Quiz 5

Figure 9-4 shows the U.S. demand and supply for leather footwear. Suppose the government allows imports of leather footwear into the United States. What will the market price be?

$24

Figure 9-4 shows the U.S. demand and supply for leather footwear. Under autarky, the equilibrium price is

$30

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. With the tariff in place, the United States consumes

31 million pounds of rice

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Without the tariff in place, the United States produces

9 million pounds of rice

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. The tariff revenue collected by the government equals the area

E

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will be the quantity demanded?

Q2

Figure 9-4 shows the U.S. demand and supply for leather footwear. Under autarky, the consumer surplus is

R

Figure 9-4 shows the U.S. demand and supply for leather footwear. Under autarky, the producer surplus is area

S + V

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade? -Sweden must have an absolute advantage in producing cell phones and Denmark must have an absolute advantage in producing butter. -The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden. -Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter. -Sweden has a higher opportunity cost of producing cell phones than Denmark, and Denmark has a higher opportunity cost of producing butter.

Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter

Which of the following is the best example of a tariff? - A $150 fee imposed on all imported residential air conditioners - A subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers -A limit on the quantity of residential air conditioners that can be imported from a foreign country -A tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

a $150 fee imposed on all imported residential air conditioners

Which of the following is the best example of a quota? -A limit imposed on the number of sport utility vehicles that the United States can import from Japan -A tax placed on all sport utility vehicles sold in the domestic market -A subsidy granted by the U.S. government to domestic sport utility vehicle manufacturers so they can compete more effectively with foreign sport utility vehicle manufacturers -A $5,000 per-car fee imposed on all sport utility vehicles imported into the United States

a limit imposed on the number of sport utility vehicles that the United States can import from Japan

Which of the following is the best example of a quota? -A limit on the quantity of tires that can be imported from a foreign country -A 40% fee imposed on all imported tires -A subsidy from the U.S. government to domestic manufacturers of tires to enable them to compete more effectively with foreign producers -A tax placed on all tires sold in the domestic market to help offset the impact of lost jobs in the domestic tire industry.

a limit on the quantity of tires that can be imported from a foreign country

Which of the following is the best example of a voluntary export restraint? -A $50 per-cell phone fee imposed on all cell phones imported into the United States -A limit imposed by the U.S. government on the number of cell phones that the United States can import from Korea -A limit set by the Korean government on the number of cell phones that the United States can import from Korea -A subsidy granted by the U.S. government to domestic cell phone manufacturers so they can compete more effectively with foreign cell phone manufacturers

a limit set by the Korean government on the number of cell phones that the United States can import from Korea

A tax imposed by a government on imports of a good into a country is called __________.

a tariff

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called __________.

a voluntary export restraint

Many economists support trade agreements, maintaining that the agreements improve economic efficiency because they result in goods being produced __________.

at the lowest opportunity cost

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

autarky

Imports are goods and services bought domestically, __________.

but produced in other countries

An economic principle that explains why countries produce different goods and services is __________.

comparative advantage

__________ is the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

comparative advantage

Autarky is a situation in which a country __________.

does not trade with other countries

The selling of a product for a price below its cost of production is called __________.

dumping

Domestically produced goods and services sold to other countries are referred to as _________.

exports

A tariff is a tax imposed by a government on __________.

imports

Goods and services bought domestically but produced in other countries are referred to as __________.

imports

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. With the tariff in place, the United States

imports 16 million pounds of rice

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. In the market for steel, the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

increase; decrease

Protectionism __________.

is the use of trade barriers to protect domestic firms from foreign competition

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

Suppose that American firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to __________.

manufacturers who export to Canada

If the opportunity costs of production for two goods is different between two countries, then __________.

mutually beneficial trade is possible

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"

A numerical limit imposed by a government on the quantity of a good that can be imported into the country is called a __________.

quota

The main purpose of most tariffs and quotas is to __________.

reduce the foreign competition that domestic firms face

Dumping refers to __________.

selling a product for a price below its cost of production

Export are domestically produced goods and services __________.

sold to other countries

Absolute advantage is __________.

the ability to produce more of a good or service than competitors when using the same amount of resources

It is difficult to determine if foreign companies are selling their products for prices below their costs of production because __________.

the true costs of production are difficult to calculate

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because __________.

they believe the restrictions will protect their jobs

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called?

voluntary export restraints