4.3 Quiz

Which point on the graph would give consumers the most surplus?

A (Triangle of P_trade, A, B)

__________ means selling goods below their cost of production

Dumping

All economists agree that protecting new industries is a valid way to stimulate the economy

False

__________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products

Nontariff barriers

Politicians often argue for tariffs increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long run effect is most likely to be:

a decrease in both American imports and exports

The infant industry argument for protectionism for protection suggests that an industry must be protected in the early stages of its development so that:

domestic producers can attain the economies of scale to allow them to compete in world markets

An import quota or tariff on French wine that raises the prices for wine will probably:

hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices

Introducing a tariff on vitamin Z would

increase American consumption of domestically produced vitamin Z

If Japan does not have a comparative advantage in producing rice, the consequence of adopting a Japanese policy reducing or eliminating imports of rice into the country would include:

the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall

International trade is fundamentally a __________

win win situation