U.S. consumers were hurt by the 2002 steel tariff; U.S. producers who use steel were also hurt, but the biggest outcry came from: a.exporters of steel to the United States—Europe, Japan, and South Korea. b.the United Nations. c.the big labor unions. d.Ralph Nader, who is very opposed to restrictions on free trade.
A
We can measure producer and consumer surplus by looking at the supply and demand graphical representation. Producer surplus is: a.the area above the supply curve but below the equilibrium price. b.the area below the demand curve but greater than the equilibrium price. c.the area below the demand curve all the way down to the quantity axis. d.the combined triangular area below the demand curve and above the supply curve.
A
What is the MOST recent set of negotiations at WTO called? a.the Doha round b.the Kyoto round c.the Geneva accord d.the Paris negotiation
A
When a tariff is imposed, there is always an additional loss. One loss occurs when consumers purchase fewer units of the good because prices have risen, so society loses the value of that consumption. This loss is the: a. consumption loss. b. efficiency transfer. b. production loss. d.X-factor .
A
When consumers are able to buy a product at a price lower than its marginal value to them, it is called: a.consumer surplus. b.consumer sovereignty. c.producer surplus. d.marginal utility.
A
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. Suppose that the €60-per-ton tariff caused Finnish production of steel to increase by 100,000 tons and Finnish consumption of steel to fall by 100,000 tons. What is the value of Finland's welfare loss due to the tariff? a.200,000 tons b.€6 million c.€12 million d.€15 million
B
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. Who will gain and who will lose as a result Finland's €60-per-ton tariff on imported steel? a.Both Finnish steel producers and steel consumers will be worse off with the tariff than without it. b.Finnish steel producers will be better off, and Finnish steel consumers will be worse off with the tariff than without it. c.Finnish steel producers will be worse off, and Finnish steel consumers will be better off with the tariff than without it. d.Both Finnish steel producers and steel consumers will be better off with the tariff than without it.
B
Suppose that the world price of steel is $500 per ton. Now suppose that the United States imposes a 20% tariff on imported steel (as it did in 2002). What is the U.S. domestic price of steel after the 20% tariff is imposed (rounded to the nearest dollar) if exporters bear two-thirds of the tariff? a.$433 b.$467 c.$533 d.$567
B
The United States recently levied tariffs on tires imported from what country? a.Japan b.Brazil c.Russia d.China
D
The General Agreement on Tariffs and Trade focused on: a.raising tariffs on agricultural products. b.lowering trade restrictions between countries. c.promoting full employment worldwide. d.increasing trade restrictions between countries.
B
The United States applies a 25% tariff on imported pickup trucks (mainly from Japan). If the United States is considered to be a "large" country, then: a.the U.S. price of imported Japanese pickup trucks will increase by 25%. b.the U.S. price of imported Japanese pickup trucks will increase by less than 25%. c.the U.S. price of imported Japanese pickup trucks will increase by more than 25%. d.the U.S. price of imported Japanese pickup trucks will increase by 35%.
B
The politics behind tariff protection suggests that, other things equal, tariffs are more likely to be imposed when: a. the benefits to consumers and producers are concentrated on specific firms and states. b. the benefits to producers and their labor forces are concentrated on specific firms and states. c. the benefits to producers and their labor forces are spread nationwide. d. the losses to consumers are concentrated on specific firms and states.
B
To help its domestic producers, the United States unilaterally raised tariffs on ____ in early 2002, but after a ruling against the United States by the WTO, it was forced to rescind the tariff. a.autos b.steel c.oil d.dairy products
B
To measure the impact of a tariff on the total welfare of society, we calculate the: a.rise in consumer surplus plus the rise in producer surplus. b.rise in producer surplus plus the increase in tariff revenue going to the government minus the loss of consumer surplus. c.rise in government revenues plus the rise in consumer surplus. d. total number of jobs saved by the tariff times the average wage.
B
WTO is the acronym for: a.the World Traffic Organization. b.the World Trade Organization. c.the World Tariff Organization. d.the World Tax Organization.
B
We can measure producer and consumer surplus by looking at the supply and demand graphical representation. Consumer surplus is: a.the area above the supply curve but below the equilibrium price. b.the area below the demand curve but greater than the equilibrium price. c.the area below the demand curve all the way down to the quantity axis. d.the combined triangular area below the demand curve and above the supply curve.
B
What is a difference between a tariff imposed by a large country and a tariff imposed by a small country? a.A tariff imposed by a large country has no deadweight consumption and production losses. b.A tariff imposed by a large country has a terms-of-trade effect. c.A tariff imposed by a small country has a terms-of-trade effect. d.A tariff imposed by a large country has no deadweight consumption loss.
B
What is an "export subsidy"? a.a payment by one government to another for exports b.a payment (or other benefit) to domestic firms by their government to help them sell exports more cheaply c.the rule that says all exports must be taxed before they leave the port d.a provision that exporters must get their payments indirectly through a third party
B
What organization emerged from the GATT, starting January 1, 1995, with expanded responsibilities and global interaction? a.the Doha round b.the World Trade Organization c.the United Nations d.the Institute for International Economics
B
When a large country imposes a tariff, the burden is often shared by: a.foreign consumers and domestic producers. b. domestic consumers and foreign producers. c. all producers and consumers in each nation equally. d. its government.
B
Which of the following statements is(are) rationales for the imposition of tariffs? I. Tariffs are a source of government revenue. II. Under certain conditions, tariffs can be used to manipulate world prices. III. Tariffs discourage domestic production. a.I b.II c.I and III d.I, II, and III
B
Why did the European Union put tariffs on banana imports from some countries and not from other countries? a.to encourage organic farming in the Caribbean b.to support former colonies in Africa c.to discourage European banana consumption d.to encourage European banana production
B
A customs union is different from a free-trade area, in that: a.the latter allows for free movement of factors, whereas the former does not. b.the latter allows for uniform tariffs, whereas the former does not. c.the latter removes trade barriers between member countries, whereas the former adopts identical tariffs with the rest of the world. d.the former removes trade barriers between member countries, whereas the latter adopts identical tariffs with the rest of the world.
C
A large nation faces a(n) ____ foreign export supply curve, rather than a(n) ____ foreign export supply curve. a.flat; upward-sloping b.downward-sloping; upward-sloping c.upward-sloping; flat d.flat; downward-sloping
C
An international conference in Bretton Woods, New Hampshire, in 1944 resulted in the formation of: a.the European Union in 1945. b.the Kyoto Agreement in 1971. c.the General Agreement on Tariffs and Trade (GATT) in 1947. d.the International Red Cross in 1955.
C
Because a large nation can force the nation exporting the product to pay a substantial amount of the tariff, its _________ may improve after the tariff is imposed. a.consumption b.production c.terms of traded. income tax collection rate
C
How does a tariff imposed by a large country differ from a tariff imposed by a small country? a.If a large nation imposes a tariff, that government gets more revenue. b.It may not have any effect at all in the large country, since its consumers have so many other choices. c.Because of its size, the large nation's tariff not only decreases the quantity demanded of the product but may also reduce the world price of the good. d.The large nation can just buy up foreign producers if the foreign producers don't like having a tariff imposed.
C
Import tariffs are ___________ on imports, and import quotas are ____________ on imports. a.subsidies; taxes b.limits; subsidies c.taxes; limits d.limits; taxes
C
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What is the purpose of this €60per-ton tariff? a.Its purpose is to protect Finnish steel consumers from foreign competition. b.Its purpose is to protect Finnish steel producers and consumers from the World Trade Organization. c.Its purpose is to protect Finnish steel producers from foreign competition. d.Its purpose is to cause Finland to comply with provisions of the General Agreement on Tariffs and Trade.
C
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What is the value of the tariff revenue from the €60-per-ton tariff? a.€6 million b.€12 million c.€18 million d.€30 million
C
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. How much total tariff revenue will the Finnish government collect as a result of the €60-per-ton tariff? a.€6 million b.€12 million c.€18 million d.€30 million
C
Suppose that the supply curve for widgets is described by this equation: P = 2Q. What is the value of producer surplus when P = 5? a.$5 b.$12.50 c.$25 d.$50
C
Suppose that the world price of resins is $100 per ton. Now suppose that the United States imposes a 10% tariff on imported resins. What is the U.S. domestic price of resins after the 10% tariff is imposed (rounded to the nearest dollar) if exporters bear half of the tariff? a.$90 b.$100 c.$105 d.$95
C
The Home import demand curve is downward sloping because: a.as the government forces the price down, consumers buy more. b.foreign companies want to help domestic competitors. c.as the price falls below domestic equilibrium, the shortage in demand is filled by importing more quantity from abroad. d.consumers can control the price of the good.
C
The difference between the price consumers are willing to pay and the price that they actually pay is known as: a.price discrimination. b.government surplus. c.consumer surplus. d.producer surplus.
C
The escape clause in U.S. trade law: a.enables the United States to withdraw from NAFTA. b.permits the U.S. government to impose trade barriers if fairly traded imports are the cause of significant injury to a U.S. industry and its workers. c.permits the government to impose trade remedies against nations that unfairly subsidize their exports to the United States. d.enables immigrants to return to their home countries.
C
Under the WTO provision of Article XIX, countries can: a.never charge a tariff on an import. b.always charge a tariff on imports. c.temporarily charge a higher tariff on certain commodities. d.provide subsidies to all domestic producers of import competing products.
C
What GATT provision did the United States use to justify levying tariffs on tire imports in fall 2009? a.antidumping duties b.export subsidization c.safeguard clause d.national security
C
When a tariff is imposed, there is always an additional loss. One loss occurs when production moves from more efficient foreign producers to less efficient domestic producers. This loss is the: a.consumption loss. b.efficiency transfer. c.production loss. d.X-factor .
C
When firms are able to sell units of a good at a price higher than the marginal cost of production, they are getting: a.consumer surplus. b.higher efficiency. c.producer surplus. d.marginal utility.
C
When the United States imposed tariffs of 30% on many steel imports in March 2002, the estimated total cost to the United States over the period of March 2002 to December 2003 was: a.$1 million. b.$3.32 for each job saved—certainly worth it. c.$185 million. d.too small to measure.
C
Which of the following describe why small nations impose tariffs, even though they reduce national welfare? I. Small, mostly poor, nations have no reliable means for collecting taxes to run their governments. II. Politicians like to build favor with industrial interests, especially during political campaigns. III. Raises for elected officials often hinge on whether enough tariff revenue is collected by the treasury department. a.I b.II c.I and II d.I, II, and III
C
Which of the following is a possible reason for a country to impose a tariff? a.A tariff discourages domestic production. b.A tariff reduces the benefits for domestic producers. c.A tariff is a source of revenue for the government. d.A tariff will encourage domestic consumers to buy foreign goods.
C
Which of the following is an exception to the most favored nation principle? a.trade in petroleum b.trade with Japan c.tariff concessions negotiated within a free-trade area or a customs union d.trade in services
C
Which of the following taxes is easiest to collect? a. income taxes b. wealth taxes c. tariffs d. value-added taxes
C
Who bears the burden of the terms-of-trade effect when a large country imposes a tariff? a.foreign consumers b.foreign producers c.domestic producers d.domestic consumers
C
A free-trade area is defined as: a.a trading agreement that allows for free flow of resources. b.a trading agreement that binds member countries to have a uniform tariff on other countries. c.a trading agreement that lets countries rely on subsidies on domestic production. d.a trading agreement in which a group of countries voluntarily agree to remove trade barriers between themselves.
D
China recently became a member of the World Trade Organization. For China, one of the benefits of WTO membership is: a.most favored nation treatment of its exports. b.the right to increase tariffs on all its imports. c.the right to subsidize all its exports. d.the right to impose antidumping duties on its imports.
D
If we assume perfect competition in the product markets, producer surplus is: a.maximized. b.minimized. c.equal to the firm's monopoly profits. d.equal to the return to the fixed factors of production.
D
One feature of the GATT and now the WTO is that all member nations get the same treatment from their trading partners in terms of trade rules and restrictions. This provision is called: a.beggar thy neighbor. b.the good neighbor policy. c.rotating obligations. d.most favored nation status.
D
Suppose that the United States is a large country and it wishes to impose optimal tariffs on its imports of avocados, bananas, and cherries. The export supply elasticities of avocados, bananas, and cherries are 1, 2, and 3, respectively. Which of the following ranks the products on the basis of their optimal tariffs from lowest to highest tariff? a.cherries, bananas, avocados b.avocados, cherries, bananas c.bananas, avocados, cherries d.avocados, bananas, cherries
D
Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves. If the government imposed a 50% tariff on imports, how much revenue would it collect as a result of the tariff? (Note: It is possible to consume partial units of this product, such as 2.5 units.) a.$1.50 b.$2.75 c.$0.50 d.$0.75
D
Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 16 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What is likely to happen to Finnish production of steel and the price of steel sold in Finland after the €60-per-ton tariff is imposed? a.Finnish steel production will fall, and the Finnish price of steel will fall. b.Finnish steel production will rise, and the Finnish price of steel will fall. c.Finnish steel production will fall, and the Finnish price of steel will rise. d.Finnish steel production will rise, and the Finnish price of steel will rise.
D
The United States applies a 25% tariff on imported pickup trucks. If the United States is considered to be a large country, then the U.S. price of an imported Toyota pickup with a CIF price (price landed at the U.S. border) of $20,000 will be: a.$25,000. b.$15,000. c.between $15,000 and $25,000. d.between $20,000 and $25,000.
D
The safeguard provision or escape clause allows a country to: a.import products below cost from foreign countries. b.export products by selling below cost to foreign countries. c.avoid tariffs in foreign countries temporarily. d.temporarily increase tariffs on certain imported goods.
D
U.S. tire producers did not support the recently enacted tariff on imports of Chinese tires because U.S. producers that also produce tires in China would have experienced a decline in their ___________ earned in ___________. a.consumer surplus; the United States b.producer surplus; the United States c.consumer surplus; China d.producer surplus; China
D
Under the GATT framework, nations negotiated for up to six years, resulting in new trade agreements. These are known as: a. conferee sessions. b. plenary meetings. c. sesquisessions. d. rounds.
D
We can measure producer and consumer gains by looking at the supply and demand graphical representation. Total welfare in the economy would be: a.the area above the supply curve but below the equilibrium price. b.the area below the demand curve but greater than the equilibrium price. c.the area below the demand curve all the way down to the quantity axis. d.the combined triangular area below the demand curve and above the supply curve.
D
Which country saw the largest increase in its textile and clothing exports to the United States after the Multifibre Arrangement was abolished? a.Japan b.India c.Mexico d.China
D
Which of the following is NOT an effect of an import tariff? a.It increases producer surplus by raising the market price and allowing more production. b.It raises government revenue. c.It reduces consumer surplus by raising the market price. d.It improves efficiency in the economy overall because it saves high paying jobs.
D
Which of the following is NOT an important provision of GATT? a.the most favored nation clause b.the safeguard provision or escape clause c.antidumping tariffs d.approval of export subsidies
D
