Microeconomics Chpt 9

Figure 9-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-1. Under autarky, the consumer surplus is ________ and the producer surplus is ________.

$195; $105

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. What is the area of consumer surplus after the imposition of the quota?

A + G + H

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. What is the area of domestic producer surplus after the imposition of a quota?

B + C

Economists believe the most persuasive argument for protectionism is to protect infant industries. But the argument has a drawback. What is this drawback?

Protection lessens the need for firms to become productive enough to compete with foreign firms; this often results in infant industries never "growing up."

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Refer to Figure 9-2. The loss in domestic consumer surplus as a result of the tariff is equal to the area

C + D + E + F.

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. Refer to Figure 9-3. What is the area that represents the deadweight loss as a result of the quota?

E + M

If Estonia has an absolute advantage in the production of two goods compared to Norway, Estonia can not benefit from trade with Norway

False

Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. Refer to Table 9-1. Select the statement that accurately interprets the data in the table

Linda has an absolute advantage in dog bathing and Sandy has an absolute advantage in dog grooming.

If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade?

The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico

Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. What happens to the market price and what is the quantity of imports?

The price equals $18 and imports equals 10 units.

The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas

True

A situation in which a country does not trade with other countries is called

autarky.

The United States is a leading exporter of wheat. What explains the comparative advantage of the United States in wheat production?

climate and soil conditions in the United States which are well-suited for wheat production

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to voluntary export restraints. With voluntary export restraints, foreign producers

limit their exports to a country

Measuring the impact of a quota or tariff on the U.S. economy is an example of ________. Stating that a quota or tariff should be eliminated is an example of ________.

positive analysis; normative analysis

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this is

production of most goods involves increasing opportunity costs

The main purpose of most tariffs and quotas is to

reduce the foreign competition that domestic firms face.

The ratio at which a country can trade its exports for imports from other countries is called

the terms of trade

Federal Reserve publication proclaimed that "Trade is a win-win situation for all countries that participate." This statement is

true because it refers to countries; individuals may be losers as a result of international trade