Econ 321 Final

If a large nation subsidizes its exports, it will increase its supply to the world and: a) the world price will fall. b) consumers in the home nation will benefit through lower prices. c) the nation will increase its imports as well. d) will prosper through increased jobs for workers and profits for its firms.

A

When the small home nation imposes a tariff of $10, the domestic price: a) rises by $10. b) rises by less than $10. c) rises by more than $10. d) does not change.

A

A large nation's export subsidy ________ importing countries' terms of trade; a small nation's export subsidy _________ importing countries' terms of trade. a) improves; worsens b) improves; does not affect c) improves; improves d) worsens; improves

B

A monopoly firm will sell ________output and charge a ________ price than a perfectly competitive firm. a) more; lower b) less; higher c) more; higher d) less; lower

B

A small country in international trade faces: a) a perfectly inelastic world demand curve. b) a perfectly elastic world supply curve. c) a perfectly elastic world demand curve. d) a perfectly inelastic world supply curve.

B

An export quota is: a) a limit on exports agreed on by both the exporting and importing country. b) a limit imposed by the exporting country on the amount that its firms are allowed to export. c) a limit imposed by the importing country on the amount that its consumers are allowed to import. d) a tax imposed by the exporting country on products exported.

B

Because a large nation can force the nation exporting the product to pay a substantial amount of the tariff, its _________ may improve after the tariff is imposed. a) consumption b) terms of trade c) production d) income tax collection rate

B

Import tariffs are ___________ on imports, and import quotas are ____________ on imports. a) subsidies; taxes b) taxes; quantity limits c) quantity limits; subsidies d) quantity limits; taxes

B

In comparison to the welfare effects of a tariff in a perfectly competitive home market, the welfare effects of a tariff under a home monopoly are _______, and the deadweight loss for the home monopoly is ________. a) lower; higher b) the same; the same c) lower; lower d) higher; lower

B

International dumping occurs when: a) domestic monopolistic firms relocate operations abroad. b) monopolistic firms charge a higher price in the domestic market and a lower price in the foreign market. c) monopolistic firms charge the same price in domestic and foreign markets. d) monopolistic firms charge a lower price in the domestic market and a higher price in the foreign market.

B

The tariff imposed to punish a foreign discriminating monopolist is called: a) a fine. b) an antidumping duty. c) punitive damages. d) a subsidy.

B

The term used to describe a tax on exports is an: a) export quota. b) export tariff. c) export restriction. d) export stipend.

B

Which organization acts as a forum for countries to come to agreement on trade policies and to resolve trade policy disputes? a) the United Nations Conference on Trade and Development b) the World Trade Organization c) the International Trade Organization d) the United Nations

B

"Infant industry protection" refers to: a) countries' use of short-term protection to protect their agricultural activities. b) countries' use of protection to protect their export activities. c) countries' use of short-term protection to protect young industries while they mature. d) countries' use of protection (tariffs and quotas) to protect their domestic manufacturing activities.

C

For a home monopolist, a quota allows the firm to increase the price by _______________ they could with an equivalent tariff. a) Not enough information is provided to answer the question. b) the same amount as c) a higher amount than d) a lower amount than

C

Foreign supply curves facing a large country differ from those facing a small country. Large countries face _____________ foreign supply curves, and small countries face ______________ foreign supply curves. a) downward-sloping; perfectly price elastic b) upward-sloping; downward-sloping c) upward-sloping; perfectly price elastic d) perfectly price elastic; upward-sloping

C

In a two-firm industry, a Nash equilibrium occurs whenever: a) each firm makes decisions without consideration of the other firm's actions. b) the first firm makes decisions without consideration for the second firm's actions, whereas the second firm does consider the first firm's actions. c) each firm considers all possible actions by other firms and then chooses the best strategy. d) the second firm makes decisions without consideration for the first firm's actions, whereas the first firm does consider the second firm's actions.

C

In general, an export subsidy: a) discourages foreign sales in favor of domestic sales. b) penalizes producers that export. c) encourages firms to export rather than sell domestically. d) justifies government involvement in helping firms export.

C

Rent-seeking activities are: a) foreign suppliers' efforts to reduce quotas. b) landowners' efforts to receive higher returns for their land. c) bribery and lobbying activities to obtain quota licenses. d) domestic consumers' efforts to reduce tariffs.

C

A free-trade area is defined as: a) a trading agreement that lets countries rely on subsidies on domestic production. b) a trading agreement that binds member countries to have a uniform tariff on other countries. c) a trading agreement that allows for free flow of resources. d) a trading agreement in which a group of countries voluntarily agree to remove trade barriers between themselves.

D

A profit-maximizing monopolist will produce at the point where: the difference between average revenue and average cost is a) maximized. b) average revenue = average cost. c) total revenue = total costs. d) marginal revenue = marginal cost.

D

Are domestic firms better or worse off after a large exporting country imposes an export quota? a) Domestic firms are better off, since producer surplus rises. b) Domestic firms are worse off, since there is a loss of producer surplus. c) Domestic firms are neither better nor worse off, since their higher export price is offset by a lower price in the domestic market. d) Domestic firms are better off, since there is an increase in the rents they earn.

D

Consumer surplus is: a) the difference between the price of a product and consumers' valuation of the last unit of the product purchased. b) the difference between the price paid by consumers and the price required of producers. c) the difference between the discounted price of a product and its retail price. d) the difference between the price of a product and what consumers were willing to pay for the product.

D

How does a production subsidy differ from an export subsidy? a) It is applied to all production and imports—everything consumed in the nation. b) It kicks in when the export subsidy runs out. c) It is applied only to production sold within the nation. d) It is a payment from government to all domestic production—not only to units exported.

D

If we allow free trade in a small nation's industry where there is a domestic monopolist, the monopoly firm: a) sees its profits rise. b) gains even more power. c) is able to charge a higher price. d) becomes a price taker, is not able to charge a higher price, and behaves like a competitive firm.

D

Suppose that the world price of sugar is $100 per ton. If a small country gives its sugar exporters a subsidy of $50 per ton, then the world price of sugar will: a) fall to $50 per ton. b) first rise to $150 per ton, then fall to $100 per ton. c) rise to $150 per ton. d) remain at $100 per ton.

D

The main purpose of an export tariff is to: a) increase profits of exporters. b) decrease profits of exporters. c) protect domestic producers competing with the exporter. d) raise revenue for the government.

D

What is the main difference between a quota and a voluntary export restraint? a) There are no differences between a quota and a voluntary export restraint. b) A quota has deadweight losses, while a voluntary export restraint has no deadweight losses. c) A quota affects a country's imports, while a voluntary export restraint affects its exports. d) The importing country administers a quota; the exporting country administers a voluntary export restraint.

D

What will happen to domestic and world prices when a large country imposes an export tariff? a) Both the world price and the domestic price will increase. b) The world price will decrease and the domestic price will increase. c) Both the domestic price and world price will decrease. d) The world price will increase and the domestic price will decrease.

D

When firms are able to sell units of a good at a price higher than the marginal cost of production, they are getting: a) marginal utility. b) higher efficiency. c) consumer surplus. d) producer surplus.

D

With free trade, the demand curve facing a small-country monopolist: a) is horizontal at the firm's MC. b) shifts upward by the amount of imports demanded. c) shifts downward by the amount of imports demanded. d) is horizontal at the world price.

D