ECON CH 7, 8, 9

A tariff is a tax placed on

an imported good and it raises the domestic price of the good above the world price.

A tax placed on buyers of tuxedos shifts the...

demand curve for tuxedos downward, decreasing price received by sellers of tuxedos and causing the quantity of tuxedos to decrease

When a tax is imposed on the buyers of a good, the demand curve shifts

downward by the amount of the tax.

Suppose the nation of Canada forbids international trade. In Canada, you can obtain a hockey stick by trading 5 baseball bats. In other countries, you can obtain a hockey stick by trading 8 baseball bats. These facts indicate that

if Canada were to allow trade, it would export hockey sticks.

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began

importing televisions and the price of a television in Paraguay decreased to $300.

Deadweight Loss measures the loss

in a market to buyers and sellers that is not offset by an increase in government revenue.

Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a result of the French subsidy, sales of French wheat to Germany

may prompt German farmers to invoke the unfair-competition argument, increase the consumer surplus of German buyers of wheat, increase the total surplus of the German people. (All of the above)

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

producer surplus increases and total surplus decreases in the market for that good.

A tax on a good

raises the price that buyers effectively pay and lowers the price that sellers effectively receive.

DWL depends on...

size of tax, elasticity of supply, elasticity of demand.

The deadweight loss from a tax of $2 per unit will be the smallest in a market with...

inelastic supply and inelastic demand

When a tax is levied on a good, the buyers and sellers of the good share the burden,

regardless of the tax is levied

When the nation of Duxembourg allows trade and becomes an importer of software,

residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.

Anger over British taxes played a significant role in bringing about the...

American Revolution

Suppose Ireland exports beer to China and imports pineapples from the United States. This situation suggests that

Ireland has a comparative advantage relative to China in producing beer, and the United States has a comparative advantage relative to Ireland in producing pineapples.

Suppose that Honduras opens its markets to international trade. As a result of this, the domestic price of coffee decreases. We can conclude that

Honduras has begun to import coffee into the country.

Which of the following is a tax on labor?

Medicare, Social Security, Federal Income. (All of the above)

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,

Mexico has a comparative advantage over other countries and Mexico will export oranges.

Assume the price of gasoline is $2.00 per gallon, and the equilibrium quantity of gasoline is 10 million gallons per day with no tax on gasoline. Starting from this initial situation, which of the following scenarios would result in the largest deadweight loss?

The price elasticity of demand for gasoline is 0.2; the price elasticity of supply for gasoline is 0.6; and the gasoline tax amounts to $0.30 per gallon.

Chile is an importer of computer chips, taking the world price of $12 per chip as given. Suppose Chile imposes a $7 tariff on chips. Which of the following outcomes is possible?

The price of chips in Chile increases to $19; the quantity of Chilean-produced chips increases; and the quantity of chips imported by Chile decreases.

At present, the United States uses a system of quotas to limit the amount of sugar imported into the country. Which of the following statements is most likely true?

The quotas are probably the result of lobbying from U.S. producers of sugar. The quotas increase producer surplus for the United States, reduce consumer surplus for the United States, and harm foreign sugar producers.

When, in our analysis of the gains and losses from international trade, we assume that a country is small, we are in effect assuming that the country

cannot affect world prices by trading with other countries

Patterns of trade among nations are primarily determined by

comparative advantages

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free-trade policy has

decreased consumer surplus in the steel market and increased total surplus in the incense market.

Sellers of a product will bear the larger part of the tax burden, and the buyers will bear the smaller part of the tax burden when the...

demand for the product is more elastic than the supply of the product.

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

export copper, since that country has a comparative advantage in copper.

When a good is taxed, the burden of the tax...

falls more heavily on the side of the market that is more inelastic.

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs. An economist would argue that

foreign competition may cause unemployment in import-competing industries, but the effect is temporary because other industries, especially exporting industries, will be expanding.

When a tax is levied on a good,

govt collects revenues which might justify the loss in total welfare, there is a decrease in the quantity of the good bought and sold in the market, and a wedge is placed between the price buyers pay and the price sellers effectively receive (all of the above).

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes

harm the United States as a whole, because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue.

When the nation of Worldova allows trade and becomes an exporter of silk,

residents of Worldova who produce silk become better off; residents of Worldova who buy silk become worse off; and the economic well-being of Worldova rises.

When a tax is imposed on the sellers of a good, the...

supply curve shifts upward by the amount of the tax.

Suppose the tax on automobile tires is increased so that the tax goes from being a "medium" tax to being a "large" tax. As a result, it is likely that...

tax revenue decreases, and the deadweight loss increases.

Suppose a tax of $1 per unit is imposed on a good. The more elastic the demand for the good, other things equal,

the larger is the decrease in Qd as a result of the tax, the smaller is the tax burden on buyers relative to the tax burden on seller, and the larger is the deadweight loss of the tax, (all of the above).

Several arguments for restricting trade have been advanced. Those arguments do not include

the no-deadweight-loss argument.

Suppose France imposes a tariff on wine of 3 euros per bottle. If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers, with the tariff, is 8 million bottles per year, then we can conclude that

the quantity of wine demanded by France, with the tariff, is 18 million bottles per year.