ECON 2302_Chpt 9 MC Practice Test

Refer to Figure 9-5. The amount of deadweight loss caused by the tariff equals a. $100. b. $200. c. $400. d. $500.

$200

Refer to Figure 9-5. The amount of revenue collected by the government from the tariff is a. $200. b. $400. c. $500. d. $600.

$400

Refer to Figure 9-1. With free trade, consumer surplus would be a. $45. b. $80. c. $210. d. $245.

$80

Refer to Figure 9-4. With free trade, producer surplus would be a. $80. b. $150. c. $210. d. $245.

$80

Refer to Figure 9-1. With trade, total surplus increases by a. $80. b. $97.50. c. $162.50. d. $495.50.

$97.50

Refer to Figure 9-15. After the quota, deadweight loss would be equal to a. E. b. B. c. D + F. d. B + D + E + F.

D + F

Refer to Figure 9-4. If this country allows free trade in wagons, consumers will a. lose by $75. b. lose by $240. c. gain by $240. d. gain by $75.

gain by $240

Refer to Figure 9-1. If this country chooses to trade, the price of baskets in this country would be a. $10 and 40 would be sold domestically. b. $10 and 105 would be sold domestically. c. $7 and 70 would be sold domestically. d. $7 and 40 would be sold domestically.

$10 and 40 would be sold domestically

Refer to Figure 9-5. The size of the tariff on carnations is a. $2. b. $4. c. $6. d. $8.

$2

Refer to Figure 9-1. Without trade, producer surplus would be a. $210. b. $245. c. $455. d. $490.

$210

Refer to Figure 9-15. The free-trade price and domestic quantity demanded would be a. P1 and Q1. b. P1 and Q4. c. P2 and Q2. d. P2 and Q3.

P1 and Q4

Refer to Figure 9-15. The equilibrium price and quantity after the quota would be a. P1 and Q1. b. P1 and Q4. c. P2 and Q2. d. P2 and Q3.

P2 and Q3

Refer to Figure 9-15. After the quota, imports would be equal to a. Q4 - Q1. b. Q3 - Q2. c. Q3 - Q1. d. Q2 - Q1.

Q3 - Q2

Refer to Figure 9-5. When a tariff is imposed in the market, producers a. gain by $100. b. gain by $200. c. gain by $300. d. lose by $100.

gain by $300

Refer to Figure 9-5. Before the tariff is imposed, this country will a. import 200 carnations. b. import 400 carnations. c. export 200 carnations. d. export 400 carnations

import 400 carnations

If a country allows trade and the domestic price of a good is lower than the world price, a. the country will become an exporter of the good. b. the country will become an importer of the good. c. the country will neither export nor import the good. d. additional information about demand is needed to determine whether the country will export or import the good.

the country will become an exporter of the good

If a country allows trade and the domestic price of a good is higher than the world price, a. the country will become an exporter of the good. b. the country will become an importer of the good. c. the country will neither export nor import the good. d. additional information about demand is needed to determine whether the country will export or import the good

the country will become an importer of the good

Refer to Figure 9-4. With free trade, total surplus would be a. $245. b. $367.50. c. $607.50. d. $687.50.

$687.50

Refer to Figure 9-4. With free trade, total surplus would increase by a. $60. b. $75. c. $135. d. $210.

$75

Refer to Figure 9-4. If this country allows free trade in wagons, a. consumers will gain and producers will lose. b. consumers will lose and producers will gain. c. both consumers and producers will gain. d. both consumers and producers will lose

consumers will gain and producers will lose

Refer to Figure 9-4. If this country allows free trade in wagons a. consumers will gain more than producers will lose. b. producers will gain more than consumers will lose. c. producers and consumers will both gain equally. d. producers and consumers will both lose equally.

consumers will gain more than producers will lose

Refer to Figure 9-5. When the tariff is imposed, consumers a. lose by $500. b. lose by $900. c. gain by $500. d. gain by $900.

lose by $900

Refer to Figure 9-5. Imposing a tariff on carnations a. increases imports by 100. b. increases imports by 200. c. reduces imports by 200. d. reduces imports by 400.

reduces imports by 200

When a country takes a multilateral approach to free trade it a. removes trade restrictions on its own. b. reduces its trade restrictions while other countries do the same. c. does not remove trade restrictions no matter what other countries do. d. is willing to trade with multiple countries at once.

reduces its trade restrictions while other countries do the same

When a country takes a unilateral approach to free trade it a. removes trade restrictions on its own. b. reduces its trade restrictions while other countries do the same. c. does not remove trade restrictions no matter what other countries do. d. is willing to trade with multiple countries at once.

removes trade restrictions on its own

Refer to Figure 9-4. The world price for wagons represents the a. demand for wagons from the rest of the world. b. supply of wagons from the rest of the world. c. level of inefficiency in the domestic market caused by trade. d. surplus in the domestic wagon market.

supply of wagons from the rest of the world

The major difference between tariffs and import quotas is that 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 a surplus for import license holders. d. All of the above are correct.

tariffs raise revenue for the government, but import quotas create a surplus for import license holders

Refer to Figure 9-5. With free trade a. the domestic price will equal the world price. b. carnations will be sold at $8 in this market. c. this country will import 200 carnations. d. there will be a shortage of 400 carnations in this market

the domestic price will equal the world price

Refer to Figure 9-5. Before the tariff is imposed government revenue is equal to a. $400. b. $200. c. $100. d. zero.

zero

Refer to Figure 9-4. Without trade, producer surplus would be a. $210. b. $245. c. $450. d. $455.

$245

Refer to Figure 9-4. Without trade, consumer surplus would be a. $210.50. b. $245.50. c. $367.50. d. $607.50.

$367.50

Refer to Figure 9-1. With free trade, producer surplus would be a. $80. b. $210. c. $245.50. d. $472.50.

$472.50

Refer to Figure 9-4. If this country chooses to trade, the price of wagons in this country would be a. $8 and 70 wagons would be sold domestically. b. $5 and 40 wagons would be sold domestically. c. $5 and 70 wagons would be sold domestically. d. $5 and 90 wagons would be sold domestically.

$5 and 90 wagons would be sold domestically

Refer to Figure 9-4. With free trade, consumer surplus would be a. $245. b. $362.50. c. $367.50. d. $607.50.

$607.50

Refer to Figure 9-4. Without trade, total surplus would be a. $122.50. b. $245. c. $367.50. d. $612.50.

$612.50

Refer to Figure 9-4. The increase in total surplus resulting from trade is a. $60. Since producer surplus increases by $180 and consumer surplus falls by $240. b. $60. Since consumer surplus increases by $180 and producer surplus falls by $240. c. $75. Since producer surplus increases by $240 and consumer surplus falls by $165. d. $75. Since consumer surplus increases by $240 and producer surplus falls by $165.

$75. Since producer surplus increases by $240 and consumer surplus falls by $165

Refer to Figure 9-5. Without trade, the equilibrium price of carnations would be a. $8 and equilibrium quantity would be 300. b. $6 and equilibrium quantity would be 200. c. $6 and equilibrium quantity would be 400. d. $4 and equilibrium quantity would be 500

$8 and equilibrium quantity would be 300

Senator Blowhard represents a state that has some textile firms in it. He wants to impose tariffs on all imported textiles. Which of the following is the least likely consequence of such tariffs? a. Domestic textile buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic textile sellers will gain producer surplus. c. Domestic textile sellers will have a higher rate of technological advance. d. Domestic textile sellers will have more market power.

Domestic textile sellers will have a higher rate of technological advance

Refer to Figure 9-15. Area E represents a. a part of consumer surplus. b. a part of producer surplus. c. a surplus for import license holders. d. government revenue.

a surplus for import license holders

Trade is beneficial because it a. creates jobs for middlemen. b. creates jobs for shippers. c. allows each nation to apply economic pressure on other nations. d. allows each nation to specialize in doing what it does best.

allows each nation to specialize in doing what it does best

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

better off and domestic buyers worse off

Countries usually impose restrictions on free foreign trade to protect a. foreign producers. b. foreign consumers. c. domestic producers. d. domestic consumers

domestic producers

Refer to Figure 9-1. With free trade, this country would a. import 70 baskets. b. export 65 baskets. c. export 35 baskets. d. import 40 baskets.

export 65 baskets

When a country allows trade and becomes an exporter of a good domestic producers a. gain and domestic consumers lose. b. lose and domestic consumers gain. c. and domestic consumers both gain. d. and domestic consumers both lose

gain and domestic consumers lose

Refer to Figure 9-4. This country would a. import 30 wagons. b. export 20 wagons. c. import 50 wagons. d. export 50 wagons.

import 50 wagons

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to a. cause these factories to pay the U.S. minimum wage. b. increase the rate of technological advance in poor countries so that they can afford to pay higher wages. c. increase poverty in poor countries and benefit U.S. firms which compete with these imports. d. harm U.S. firms which compete with these imports.

increase poverty in poor countries and benefit U.S. firms which compete with these imports

Refer to Figure 9-4. If this country allows free trade in wagons, producers will a. lose by $210. b. lose by $165. c. gain by $45. d. gain by $210.

lose by $165

If the United States exports cars to France and imports cheese from Switzerland, a. the United States has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese. b. the United States has a comparative advantage in producing cheese, and Switzerland has a comparative advantage in producing cars. c. the United States and France would both be better off if they each produced cars and cheese. d. Comparative advantage cannot be determined without knowing absolute prices.

the United States has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese

The domestic price of a product will equal the world price a. when the domestic supply of the product increases. b. when the country allows free trade. c. when trade restrictions are imposed on the product. d. if the country chooses to export and not import the product.

when the country allows free trade

The world price of yo-yo's is $4.00 each. The pre-trade price of yo-yo's in Taiwan is $3.50 each With free trade, in the yo-yo market in Taiwan consumers a. and producers will both lose. b. and producers will both benefit. c. will lose and producers will benefit. d. will benefit and producers will not be affected.

will lose and producers will benefit