Test 3 Micro

Refer to Figure 9-6. The amount of deadweight loss caused by the tariff equals

$100

Refer to Figure 9-5. With trade, the price of tricycles in this country is

$11, with 200 tricycles produced in this country and another 320 tricycles imported.

Refer to Table 10-1. How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?

$2

Refer to Figure 10-8. What is the equilibrium price in this market?

$8

Refer to Figure 10-8. What is the socially-optimal quantity of output in this market?

10 units

Refer to Figure 9-6. When the tariff is imposed, domestic consumers

?lose by $200.

When a country that imports a particular good imposes a tariff on that good,

?not producer surplus decreases and total surplus decreases in the market for that good

Refer to Figure 9-9. Total surplus in this market after trade is

A + B + C + D.

Refer to Figure 9-1. When trade is allowed,

Guatemalan producers of coffee become better off and Guatemalan consumers of coffee become worse off.

Suppose Japan exports cars to Russia and imports wine from France. This situation suggests

Japan has a comparative advantage relative to Russia in producing cars, and France has a comparative advantage relative to Japan in producing wine.

Refer to Figure 9-15. With trade and without a tariff, the price and domestic quantity demanded are

P1 and Q4

If the government were to impose a fine of $4,000 for each unit of air-pollution released by a fertilizer plant, the policy would be considered

a corrective tax

The principle of comparative advantage asserts that

countries can become better off by specializing in what they do best.

Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Guatemala

decreases by the area B + D.

A tariff on a product makes

domestic sellers better off and domestic buyers worse off

Refer to Figure 9-6. Before the tariff is imposed, this country

imports 400 roses

A tax on an imported good is called a

tariff

An externality is

the uncompensated impact of one person's actions on the well-being of a bystander

All externalities

cause markets to fail to allocate resources efficiently

What is the fundamental basis for trade among nations?

comparative advantage

Negative externalities lead markets to produce

greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels

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

The North American Free Trade Agreement

reduced trade restrictions among Canada, Mexico and the United States.

Positive externalities

result in smaller than efficient equilibrium quantity.

Internalizing a positive externality will cause the demand curve to

shift to the right

The "unfair-competition" argument might be cited by an American who believes that

the French government's subsidies to French farmers justify restrictions on American imports of French agricultural products.

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries,

the domestic price of coffee will equal the world price of coffee.

If education produces positive externalities, we would expect

the government to subsidize education.

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

the world price of olive oil is higher than the price of olive oil that would prevail in Spain if trade with other countries were not allowed.

Which of the following tools and concepts is useful in the analysis of international trade?

total surplus domestic supply equilibrium price

An optimal tax on pollution would result in which of the following?

Producers will internalize the cost of the pollution.

Refer to Table 10-1. What is the socially-optimal quantity of output in this market?

2 units

Karen's cat causes Danny to sneeze. Karen values her cat's companionship at $300 per year. The cost to Danny of tissues and her allergy medication is $350 per year. Based on the Coase theorem,

Danny should pay Karen $325 to give away her cat.

Refer to Figure 10-9, Panel (b). The market equilibrium quantity is

Q3, and the socially optimal quantity is Q2.

Which of the following is an example of an externality?

cigarette smoke that permeates an entire restaurant a flu shot that prevents a student from transmitting the virus to her roommate a beautiful flower garden outside of the local post office

Negative externalities occur when one person's actions

adversely affect the well-being of a bystander who is not a party to the action.

If the world price of coffee is higher than Colombia's domestic price of coffee without trade, then Colombia

has a comparative advantage in coffee and should export coffee.

A country has a comparative advantage in a product if the world price is

higher than that country's domestic price without trade.

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

import copper

One reason that private solutions to externalities do not always work is that

interested parties incur costs in the bargaining process.

All remedies for externalities share the goal of

moving the allocation of resources toward the socially optimal equilibrium

Refer to Figure 9-1. In the absence of trade, total surplus in Guatemala is represented by the area

not abcdefg

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.

Refer to Figure 10-4. The socially optimal quantity would be

q2

If gasoline taxes were significantly increased in the United States, then

some of the government regulations that require automakers to produce more fuel-efficient cars would become unnecessary. other taxes, such as income taxes, could be lowered. it is likely that roads would become safer and the environment would become cleaner

​Refer to figure 9-26. The figure shows that

​the U.S. will export baseballs when the market opens to international trade.